Financial Freedom Strikes Again!
An article on KHOU Houston’s website, “Texas senior citizen’s home ownership threatened by reverse mortgage loan,” reports:
“Janet Tannehill, in order to ease her financial burdens, took out a reverse mortgage through One West’s now defunct reverse mortgage subsidiary, Financial Freedom. Now, she is in foreclosure because of her reverse mortgage…”
Sounds appalling right? Well, there’s more to this story, even if KHOU does not report it.
Namely, the fact that Tannehill took out a reverse mortgage with a PRIVATE LENDER, uninsured by the FHA, and failed to pay her property taxes.
First, it needs to be clear that this type of reverse mortgage NO LONGER EXISTS! In fact, hey only account for 1% of all outstanding loans.
Second, all reverse mortgages are currently insured by the FHA through the Mortgage Insurance Premium, which insures that you never owe more than the current value of your home.
Third, there are financial responsibilities associated with the reverse mortgage including property taxes, homeowners insurance and maintaining your primary residence in live-in condition.
Understanding these three points is crucial in determining why Tannehill’s reverse mortgage loan became due and payable.
There is a twist though: her mandatory reverse mortgage counseling consisted of “a five-minute phone call, with paperwork mailed later.”
It’s important to note: no reverse mortgage counseling should last five minutes.
First, this is close to impossible since counselors and borrower(s) have to go over:
The borrowers’ monthly income and budget
The in’s and out’s of the reverse mortgage
Review each document in the application
This is in addition to a Q&A session at the end of the counselor in case there is anything the borrower(s) doesn’t understand and wants to go over again.
Even if this is not the borrowers’ first time taking counseling, the session should never last less than 30 minutes.
Sadly, there are unscrupulous people in any business, who hope that, by taking advantage of the weak, they will reap the rewards. Reverse mortgage counseling is the foundation of every transaction I partake in. In addition, I go over the paperwork again when I sit down, face to face, with my clients. I want to make sure they understand everything BEFORE they sign.
Not all brokers, agents, etc. are the same…and one bad experience does not guarantee that every one after that one will be sour. However, it does guarantee that you will have to work twice as hard to gain back consumers’ trust.
I am not in the business of doing business unethically, nor do I pressure my clients, potential or otherwise, but they will always be people who do. In addition, counseling has become more complex and detailed to ensure situations like these aren’t repeated.
Don’t let one bad apple (or a few) ruin the whole bunch though. Like I’ve said before, “we are not all the same. Stop comparing us.”
Interested in a reverse mortgage? There is no time to wait. Give PS Financial Services a call at (888) 845-6630 or sending us an email atinfo@PSReverseMortgage.com. We do not pressure those who inquire. We are simply here to help.