I Went to the Podiatrist for Brain Surgery…If you needed brain surgery, would you go to the Doctor who happens to be a podiatrist just because you know someone who works there? A Medical Doctor after all is a Medical Doctor and they can all help people with any ailment, right? ABSOLUTELY NOT! Now that’s just silly and we all know that to not be the case. Yet people think a mortgage company is a mortgage company and can offer all kinds of mortgages, and this couldn’t be farther from the truth. This is the story about a client who experienced this contrast first hand, but first let’s learn about the differences between the types of mortgages. Reverse Mortgages and Forward Mortgages (conventional, FHA, VA, etc. that all require payments) are, simply, polar opposites. When a Mortgage Loan Originator takes their 24 hour course to get licensed, the portion of the course and test that comprise the Reverse Mortgage is approximately 1%, simply addressing what a reverse mortgage is and not the details surrounding it. A reverse mortgage is highly complex and intricate with various ways of using it. There are also many rules and regulations that are unique to this program. On March 2, 2015 the program will become far more complex with the addition of a Financial Assessment, which is unlike any credit and income verification you see with Forward Mortgages. My company is spending dozens of hours in training to make sure we nail this down, and the lenders and investors will still have their own rules to add to the FHA (Federal Housing Administration)’s rules.
The Story:So in late December 2014 a borrower contacted us saying she had already signed an application and completed the FHA reverse mortgage counseling (mandatory for all reverse mortgages) through a friend who is a processer at a regular mortgage company. She was concerned because it had been 3 weeks, she never met the actual Licensed Mortgage Loan Originator (MLO), and no appraiser had contacted her, which was the next step. To make a long story short, when one of our Reverse Mortgage MLOs met with this client, she had not been told how the program works and the various options and uses that exist. Further, the so-called Reverse Mortgage Counseling they attended did not give them the official government document needed to start the process with a FHA lender. Instead of receiving the “HECM Counseling Certificate,” they received a “Certificate of Achievement” that looks like something you could buy at Staples. This meant that no case number had been opened with FHA to allow the mortgage company to legally order an appraisal, which is why the borrower had been left in limbo for 3 weeks. We then had to start all over, and they had to pay for a second counseling from an authorized FHA reverse mortgage counselor. When you are looking for a mortgage company to offer you a reverse mortgage, make sure they are truly experienced. Some companies list the reverse mortgage as the last of 10+ programs they offer just because they don’t want to lose a commission when that 1 reverse mortgage borrower comes along every year.
Please don’t fall victim to the Podiatrist who is willing to perform Brain Surgery.
Give PS Financial Services a call at (888) 845-6630 or via email at info@PSReverseMortgage.com.