How Safe Is Your Reverse Mortgage?

by Peter G. Miller
October 30th, 2008

Story Tools

With all the news of bank losses, bank failures and bank screw-ups it’s hardly unnatural to wonder just how your bank fares in the safe-and-secure department.

For reverse mortgage borrowers or those considering a reverse mortgage the level of concern can range from “no worries” to “oh my.” Here are some situations to consider:

___You’re thinking of getting a reverse mortgage so the important issue is whether or not the lender can deliver as promised at closing. A lender in the news for big losses might not be the best choice.

___You have a reverse mortgage backed with FHA insurance. Good news — no worries. If the bank goes into the dumpster Uncle Sam will make good on any money to which you are due.

___You have a reverse mortgage and have gotten all the money to which you are due. Great. No problems. Just keep paying property taxes and other required obligations.

___ You have a reverse mortgage with a line of credit outstanding. You can borrow more according to your agreement. The mortgage is not FHA insured. This is a situation which requires investigation. Contact the bank and ask about their financial status. Be aware that many lenders have limited withdrawals from traditional (forward) home equity lines of credit (HELOCs). This does NOT seem to be a problem with reverse mortgages as I read the financial pages, however it can’t hurt to chat with bank officers.

___You have a reverse mortgage and your lender goes out of business before closing. So far all failed banks have been sold to other banks or taken over by the FDIC. All insured deposits have been covered. Whether all loan commitments have been fulfilled, or fulfilled on a timely basis, is unclear. Contact your lender immediately for specifics.

Related Resources You May Like

This entry was posted on Thursday, October 30th, 2008 at 2:43 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “How Safe Is Your Reverse Mortgage?”

How Safe Is Your Reverse Mortgage? | Reverse Mortgage Guide Says:
November 2nd, 2008 at 11:35 pm
[...] Read the rest of this great post here [...]
reversecharles Says:
November 3rd, 2008 at 1:18 pm
In the mist of all the financial crisis how great is it that there are those seniors that have the equity. This means, that not every American purchased their home in the last 3 years with a 0 down negative am mortgage as the media would have you believe. I am not a fool, the crisis is real and affecting many people, but its important to note that most of the same seniors that were doing well before the downturn will also do quite well after the downturn. But some real action is needed from our leaders to protect the financial interest our seniors, one of the treasures of our great country.