April 2016

Are You a Caregiver?

My blog is about Reverse loans and providing the latest information about them but it is also a resource for people who are seeking information about other issues of aging and due to the fact that I have a very large resource of professionals that provide services to senors and their families, I like to share that once in awhile on this site.

Whether they need a really great Estate Planning Attorney,  help with a parent who has Alzheimer’s disease, in home care giving or any of the other issues that families and or the senior’s are faced with each day.  I have the resources and information at hand.

Unfortunately there are many adult children who are taking care of their parents needs each day and at the same time, they may be working full-time   ( and taking time off from their jobs because of emergencies with their parents), married and still have young children at home that need their attention.

They are referred to as “The Sandwich Generation”.

Soon the burden of taking care of their parents becomes far too difficult and stressful and quite frequently results in them developing a serious illness.   And it is not unusual for them to actually die before their parents passes, due to the enormous psychological stress associated with the demands of whatever the situation may be with their parents.

It’s important for them to take care of themselves and if at all possible, pay someone who is a licensed professional to relieve them of the burden.  It is a burden and their should be no guilt about letting someone else take care of your parents, as no one is qualified to do the job except for a professional who is trained to handle the seriousness of being a caregiver.

Please read the description below from Coast Caregiver Resource Center if you find yourself overwhelmed, angry, exhausted and feeling helpless and hopeless in trying to do the best that you can for your parents.

Enjoy your time with your parents and let go of any feelings of guilt about not being with them all of the time.   You have a life, too.

They are a wonderful resource for help when you need it the most.


Coast Caregiver Resource Center (CCRC) is one of eleven regions in the statewide non-profit California Caregiver Resource Centers that was created over thirty years ago to provide support services for family caregivers of persons with brain/cognitive impairment, such as all dementias, Parkinson’s and Huntington’s diseases, stroke, brain injury and many more. Services include assessments of the caregiving situation and needs, action plans, educational information, resource referrals, ongoing consultations, support groups, and emotional support.

CCRC includes three counties, Ventura, Santa Barbara, and San Luis Obispo, with family consultants in each county with masters’ degrees in related fields. Each region has a host employer, and CCRC’s is Cottage Health in Santa Barbara. CCRC is a program of Cottage Rehabilitation Hospital. Contact may be made through the main office in Santa Barbara at 888-488-6555 or info@coastcrc.org.

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How Does Bad Credit Affect Getting a Reverse Loan?

Since the crash of the Stock Market and the housing industry 8 years ago, it has become much more difficult to qualify for a mortgage than it was in the past.

With the advent of new regulatory changes and rules affecting both industries, the impact on a potential borrower has been significant.

By “significant”, I am referring to the enormous amount of documentation a potential borrower must submit to the Lender who they are applying with for a new mortgage.    A lot of people are very upset about the amount of paperwork and scrutiny they have to undergo in order to become approved for a mortgage.

But, these regulations and piles of documentation are not necessary ( There is now the Financial Assessment)  for a senior to provide if they are applying for a Reverse mortgage.   Because there are no payments on a Reverse loan, the applicant DOES NOT have to qualify using their FICO scores or Debt to Income Ratios.

(The Financial Assessment does require some bank statements or any statements showing cash reserves & verification that the borrower has made their property tax & Homeowners insurance payments on time for the previous 24 months.   And if not, they might be required to have an Impound account set up to make sure that they are paid in the future.)

As a matter of fact, even if they have poor credit or a BK and their income isn’t very much, they will qualify for the FHA HECM Reverse loan.   It’s just a matter of providing a letter of explanation for any derogatory credit.

I recently had a client who due to a very serious illness and the medical expenses associated with it, used up all of their credit cards to pay their mortgage payment and other monthly expenses and to cover what their insurance didn’t pay and eventually they had to file for a bankruptcy, plus they also owed money to the IRS.

They repaid the IRS, completed the bankruptcy and I was still able to have them approved for their Reverse mortgage and paid off the existing loan leaving them free of a monthly mortgage payment.

This is just one of many examples of how credit and income are irrelevant for qualifying for a Reverse loan.

And the BORROWER STILL OWNS THEIR PROPERTY.   The bank NEVER takes it when they pass away, the estate goes to the heirs.



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HUD Approved Counseling for Reverse Loans

As mentioned in my previous 2 posts, counseling by an HUD approved agency is required by the federal government prior to applying for a Reverse mortgage.

Now, that does not mean or obligate anyone who completes the counseling to apply for this loan, it’s simply an excellent option for anyone that is seeking accurate information about the HECM program and not be influenced by some of the myths that continue to circulate about it.

I can provide a list of some of these approved agencies and they do typically charge an $125 fee for their service.   But it’s worth it, plus once completed the “applicant” will receive a HUD Counseling Certificate that verifies they have completed the counseling and if they decide to move forward on a loan application, they will need to give this to the Loan Officer.

Here is the remainder of the article about counseling that I have been sharing on my blog.

“Clarifying what makes the reverse mortgage become due and payable creates some surprise among prospective borrowers, Tetreault said, but it also opens the door to other questions that seniors might not have thought about previously, such as what happens if they do not pay property taxes and insurance payments on time.

“We talk about what their responsibilities are as reverse mortgage borrowers to make sure they do not put themselves at risk of foreclosure,” she said.

The million-dollar question

HECM counseling is a necessary stepping stone in the older homeowner’s journey to get a reverse mortgage. This decision is typically prompted by a significant need, whether that is the result of an unexpected personal issue or even the intrigue of using home equity to supplement retirement wealth.

In many cases, the million-dollar question is: how much money can I get from a reverse mortgage?

One of the things ClearPoint does off-the-bat is ask counselees how they plan to use the money they receive from a reverse mortgage; whether that means using these funds for daily or future expenses, paying off debt, etc.

In understanding what the loan proceeds will be used for, Tetreault said counselors can help prospective borrowers determine if a reverse mortgage is really the right product for them, or if there are other alternatives that might fit best with their financial plans.

At the end of the day, the decision to get a reverse mortgage hinges upon education and the awareness of what other resources are available to seniors that can help them accomplish their personal needs.

“Education empowers consumers,” Tetreault said. “Whether seniors take that information and decide to get the reverse mortgage or not, at least they are educated and have an understanding of all the choices and options available to them.”

Written by Jason Oliva/Reverse Mortgage Daily

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HUD Counseling for a Reverse Mortgage

As I said in the previous post, anyone that intends to apply for a Reverse loan must first complete counseling with an HUD approved agency.

Originally this service was free and funded through Grants, but due to the increase demand for Reverse loans, it soon became very apparent that it would become necessary to charge a fee for this service.

As of this “writing”, most of the agencies charge $125.00 but it is refundable if the senior does apply for a Reverse loan.    They will be given a credit at the close of Escrow for this upfront fee and the HUD Certificate for Counseling that they receive, is effective for 6 months in the event they don’t immediately apply for the loan.

Here is the second part of the article that I shared in my last post.

“Although many prospective borrowers already have some knowledge of reverse mortgages, having done their own research prior to the counseling session, Tetreault, who has been a credit counselor for 16 years and a HECM counselor for seven years, admits that the misunderstanding about the transfer of homeownership continues to be one of the most frequently asked questions during the counseling process.

“They are always surprised to learn they still, in fact, own the home even with a reverse mortgage,” she said.

No payments necessary?

The internet provides a wealth of knowledge on just about anything. With a few keystrokes and clicks, even unsavvy web browsers can find the most basic information on reverse mortgages to aid them in their quest for knowledge.

Unfortunately, not everything published on the internet is vetted for accuracy. So it’s not beyond reason to be naturally suspicious of financial products that offer extra cash flow without requiring a monthly payment in return.

“Most of the time, when seniors are coming for counseling, they are skeptical about why they are able to get this [reverse mortgage] loan and not have to make payments,” Tetreault said.

Tetreault’s job then is to clarify that the funds obtained from a reverse mortgage must be repaid at a later date, and that just because borrowers aren’t required to make monthly payments toward the loan balance, they are still required to maintain their property taxes and homeowner’s insurance.”

Jason Olivia/Reverse Mortgage Daily

Counseling is the most reliable resource for anyone considering applying for a Reverse loan, because the Counselor has nothing to gain be giving you honest information.   Plus they cannot steer a potential borrower to any particular Lender.

If you wish a list of HUD approved agencies, please contact me and I will provide you with a list of them

I will share the remainder of this article in my next post.

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HUD Counseling for Reverse Loans

One of the best resources for accurate information about Reverse mortgages is through a HUD approved counseling agency.

As a matter of fact, no one can apply for the loan without completing a counseling session which is typically done over the telephone in about one hour.

Once it’s completed the counselor will send a HUD Counseling Certificate to the individual(s) for them to keep and use if they decide to apply for the loan.

Here is a copy of an article that was published a couple of months ago with more details about this important resource.

“From an educational standpoint, Home Equity Conversion Mortgage (HECM) counselors are the first line of defense in the ongoing struggle to dispel the most common reverse mortgage myths and misconceptions.

Mandatory HECM counseling provides seniors with the necessary exposure to make an informed decision about getting a reverse mortgage. Like originators, the job of a HECM counselor is also rooted in education as they help prospective borrowers more clearly understand the inner workings of reverse mortgages.

Despite this dual effort on the educational front, and the wide variety of positive press from the mainstream media lately, several reverse mortgage illusions have yet to evaporate into the ether.

Borrowers, in fact, still own their homes

One of the most common misconceptions of reverse mortgages is that borrowers automatically relinquish ownership of their homes once they obtain a HECM.

Perhaps the result of negative media representation in the past, the lingering effect of this myth has obscured the truth about reverse mortgages among the general public. The reality is often a pleasant revelation for seniors once they undergo HECM counseling.

“Seniors are under this misconception that they don’t own the home anymore—the lender does,” said Sherry Tetreault, a Tenn.-based certified credit counselor with ClearPoint Credit Counseling.”

Jason Oliva/Reverse Mortgage Daily

Due to the fact that this article is quite long, I plan on sharing it in two additional posts here on my blog.

If anyone would like a list of some HUD approved counseling agencies, please contact me as there are several different ones to chose from, but the counseling process is uniform.

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