Scammers of all kinds come out this time of year to prey on those that may not be aware. They seek out those that can’t easily fend for themselves. Sometimes it is a senior who may be sick, lonely or suffering from dementia. Because I work with many seniors over the age of 62 in my reverse mortgage business I pay close attention to these con artists. They can pick the vulnerable out easily and spin their services or products as though they are legitimate.
The Better Business Bureau (BBB) listed the top 10 scams of last year. This great organization sees it all and works hard to inform consumers about how to inform themselves of the reputation and quality of services a business performs prior to doing business with them. The Top 10 Scams for 2011 were:
- Top Job scam that targets anyone looking for work – YOU GOT THE JOB! Now fill out the online job form and they have all of your information for Identity Theft.
- Top Sweepstakes and Lottery scam– YOU WON! Targets social media users so that when you click on the link the scammer sees all of your personal information
- Top Social media scam – click here – downloads a virus that finds your passwords
- Top Home improvement scam – in person pitch that results in shoddy work or they take your money and run
- Top Check Cashing scam – sorry I wrote the check for too much, write me one for the difference. Their check bounces and your check is cashing
- Top Phishing scam – email from ACH (automated clearing house) about an electronic transaction problem. Link takes you to a false banking site that steals your money.
- Top Identity Theft scam – you are staying at a hotel and a late night call from someone posing as a desk clerk for your credit card information
- Top Phone scam – we can help you keep your house by dealing with your mortgage company. They get paid and do nothing and you owe more in the end
- Tom Sales Scam – online pitch like win an iPad – you pay for every bid even if you don’t get what you bid to purchase
- Top Phishing scam of the year is the Better Business Bureau Scam
BBB email “complaint against your business” – clicking on the link downloads malware that gets your banking information and transfers money
Helping seniors understand Reverse Mortgages in the Spokane, WA area is my business so I hear a lot of horror stories. Just yesterday I was told about a business owner in town that was on the phone talking with his 90 something mother in Monroe, WA and she told him that her bank account was empty. He was shocked as she wasn’t wealthy but always carried a comfortable balance in her savings.
As it turns out she was a victim of the Top Sweepstakes and Lottery scam. She was called and told that she won but would need to send some money to claim it. Then call after call for more money until she had exhausted all of her savings and incurred $20,000 in credit card debt. The family got DSHS involved and they aren’t sure that she believed them when they told her that she was the victim of a scam.
If you ever have a question about whether or not something is a scam be sure to give me a call, Jack Tenold, and if I don’t know the answer I will refer you to someone with more knowledge.
Wait! What IS a reverse mortgage?
I was chatting with a lovely senior lady (we’ll call her Jane) who, with her husband, was shopping for a new senior-friendly home. I suggested that she may wish to purchase the home with a reverse mortgage.
“Oh no! I don’t want a reverse mortgage,” Jane proclaimed.
“I just don’t want one. No reverse mortgage for me.”
“But you would be able to live here, keep a great deal of your cash from the sale of your previous home, and never have a house payment as long as either one of you stayed in the home,” I said.
“No no. Not for me,” she insisted.
“Hold on, tell me more about this thing,” asked her husband.
And therein lies the problem. So many people who insist they don’t want a reverse mortgage have no idea what it is. They have worked themselves into a belief that a reverse mortgage would not be good for them, when oftentimes it is the best solution for their financial needs.
You see, a reverse mortgage is simply another tool to consider when making a financial plan. It is quite common for seniors to want to stay in their home, have extra cash, and not be burdened with house payments.
Although my office does all kinds of home mortgages – and does them well – I have made it a point to emphasize to people 62 years of age and older that they should seriously consider the benefits of a reverse mortgage. And do you know what the two biggest obstacles are that I have to overcome?
Here are the obstacles: Fear and ignorance. All of us are woefully ignorant when it comes to this financial tool. And that ignorance produces fear.
The media, the government, and financial sites seem to go out of their way to portray this rather simple financial tool as a scary, complex, dangerous instrument. In fact, it is a vital part of a good financial plan for many people.
Here’s a good exercise for you:
Find a financial product that looks like this:
A lump sum or a monthly income given directly to you.
No repayment of that money until you leave the home permanently.
No impact on Social Security.
No impact on Medicare.
No impact on your taxes.
No limitations on what you can do with the money.
You continue retain title to the home and pay property taxes and homeowner’s insurance.
There are no limitations because of your credit rating or your income.
Did you find a financial product which can do those things? Unless you answered “reverse mortgage”, I’m pretty sure you did not. Because there is no product other than a reverse mortgage which can accomplish all of those goals.
Anyone considering a home loan today is concerned about the value of their home. With a reverse mortgage loan (and all loans) the appraisal is to determine the amount that is available to loan.
The appraised value is determined by a licensed appraiser comparing properties that have recently sold in your neighborhood.
The appraiser is independent and cannot be influenced by a loan officer or lender and is responsible for making certain that the property meets certain requirements. FHA appraisers are particularly concerned that the house is in reasonable condition and that there are no health or safety issues.
Sometimes the appraiser makes their appraisal “conditional” to certain repairs being done on the home. For example if a roof is near the end of its life, the appraiser may require a new roof to be installed. Bids are obtained by the homeowner and funds are set aside to take care of those repairs after the reverse mortgage is completed. The homeowner is then responsible for seeing that they are done in a timely manner. A few repairs may be required before the reverse mortgage is put into place if they are deemed to be serious health or safety issues.
The amount of money available to the borrower is always less than the appraised value because there must be equity remaining in the home. Equity in the home is the difference between the appraised value and the amount of the reverse mortgage.
While I do all types of home loans (conventional, refinance, purchase, VA, FHA, USDA), I have specialized in reverse mortgages for many years. Some of the big banks are no longer doing this type of home loan. I am available to assist you and look forward to meetin you. Call me any time with your questions. I am licensed to serve homeowners in both Washington and Oregon.
I can be reached at (509) 623-1623 ext. 1 or toll free at (800) 617-3105. If you have a question, call now. I am happy to explain the details regarding reverse mortgages or conventional mortgages. A loan comparison will provide you with the figures necessary to make a smart decision.
My clients are often surprised to learn what appraisers actually look at when determining the value of a real estate property whether it is rural or urban.
A common misconception is that the value of a home is determined after the appraiser has completed a physical property inspection. Actually, the appraiser has a good idea of the property’s value by the time the appointment is scheduled because the professional appraiser has done some homework.
The good news is that you don’t have to worry about pushing back an appointment a few days just to “clean things up” in order to help influence the value of your property. Most folks prefer to put everything in order because the appraiser will take photographs of the interior and the exterior of the home. A clean and tidy house will certainly make it easier for the appraiser and you will feel better too. Also, it doesn’t hurt to mention the new roof or furnace or fence that you may have recently purchased.
The Key Components Addressed In An Appraisal
Location, view, topography, lot size, utilities, zoning, external factors, highest and best use, landscaping features…
Quality of construction, finish work, fixed appliances and any defining features
Age, deterioration, renovations, upgrades, added features
Health & Safety:
Structural integrity, code compliance
Above grade and below grade improvements
Is the property conforming to the neighborhood?
Is the property functional as built – style and use?
Garages, Carports, Shops, etc..
Curb appeal, lot size, & conforming to the neighborhood are obvious to the appraiser when they drive down into the neighborhood pull up in front of your home.
When entering your home, they are going to look at the overall design, condition, finish work, upgrades, any defining features, functional utility, square footage, number of rooms and health and safety items.
Be sure to have all carbon monoxide and smoke detectors in working condition.
Since a home appraisal provides half the weight in any credit decision involving the security of real estate, the appraisal is done by a qualified, licensed appraiser who is familiar with your neighborhood, and the type of home you are buying, selling or refinancing.
If you’re interested in the specifics, here is a copy of the blank 1040 URAR form that is used by every appraiser in the country.
Related Update on HVCC:
Appraisers hired for a mortgage transaction on a conforming loan are chosen from a pool of qualified appraisers at random. Neither you nor your lender has the opportunity to decide which appraiser will inspect your home. This change was brought on with the Home Valuation Code of Conduct HVCC, and is effective with conventional loans originated on or after May 1, 2009.