Although reverse mortgages have been available for many years, their popularity has increased in the last few years as real estate prices have continued to escalate. The country has seen home values appreciate, which has given homeowners 62 years of age and older access to greater amounts of equity. Reverse mortgages let homeowners pull equity out of their home and the money received does not affect Social Security and Medicare benefits.
In response to changing market trends and its clients, MDMC has added reverse mortgages to its due diligence review. Reverse mortgages differ from other loans in the following ways:
- A reverse mortgage is not payable until the borrower dies or sells the property, so there is no minimum credit or income requirement. Thus the lender collects the total loan amount plus interest when the estate is settled before any beneficiaries have a claim.
- On the application, only the credit score is captured.
- One of the key considerations for potential borrowers is the equity they have accumulated over the years in their home. The risk of the reverse mortgage loan is in the property value, which makes the appraisal report extremely important.
- MDMC's Reverse Mortgages Review ensures compliance with all federal, state and municipal laws as well as program-specific requirements. The following checks are performed:
- Extensive analysis of the property appraisal.
- Necessary counseling of individuals seeking a reverse mortgage.
- Determination if property and borrowers are eligible for program.
- Review of repair escrows and inclusion in loan documents, if necessary.
- Proper hazard and flood insurance determination (if necessary).
- Any existing bankruptcy proceedings are disposed of properly.
- Presence of adequate water sample test, if property is on well water.
- All legal docs regarding POAs, Guardianships, Death Certificates and Trusts are in order.
- Confirmation of occupancy.
To ensure the reverse mortgage review is handled with the same level of service that MDMC clients have enjoyed since 1992, MDMC's reviewers have undergone extensive training on reverse mortgages and specialists have been added to the team.
We look forward to sharing our expertise and insight with you as we partner together to create customized solutions to your business needs. Contact us to find out more about how we can meet your reverse mortgage loan review needs.