Reverse Mortgage Borrowers Not Getting Lift From Appraisals
I received an email a few days ago from a prospective customer. I say prospective loosely because I'm quite sure he won't become one.
After warming me up by praising my marketing skills, he asked me his burning question: What can you do different than any other guy to get me the highest possible amount of cash from my house?
I replied that I can't. All reverse mortgage lenders use the same formula to arrive at how much money can be squeezed out of the loan.
So he asks me to use an appraiser that really does a "good job". Of course this is code for an appraiser who fudges up his numbers to make the loan or transaction work.
He was asking this, because he knew if his home was assessed at a high amount, the lender would give him a heftier loan.
With home values reducing he is in the same shaky boat as many senior mortgage holders. They want to use the reverse loan to rid themselves of the burden of the monthly payment.
However, with a low appraisal the reverse lender cannot always give enough to complete this goal for them. Instead, the borrower has to continue paying on the forward mortgage until the worth of his house goes up enough to try again.
Unfortunately borrowers aren't the only ones struggling; appraisers are as well. For awhile they were able to pad their appraisal reports.
A totally "by the book" appraiser reading this might be a little hot under the collar. But everyone knows plenty of fudging was going on.
Now the finger is pointing at everyone in the real estate industry for causing the big mortgage mess, even appraisers. They are being watched more closely than they were before.
With the frequency of appraisal reviews taking place, appraisers could possibly lose their license if they don't do things by the book.
I relayed all of this information to the potential client, and he hasn't called me since. I warned him that other lenders would assure him the highest possible appraisal.
Most lenders will promise it, but won't do anything differently when it comes down to it. I choose to let seniors know all the facts and risk losing them as a client.
After warming me up by praising my marketing skills, he asked me his burning question: What can you do different than any other guy to get me the highest possible amount of cash from my house?
I replied that I can't. All reverse mortgage lenders use the same formula to arrive at how much money can be squeezed out of the loan.
So he asks me to use an appraiser that really does a "good job". Of course this is code for an appraiser who fudges up his numbers to make the loan or transaction work.
He was asking this, because he knew if his home was assessed at a high amount, the lender would give him a heftier loan.
With home values reducing he is in the same shaky boat as many senior mortgage holders. They want to use the reverse loan to rid themselves of the burden of the monthly payment.
However, with a low appraisal the reverse lender cannot always give enough to complete this goal for them. Instead, the borrower has to continue paying on the forward mortgage until the worth of his house goes up enough to try again.
Unfortunately borrowers aren't the only ones struggling; appraisers are as well. For awhile they were able to pad their appraisal reports.
A totally "by the book" appraiser reading this might be a little hot under the collar. But everyone knows plenty of fudging was going on.
Now the finger is pointing at everyone in the real estate industry for causing the big mortgage mess, even appraisers. They are being watched more closely than they were before.
With the frequency of appraisal reviews taking place, appraisers could possibly lose their license if they don't do things by the book.
I relayed all of this information to the potential client, and he hasn't called me since. I warned him that other lenders would assure him the highest possible appraisal.
Most lenders will promise it, but won't do anything differently when it comes down to it. I choose to let seniors know all the facts and risk losing them as a client.
posted by Credit Counseling at
6:10 AM
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