Reverse Mortgages

Discussion in 'Sun City General Discussions' started by CMartinez, May 31, 2018.

  1. CMartinez

    CMartinez Well-Known Member

    In doing some research, the FHA issue has been around since the mid 1990’s These stipulations for foreclosure on HUD properties has to do with private recreation facilities, developments were told that their FHA mortgage applications violated the “free assumability” clause in the Code of Federal Regulations. In Sun City’s case, this $3,500 fee is levied by the Recreation Centers of Sun City, and it applies even when properties are transferred to heirs through the probate process.

    But be cautioned that the problem isn’t limited to 55-and-over communities. After all, the text of the code states that “a mortgage shall not be eligible for insurance if the mortgaged property is subject to legal restrictions on conveyance.”

    It has been heard of rejected applicants in non-age-restricted communities that have shared property preservation fees, as well as denials involving homes with leased solar panels; since the homeowner maintains a separate lease with the company that owns the panels, the FHA could technically be left holding the bag for future payments were the home to enter foreclosure.

    In the case of reverse mortgages, once the lender goes into foreclosure, the RCSC seeks another PIF fee, which the violates 24 CFR 203.41, the section of the Code of Federal Regulations that lays out the free assumability clause.

    Corporations, such as the RCSC, need to decide how to mitigate the effects of FHA’s regulations. Typically, it is asked of homeowners in these communities to think about the potential solutions: Would they prefer to just exempt reverse mortgages from the foreclosure payment requirements, or remove the stipulation for all types of FHA products? Does the RCSC want the entirety of its properties to become FHA exempt, which would mean no one can get a HUD insured loan in the community? What does that do for your property value?
     
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  2. BPearson

    BPearson Well-Known Member

    Gee whiz Ida, ya know i love ya like a sister, but did a "rightie, tightie, whitie just use the "rich are getting richer"argument on a aging socialist lefite? Goodness me girl, don't even get me started on income equality in this country and the how's and the why's. Working men and women have been pounded ever since the days of Gordon Gecko and the movie Wall Street made it an art form to screw those on the bottom of the pile. Think not? Look at this last tax reform by your friends on the right...now that is the classic definition of the "rich getting richer." And all of those cuts for businesses and the silly hype of sharing it with the workers; you only have to look at where they've put that money. Aside from some short-term bonuses, the bulk has been used for stock buy-backs.

    But alas, that's not the point of this thread. This is about Sun City and those who need solutions not platitudes or bull crap. I get crazed when speaker after speaker asks for some consideration and then they do tell them they are working on it and they in fact are doing nothing, NOTHING. Let's be honest; the goal here is to simply get to the summer break (only the June meeting left) and then go away and enjoy being off. The problem is months will creep by for those starving and unable to meet their monthly expenses while the board hopes something magical will come out of HUD that will keep the"double dipping" flowing through the coffers.

    As far as flippers, they know their costs going in if they buy in Sun City. On the other hand, that is exactly why FHA mortgages and reverse mortgages aren't being written in the community because they too know the potential costs and aren't willing to put the tax payers (yes it's us that backs those loans) assets at risk. The problem is if other communities have addressed the problems and we haven't, it leaves us in a bad position when buyers are looking for FHA loans. That's why the article i linked from Carole above is so interesting.

    Finally, you also managed to find another one of my hot-buttons. The RCSC is a corporation and the corporation is in my mind, none other than the membership. We own it. We run it. The fiduciary responsibility is to ourselves. And while i may have sounded flip about the all-golf-all-the-time PIF, the only suffering from changing the rules on foreclosures is to the total dollars that comes in every month. We have enormous sums of cash collected and while it's down this year a bit, it's because for 2016/2017 we had the massive infusion of money from the KHov development (roughly 142 home with the $3500 PIF and the developers access fee of $5000 per home).

    Let me just conclude this diatribe with this simple thought as the board gets ready for the summer break...the rich do indeed get richer, the poor struggle to get by. It's easy to say that's life, but to fail to recognize there are people in Sun City who need some help is shortsighted and cruel. If you or the board have answers beyond reverse mortgages, please put them out there before the summer break.
     
    CMartinez likes this.
  3. Ida Eisert

    Ida Eisert Member

    Seems to me that most are talking about HUD as if they are the lender. They are not the lender. HUD insures the loan that the Lender makes to the borrower. The Mortgagor/borrower must qualify for the loan by the Lender as well as HUD criteria for Lender insurance by gov/HUD for this type of loan. There is a risk ratio that Lenders follow for any loan type. Could be some of the individuals that want loans don't qualify from certain lenders and why not to put some onus on Lenders. There are times individuals have to apply again somewhere else in order to get a loan. We were told months ago by RCSC Management that in fact, some individuals were obtaining reverse mortgages.
     
  4. CMartinez

    CMartinez Well-Known Member

    It is the servicer of the mortgage that does the repo. Those that were getting loans were conventional loans, not FHA loans. I suspect that as time goes on, all lenders will start to follow HUD lead. Without the lender insurance, no one is going to get an FHA backed loan.

    Does the RCSC want the entirety of its properties to become FHA exempt, which would mean no one can get a HUD insured loan in the community? What does that do for your property value? There are not going to be that many loans to come through needing this type of insurance.

    It is also telling to me that if you were told months ago that reverse mortgages were going through, this is an item that has been on the RCSC agenda for a while now. How awful to hold its cardholders hostage for months and not see the value of making one exception for HUD based loans. That is shameful of the board to ignore the pleas of its residents.
     
  5. BPearson

    BPearson Well-Known Member

    It's not months Carole, it has been well over a year now the board has been looking into fixing it. If you listen closely, what you hear is them hoping HUD changes their rules so it goes away. Don't hold your breath. People that feel strongly about this matter should show up in force at the next board/member exchange on June 11 at the Lakeview social halls. Sometimes it seems the only thing the board understands is large, loud and angry crowds.
     
  6. Cynthia

    Cynthia Well-Known Member

    Didn't one board member say something to the effect of...why should we change our rules, the government should. That would mean they don't even plan to change it...at least that board member doesn't.
     
  7. BPearson

    BPearson Well-Known Member

    Good catch C and he's one of the more "liberal" of the board members. If you have followed this fiasco since inception you've seen various board members and staff suggest they are working towards a workable solution. David's answer tells me what they are saying in private work sessions is far different from their public responses at open meetings. If they have no intention of changing their position, just tell people we don't care about your personal problems our goal is to just keep getting as much money as we can into the PIF. While it may a butt ugly answer, it would at least be intellectually honest.
     
  8. CMartinez

    CMartinez Well-Known Member

    Here is the sad part, the refusal of the RCSC to not bend its rules could cause the HUD/FHA to ban all of their loan products to Sun City. This would mean no one could get any kind of a FHA backed loan, not even a normal FHA loan. This would affect a significant number of home buyers. How many PIF's do you think the FHA loans generate? It would appear the RCSC wants to play chicken with the government, and I fear the RCSC and its residents lose.
     
  9. Ida Eisert

    Ida Eisert Member

    There is a lot of ambiguity out there even though I am not a proponent of the Reverse. It would be nice to get some benchmarks.
     
  10. GCotten

    GCotten Member

    I was in the Safeway store at 107th recently and observed a senior Sun City resident going off in a violent fashion against one of the bakery employees. The senior had a friend with her who appeared to be a kind of an understanding caretaker of sorts. Both ladies were probably in their late 60's or early seventies. The sheriff deputies had to be called due to the seriousness on the verbal and almost physical abuse being put forth by the senior against the employee and eventually other customers as she was being escorted up to the front of the store. The caretaker friend explained that the abusive lady had not taken her meds for I believe she said manic depression or something of the sorts.

    The point of the story is that senior communities have a higher rate of uncontrolled civil disturbances due to age, medical issues, family issues and obvious spousal death and perceived or real uncaring families. The world as we all witness on a daily basis is different than it use to be and is totally out of control on all violence issues. In the past I have tried to bring this issue to the forefront of RCSC board members and management. A lot of the clubs in Sun City recognize the dangers that are out there regarding the club meetings and some hire their own security for club social events. RCSC certainly needs to reconsider their thinking on this issue especially since this forum now seems to be a tool to unknowingly incite anger and to call for questionable behavior by members at RCSC meetings. I think in our concerns regarding RCSC issues safe rational thinking goes to the wayside when emotions flare. I which that those we look to for information and knowledge on issues and those that post on this site would be more mindful of possible unintended consequences. I am sure most are aware of the tragedy that occurred several years ago at a neighboring senior community whereby a distraught member/property owner came into a board/committee meeting and killed several people. The odds are greater today than ever before of that occurring again.
     
  11. BPearson

    BPearson Well-Known Member

    Wow, chastised by the guy who couldn't cut it as a board member. Sorry pal, but there's nowhere i suggested violence. Perhaps your knowledge of the English language is different than mine but being angry isn't the same as advocating for violent behavior. So what's your solution genius? Keep letting the board lie to people? So far your advice to this difficult situation was to steer people in trouble away from reverse mortgages and to stay calm and meekly sit in the corner as the board breaks for the summer and they crumble under APS bills that leave them in even deeper financial distress.

    On second thought, with that kind of creative thinking, perhaps it was best for all of us you quit the board when you did. Nope, no violence here, just angry over stupid people who refuse to see the hurt some of our own community members are going through and refusing to do anything about it.
     
  12. CMartinez

    CMartinez Well-Known Member

    HECM endorsements grew 13.1, First-time homebuyers accounted for 725,102 or 82.2 percent of all FHA forward purchase loans. New Senior loans count as First time buyers. FHA held roughly 28 percent of the home-purchase market. VA purchases 11.6.
    Are these the statistics or benchmarks you were looking for Ida?

    These numbers are not unique to Sun City, but are evidence of some of the market trends. The one person I knew that worked in Sun City as a loan originator has retired. I have contacts for the mortgage market for Phoenix, but with the amount of loans made that include subsidized payment could skew the number.

    I got these stats by going to the individual websites and researching market trends for 2017
     
    Last edited: Jun 4, 2018
  13. Cynthia

    Cynthia Well-Known Member

    I don't think the crying, begging members at the board meeting needed the forum to incite them to anything. It's the opposite. They told us. This became especially an issue when SCW and other places were able to amend their documents. Last year people were quiet and asking for a solution. Here at the forum we were quietly discussing it as well. Naturally as time goes on and nothing is done people do, and should, get angry. For some people, time is of the essence.
     
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  14. Ida Eisert

    Ida Eisert Member

  15. GCotten

    GCotten Member


    Thank you Bill for all your support and words of wisdom over the last several years. Dummy me, I thought you were truly a friend. I don't think I singled you out on my posting but if you feel compelled to take the hit that's fine. Just remember the unintended consequences, not everyone can control their emotional responses as we have just witnessed.
     
  16. BPearson

    BPearson Well-Known Member

    We were always friends Gary, until you tried to put words in my mouth. And so we are clear, i was in perfect control of my emotions. Apparently you don't know me as well as you think you do because what I said was exactly what i wanted/intended to say. One of my hero's was Dr. Martin Luther King. Peaceful, non-violent protest was one of his mantra's and unfortunately in my previous work life we had to use it more often than i liked. Because all too often those holding the cards love to preserve the status quo which only insures nothing ever changes.

    This nonsense has been dragging on for more than a year. At least a half a dozen staff and or board members have implied they were working to fix the matter. Obviously they aren't interested in doing so and they'll skate through the June meeting and the folks in dire need of some relief will sit rotting waiting for their break to be over. On the other hand, a half a dozen senior communities addressed the matter head-on, rewrote their language and are moving forward for the benefit of those in need of a reverse mortgage.

    And so we are clear, i was the only one encouraging people to show up loud and angry at the June board/member exchange so pretending you were directing your not so subtle words at someone else is foolishness. Just be willing to man up and admit what i said was far from encouraging any kind of violence; that came from you me friend, not me.
     
  17. CMartinez

    CMartinez Well-Known Member

  18. GCotten

    GCotten Member

    Unintended Consequences.................hopefully our luck holds out through this ordeal.
     
  19. CMartinez

    CMartinez Well-Known Member

    Gary,
    At the last board meeting there was a lot of emotion coming through. The one man was angry but he stated if nothing gets done by June, he would look at litigation. This is very emotional for these folks, they are not taking medications they need, they can't hardly use their air conditioning, if it wasn't for food banks, they may not be eating. Yet, they have paid their RCSC dues, as they are still members in good standing. All of this going on while the board says they are looking at making changes. This would be blatant lie to all of these folks. No desire to change, blaming it on the government, etc., etc., etc.!

    “In the case of reverse mortgages, once the lender goes into foreclosure, the RCSC seeks another PIF fee, which then violates 24 CFR 203.41, the section of the Code of Federal Regulations that lays out the free assumability clause”.

    “Corporations, such as the RCSC, need to decide how to mitigate the effects of FHA’s regulations. Typically, it is asked of homeowners in these communities to think about the potential solutions: Would they prefer to just exempt reverse mortgages from the foreclosure payment requirements, or remove the stipulation for all types of FHA products?” Does the RCSC want the entirety of its properties to become FHA exempt, which would mean no one can get a HUD insured loan in the community? What does that do for your property value?

    I posted the stats of FHA/HUD backed mortgages, 82.2% of all mortgages are FHA based. Again, does the RCSC feel it is doing the community a favor by not honoring Federal regulations that outline the "free assumability" clause. Note folks:: Federal Regualtion
     
  20. GCotten

    GCotten Member

    Carol....You, Bill and a lot of other people have expressed the situation and the dire need that a lot of folks have. And yes it has been going on a long time which just magnifies the seriousness of the individuals situations. You just stated that some are not taking medications that they need....one of my points in my earlier email. Do we not think there is room for the unthinkable to occur. The pressure is building and a lot of us who think we have all the answers are failing to realize that the difference between "sanity and insanity" is a millisecond. There is no doubt in my mind that any number of people in dire straights who may not see any hope could just decide to end the pain. Our well intended advise and postings could just possibly be adding to their lack of hope and despair and "unintended consequences" could occur. And yes I know there is the other side of the coin with the opposite point of view. All I'm trying to say is that when we speak live as we do on this forum that we consider what I have been saying. I don't disagree with the concerns. Bill or anyone else that has or wants to trash me and my integrity does not solve the problem and does nothing to reach the positive ending that we all want.
     

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