Reverse Mortgages

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

  1. CMartinez

    CMartinez Member

    Thank You Gary for the explanation. I now see your point. And yes, some of these folks have been asking for help for over a year, and could be making things more desperate than they have let on.

    I wish I could say this forum reaches the entirety of Sun City, but, it is not the case. As you may have noticed, the same folks are the posters, and at any time, when I look at who is online, it usually shows a max of 20 people. The flip side of this coin is it appears the only time the board will act or react is when there is a large group of people, demanding action. I also know there is only 3% of the population seeking reverse mortgages, so even a call to action by those affected would mean a smaller crowd.

    I don't think anyone is trying to whip the audience into a frenzy, just have the numbers present to allow for an informed choice by the board.

    You and I have only spoken on this board. I did see you once at a board meeting, as an audience member. From reading what you write, with the accompanying explanation, I feel your are a man of integrity with a willingness to help and listen. Bill and I have been trying to find solutions to this problem, and the more I see written, sometimes, it is enough to to make the most ardent of readers, bristle. Bill has stated this has been going on for a year, and despite citing the Federal Code, which I am sure the board is aware of, they continue to snub their noses at these people of dire need.

    Thank you for your time and your explanation, it made it much more clearer to me what your intent is. Thank You
     
  2. CMartinez

    CMartinez Member

    A copy of a letter I sent to the local paper.

    AN OPEN LETTER TO THE RECREATION CENTERS OF SUN CITY

    I just left a board meeting, at which there were about 53 people. Some were realtors, one was a mortgage servicer who was not allowed to speak, as he was not a Sun City resident, and almost the rest were there for one reason - Reverse Mortgages.

    Let us start with what a reverse mortgage does. It allows the homeowner to collect on their equity in the form of a monthly payment back to the homeowner, allowing the interest and the balance to accumulate against the property, until such time as the homeowner passes or the mortgagee leaves the home, for whatever reason.

    Now think of having equity in your home and you need it to make ends meet. Perhaps doctor bills have piled up, maybe you have used all of your savings to pay for medical needs of a spouse, which has passed, or you need the money just to be able to meet your basic living needs. There are no kids or relatives to ask for money of. You are alone and desperate.

    The difference between a reverse mortgage and taking out a new or second mortgage is the payments. With a reverse mortgage, the payment comes to you. With a new mortgage or a second mortgage, a borrower would need to be able to qualify for the new payments. When you are down to nothing to draw on, you will not qualify for a new mortgage because your income it too low.

    In doing some research, the FHA issue has been around since the mid 1990’s. Per Alex Spanko, of Reverse Mortgage Daily, “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 when properties are transferred to heirs through the probate process, deed-in-lieu, or foreclosure.”

    “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?

    Sun City needs to honor the needs of its residents and put together a special Board Policy to address the waiver of the PIF for those applying for reverse mortgages only. Sun City will see another PIF collection when the house is sold again, so in essence, the RCSC does not lose out in the long run.

    Most other local adult communities have made special conditions within their Corporate Documents that allows for the residents to gain a reverse mortgage, without the added burden of a second PIF fee. Sun City and the RCSC needs to step up and meet the needs of its cardholders and address this issue.

    When a homeowner is in tears at the podium, asking for relief, do it. Do it because it is the right thing to do. Do it, because your cardholders need you to do it. Out of the $12M the RCSC has in its coffers, I am quite sure the amount of the forfeited, one-time PIF will be negligible. Your cardholders are needing you to step up, do it. Does someone have to die because they had no resources and the RCSC refused to change its policy? How will that law suit shake out?

    Sun City is known for its community spirit, its willingness to help one another when there is a need. Folks, there is a need, and it is now.

    For all of those who are cardholders in good standing with the RCSC, there will be a Membership Exchange meeting at 9am at the Lakeview Recreation Center, Social Hall #3, upstairs on Monday, June 11th. If this issue affects you directly, please come to the meeting and address your needs and concerns with the Board of Directors at that time. The Board of Directors need to hear from you, as this is a very serious issue that requires their intervention, sooner rather than later. They are the only ones who can make the requisite changes to the Corporate Documents to affect a positive change. Please, if you can, make the time to come and voice your concerns to the full board.

    If you cannot make it to the member exchange meeting, you may still meet with a Director on Friday, June 15th from 1p -3p. The first hour is open for discussion, and everyone is limited to 10 minutes to give others time to speak as well. The second hour, 2p -3p is available by appointment only. To schedule an appointment to meet with a Director, please call 623-561-4600 to schedule some time. The location for these meeting is at the Lakeview Board Office on the lower level.
     
    Last edited: Jun 6, 2018
  3. Ida Eisert

    Ida Eisert New Member

    "Lynette Jordan, with Primary Residential Mortgage, said she knew of the FHA situation and because of that did not take any reverse mortgage applications. She turned away 25 applicants in the past six months." unthinkable: individuals like this are part of the problem. Applying for a loan by anyone is a case by case qualification. Allegedly she just turned them away based on the article. These individuals may have not qualified despite the PIF. So more fuel to the fire. She said: “I don’t take applications because I don’t want to raise people’s expectations and then tell them there is nothing we can do for them,” she said." She may have been able to help/suggest another type of loan but allegedly didn't even try.

    The article also states
    "Many baby boomers are burdened with debt and "must" use FHA programs to purchase.” So where are the statistics with that statement? Making generalized statements does not help at arriving at solutions. And in fact, if someone is burdened with debt who wants to give a loan to them and end in foreclosure as well as community exposure as such and at who's expense ultimately. It is a risk ratio factor.

    Solutions are what is needed. My take is the only solution in the articles I have read in my opinion is that these realtors and mortgage bankers are saying RCSC is the only solution to the problem.

    Most homeowners do not have the expertise in such a loan or any loan for that matter and an individual in another article is asking
    "Instead, Recchia said, homeowners’ associations need to decide how to mitigate the effects of FHA’s regulations. She typically asks homeowners in these communities to think about the potential solutions:" She is the expert and has more experience in the field and she is asking the homeowners for "potential solutions." The homeowners are the ones that are asking for relief.

    In another article, January 2018 in SCHOA newsletter by Vicki Frye, Vice President at Sun City Community Fund: Her solution is RCSC change. It is always easy to give someone else's money away. As Vicki Frye says
    "We have a group of caring, concerned residents, mortgage lenders, REALTORS, attorneys, and community leaders".

    IMO Maybe a charitable organization be another solution for individuals in such dire straits. What about family, friends.


    RCSC is proactively working on a solution to their credit. “ FHA insures loans, the underwriting guidelines are designed to protect the taxpayer” and in this case, RCSC is ultimately protecting the membership at large. Hopefully, a solution will come soon. I realize other communities have caved to pressure possibly to their detriment, in my opinion, possibly ours. Since Reverse Mortgages fall under the umbrella of FHA and the fallout is happening across the country the comment that Gary made about "unintended consequences" is why in my opinion RCSC is being very cautious and rightly so to protect our PIF for the good of the membership not because they are insensitive to the needs of the unfortunate.
     
    Last edited: Jun 5, 2018
  4. CMartinez

    CMartinez Member

    Ida, what the heck are you talking about? These people are not burdened by debt. Making "erroneous" statements would be the problem with this letter. "Instead, Recchia said, homeowners’ associations need to decide how to mitigate the effects of FHA’s regulations. She typically asks homeowners in these communities to think about the potential solutions:" If you are going to take statements, then include the entire statement. "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?” This means the entirety of Sun City could become exempt from FHA loans.

    Why has it taken well over a year for this to be resolved? Why are people being left by the wayside as other communities are realizing there is a need for the HECM market to have this one small exclusion? How in the world do you come to your conclusions these folks are riddled with debt? If they are in debt, they won't qualify for a reverse mortgage to begin with, much less any other kind of mortgage! IMHO, the RCSC is looking at their bottom line, not how to protect their neediest of cardholders.

    I wouldn't offer to take a HECM loan in Sun City either. If I know the community is not complaint with "24 CFR 203.41, the section of the Code of Federal Regulations", I wouldn't bother taking their application either. I used to be a mortgage loan originator, and if I were working today in this market, I would turn away those in Sun City as well, as I would not waste my time on a guaranteed declination!


    IMO Maybe a charitable organization be another solution for individuals in such dire straits. What about family, friends. Another clue you don't read the previous pages. The one gentleman has no children or relatives alive he can borrow from. This was written about in prior pages! Which charitable organization should he go to? Which ones, so we can get a list together and publish it for all of those in need of a reverse mortgage and can't because the RCSC will not make a concession.

    The "membership at large" isn't applying for a HECM, less than 3% of all mortgages generated are reverse mortgages.

    RCSC is proactively working on a solution to their credit. How are they working to the needs of the people that need a HECM mortgage? Did you read Gary's comment? His "unintended consequences" was to elude to the fact that someone may come into a RCSC meeting and do someone harm, such is what happened some years ago at another board meeting in Peoria. I truly don't think using Gary's comment is in good taste to use to defend the RCSC. "FHA insures loans, the underwriting guidelines are designed to protect the taxpayer". The taxpayer's estate is the one being charged the PIF!! How is that protecting anyone?
     
  5. CMartinez

    CMartinez Member

    "Lynette Jordan, with Primary Residential Mortgage, said she knew of the FHA situation and because of that did not take any reverse mortgage applications. She turned away 25 applicants in the past six months. I don’t take applications because I don’t want to raise people’s expectations and then tell them there is nothing we can do for them,” she said.

    Solutions are what is needed. My take is the only solution in the articles I have read in my opinion is that these realtors and mortgage bankers are saying RCSC is the only solution to the problem

    In another article, January 2018 in SCHOA newsletter by Vicki Frye, Vice President at Sun City Community Fund: Her solution is RCSC change.


    Direct quotes to your posting Ida. Doing your post all in bold, so as to yell at the reader in print, doesn't make your case.
     
    Last edited: Jun 7, 2018
  6. Ida Eisert

    Ida Eisert New Member

    Well, folks, you are seeing what happens to individuals when they have a different point of view. An attack on the person. Very sad.
     
  7. BPearson

    BPearson Well-Known Member

    No attack here kiddo. Between you two ex-board members (Gary and Ida), i've decided it's far better to join the the dark side and agree wholeheartedly. Those poor folks standing at the microphone begging for help be damned. Way more important for the RCSC to shovel another 10 or 20 million dollars into golf courses than invest solutions to help those in need. Thank goodness for you silver tongued seniors who laid out such strong arguments that you could convince me to abandon the principles i have believed in and fought for my entire life.

    And let me just encourage any of you who might be angered over the RCSC pretending to be studying this challenging matter for a year plus...forget about it. Seriously, quit wasting your time, stay home and leave those poor beleaguered board and staff members to quietly slip away for their summer break. Goodness, clearly it has been a strain and asking them to do what a half a dozen other communities have done to help those in need was surely silliness on our parts.

    Way to go gang. Let me pile on to those begging for help and say; those struggling better just pull yourselves up by your bootstraps and get your stuff together.

    Boy, i feel way better now!

    One last thing: Another of my hero's was Hubert Humphrey and this is my favorite quote from him: "It was once said that the moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life, the sick, the needy and the handicapped."
    Sick eh?
     
  8. BPearson

    BPearson Well-Known Member

    Herein lie the beauty of this board. With the free-flow of ideas and suggestions, solutions are forged from challenging problems and a greater understanding of ones self is almost always found. After careful introspection, it has become dauntingly clear to me how right i was when i wrote on this site the analysis of being an abysmal failure as a board member. Now i know why.

    It's always bothered me that new board members have to swear allegiance to the corporation. Elected by the community to serve the well-being of a non-entity seems foolish on its face. And now, i find out board members have a fiduciary responsibility to golf course maintenance sheds well ahead of the residents living in Sun City (don't you just love hyperbole?). Nope, just never could connect the dots on why the members play second fiddle to the corporation, but it is clear it is the new paradigm shift.

    To help me get my head around this rebirth of the importance of the corporation as the end-all-be-all, i have rewritten the signature i used to sign off with on this site. It now reads: "Corporation before community. Politics before people."
    Now it all makes perfect sense to me.
     
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  9. aggie

    aggie Member

    Time to get back to the facts and end personal attacks. We don't want to scare away new members to this forum. If other neighboring communities looked at their bottom line and saw that they can make it on the income from collecting the PIF when the foreclosing lender re-sold the property to a private party.....why can't the RCSC make it? We do need to be told how much income would actually be lost without the double charge of the PIF at foreclosure and then at re-sale. Could any part of this be complicated because the RCSC is Title 10 and the others are Title 33?

    More questions than answers....:confused:
     
  10. CMartinez

    CMartinez Member

    Aggie,

    From what I understand, Sun City West is also Title 10, they choose to abide by the rules of Title 33. I wonder more if this doesn't have some impact on the lawsuit pending against the RCSC. That would be the best reason I could think of to refuse this for as long as they have.

    I truly believe the RCSC has a huge generous PIF reserve from when those new homes were built and purchased. The was a per lot fee paid by the builder At $5000, plus each homeowner paid a PIF when the moved in. There is some serious chunk of money there, besides the regular sales and deed rework coming in.

    The RCSC has allowed all kinds of clubs to become a part of Sun City, and never balked at all of the costs to get them set up. Since market shares show only 3% of the HUD loans are for reverse mortgages, I would say average about 5% loss. We lose that every year just in cost overruns on the various projects going on around the RCSC.
     
  11. BruceW

    BruceW Member

    Exactly... seems like a drop in the bucket to do the right and honorable thing.
    I don't know what the dollar loss would be, but reasonable thinking should be to think about doing what is right for those that are desperate. Seems to me that charging PIF for a reverse mortgage is just cruel to the people that have come to the conclusion that they have no other option.

    Personally I wouldn't recommend a reverse mortgage to anyone, but sometimes there may be no other option. If that is the case it should be an easy process and not cost you PIF you don't have. If a homeowner has chosen the reverse mortgage option it is likely that they desperately need that $3500.

    My better half and I are working hard to ensure we don't end up in a situation where we will have to do something like a reverse mortgage in retirement, that's why we are not physically in Sun City yet, but even with all the planning we can do stuff happens.

    I seriously don't get it... how can anyone on the BOD and in their right mind not fix this?
    Does human compassion fly out the window when you become a director?
     
    Last edited: Jun 6, 2018
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  12. Cynthia

    Cynthia Well-Known Member

    The realization of this, after several years of knowledge, is disheartening. I thought the board=a local city government. Except I thought since it was run by a BOD of residents it would be more compassionate. Especially since everyone is old here. Instead, it's a weird amalgamation. A city corporation. And while they certainly do work to improve the community, IMO they sometimes do it less than many small city governments. I never thought I would think that about SC; I always thought they would put the community first. Maybe it's because of the history of SC that I read before I bought in. I guess it used to be but now the community is second. I understand protecting funds, but SC is not a business. A corporation yes, but not a business. There is a good side to having a volunteer board of course but a bad side too, as I see it. Since they do not care about re-election they have less skin in the game. Even so, I still don't get it. They take their allegiance to the non-entity way too seriously.
     
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  13. CMartinez

    CMartinez Member

    Folks, on the RCSC website, under the "RCSC" tab, go down to the last category, it is labeled "Legal". It is under this tab the pending lawsuit and the RCSC's responses are listed. If you go to the "Original Complaint", there is some light reading there. There are specific allegations to the charge of the PIF, and most all of the complaint cites Title 33 code. We are title 10, but these folks in the lawsuit are trying to force the RCSC to be a Title 33 homeowners association.

    Back to the PIF, there are a few things at Play here. First there are those that have lived here long enough, they never paid a PIF fee to begin with. Then as the PIF fee has changed throughout the years, the suit alleges discriminatory practices to the residents of Sun City, again citing Title 33 law. The allegation on unfair application is a big one in this suit, as most of the alleged issues have to do with "unfair" policies of of administering fees, whether it be the PIF, the annual assessments, or the transfer fees.

    So, not defending the RCSC, as they could still grant a deferment on the HCME loans, as they are a separate class of loan, not property. The variance would be for a loan type versus property type.

    Right now, with the lawsuit pending, to grant a variance that reflects a "property action" would place the onus on the RCSC for all of the other allegations. I do not know how to make the "24 CFR 203.41, the section of the Code of Federal Regulations" make it the reasoning behind the PIF removal, but it again refers to a specific type of loan. The Class Action Suit denotes "property"

    The idea of the class action suit being the cause of this was first proposed by Aggie. Sorry for not giving her the credit for her idea.
     
    Last edited: Jun 6, 2018
  14. Cynthia

    Cynthia Well-Known Member

    I'm not exactly sure what you are saying, but if you are saying that the lawsuit is creating an issue with the changes for the reverse mortgage loans, then fine, they should just come out and explain the issue. We are not children to be kept in the dark. This "we are working on it" explanation is just not cutting it anymore. People are upset.
     
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  15. CMartinez

    CMartinez Member

    Cynthia,

    I am theorizing this is the reason for dragging of their feet, hoping to get a different outcome from the HUD/FHA folks. Unfortunately, as I read it, this "ruling" has been hovering around since the mid 1990's. To think the HUD will change its mind because of our pending litigation is a joke.

    I agree, if it is because there is a fear that making the exception for the Federal Law will make it unfavorable for the local lawsuit, we are still talking oranges and apples as to the loan type. Since we would be granting a variance on a loan type, not a property type, I think we would be good to go. That is my "Unprofessional" opinion.

    Thank You to Aggie for first recognizing this as a possible answer.
     
    Last edited: Jun 6, 2018
  16. BPearson

    BPearson Well-Known Member

    No need to theorize C, they are simply hoping HUD changes its rules so they can keep double dipping on foreclosures. The other thing that is abundantly clear is the RCSC has demonized reverse mortgages since this battle began. Rather than focusing on the problems of those who need some relief, they have convinced board members (past and present) they are doing people a favor by keeping them from the clutches of those rotten reverse mortgage lenders.

    We can debate the merits of reverse mortgages all day, but that's exactly what the RCSC wants. That way they can skate by doing nothing...like they have for the past year plus.
     

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