Black People Screwed Again by U.S. Government

[boxcar]

Originally Posted by AndyC

Let's analyze what happens with a RM.

1. Do they deplete available cash? No.
2. Do they increase monthly expenses? No.
3. Do they cause people to miss their property tax and insurance payments? No.

In short, there is absolutely no financial hardship that directly results from receiving a reverse mortgage. In fact, many RMs roll-up current mortgages into the RM so that current mortgage payments are no longer required by the borrower.

At what cost does everything happen for the borrower? It will cost high loan fees which will be paid from the loan proceeds and it will cost the borrower's heirs the equity that is being used up by the loan.

RMs are a con game to get people's homes. You're asking all the wrong questions.

https://www.daveramsey.com/blog/how-...mortgages-work

[davew]

what does the US Government have to do with this?


what about payday loans or pawn shops? do they screw black people as well?

[AndyC]

Originally Posted by boxcar

RMs are a con game to get people's homes. You're asking all the wrong questions.

https://www.daveramsey.com/blog/how-...mortgages-work

Maybe Dave Ramsey should do more homework. He is incorrect when he states that there could be more owed on the loan than the value of the house.

And he makes the same lame statement made by other articles saying that you
could lose your home by foreclosure! Of course the foreclosure has nothing to do with the RM, it happens because people don't pay their property taxes, insurance or HOA fees.

The only things that Ramsay states that I agree with are that the fees are generally high and the heirs take a hit. The only way the senior borrowers take a hit is if they make incredibly poor economic decisions going forward.

[thaskalos]

Originally Posted by boxcar

RMs are a con game to get people's homes. You're asking all the wrong questions.

https://www.daveramsey.com/blog/how-...mortgages-work

You can't eat the house. There are many seniors who are sitting in a paid-off home and need additional income...but they don't want to sell their home and move. The reverse mortgage may not be for all the seniors...but it suits the needs of enough of them to keep it as an available option, IMO.

[MargieRose]

Originally Posted by boxcar

RMs are a con game to get people's homes. You're asking all the wrong questions.

https://www.daveramsey.com/blog/how-...mortgages-work

Boxcar, you are quite wrong about this. The last thing a bank wants is responsibility, along with all of the costs, for your home. What the bank does want is the interest paid and/or accrued on the mortgage loan from a responsible owner. The bank can possibly lose money in the first scenario and can easily make money in the second scenario.

Also, it doesn't matter if the home's market value ever drops below the outstanding reverse mortgage (RM). The prepaid insurance policy required at the inception of a RM will pay the bank for the amount of a loss in the market value of the home; not sure if it will cover other costs (homeowners' insurance, taxes, maintenance, etc.) until the home is sold.

A home is an investment. A reverse mortgage allows one to cash out the investment, if so desired, without having to give up the investment...sort of like retaining your cake and being able to eat it, too.

[garyscpa]

Originally Posted by boxcar

Most of us know that a disproportionate number of black babies are aborted every year. But what most of us might not know is that the mortgage product known as a Reverse Mortgage, which was allegedly designed to help improve the lifestyles of the poor senior homeowners, is severely backfiring on black seniors. Most foreclosures on this product are occurring with black seniors.

Just as an aside, Obama was apparently a big fan of this product. Why am I not surprised that this math-challenged, business sense-deprived meathead would be?

https://www.yahoo.com/finance/news/s...100319361.html

The good news is its only black people getting screwed for their own decisions. Hoping people can detect sarcasm, but skeptical.

[Actor]

Originally Posted by barahona44

The way reverse mortgages work is that insurance and taxes have to be paid by the home owner;

You mean they cannot arrange for an escrow account where the bank makes those payments?

[Ocala Mike]

I rarely do so, but I have to agree with Boxcar on this.

https://www.naplesnews.com/story/new...ss/1192702001/

[boxcar]

Originally Posted by Ocala Mike

I rarely do so, but I have to agree with Boxcar on this.

https://www.naplesnews.com/story/new...ss/1192702001/

DRATS! You just made me spill my hot coffee!

[boxcar]

Originally Posted by MargieRose

Boxcar, you are quite wrong about this. The last thing a bank wants is responsibility, along with all of the costs, for your home. What the bank does want is the interest paid and/or accrued on the mortgage loan from a responsible owner. The bank can possibly lose money in the first scenario and can easily make money in the second scenario.

Also, it doesn't matter if the home's market value ever drops below the outstanding reverse mortgage (RM). The prepaid insurance policy required at the inception of a RM will pay the bank for the amount of a loss in the market value of the home; not sure if it will cover other costs (homeowners' insurance, taxes, maintenance, etc.) until the home is sold.

A home is an investment. A reverse mortgage allows one to cash out the investment, if so desired, without having to give up the investment...sort of like retaining your cake and being able to eat it, too.

Tell that to all the poor black people losing their homes.

Also, people with an RM can only "cash out" 40% of their home's value.

The point to this thread is that there are real and dangerous downsides to RMs that I guarantee you banks make it a point to not disclose to these homeowners. The banks dangle that carrot of instant cash before these people and they are "blinded" by it, hence the term "blindsided" is used in the headline in the link of the opening post.

The second point is that this product was invented on the dimwits' watch and "enhanced" and modified and renovated again and again over the course of decades, all with the blessing and approval of our mighty fine government. Now...the libs are supposed to be the poor and downtrodden people's watchdog, protecting them from "evil" capitalists -- such as Big Banking. And this is especially so when the poor are "people of color" supposedly. So, with all this tweaking of the RM and its rules over all these many years, where is the rule that requires banks to fully disclose to potential buyers of this product all the downsides in addition to the dubious and questionable upsides to RMs?

And when it comes to banking industry, there's no such thing as "having your cake while eating it". That is the illusion!

[boxcar]

Originally Posted by AndyC

Maybe Dave Ramsey should do more homework. He is incorrect when he states that there could be more owed on the loan than the value of the house.

And he makes the same lame statement made by other articles saying that you
could lose your home by foreclosure! Of course the foreclosure has nothing to do with the RM, it happens because people don't pay their property taxes, insurance or HOA fees.

The only things that Ramsay states that I agree with are that the fees are generally high and the heirs take a hit. The only way the senior borrowers take a hit is if they make incredibly poor economic decisions going forward.

Really? He should do his homework? This guy is an expert on finances,and has helped untold numbers of people to get out of debt and get on their feet.

What part of this math don't you get?

But that’s simply not true. Here’s the math to prove it:

Home Value: $200,000
Reverse Mortgage: $80,000 (lump sum)
Interest Rate: 5.7%
Age at Time of Loan: 62
Term: 25 years
Total Interest Accumulated: $119,000
Total Owed at Death: $319,863(4)

In this example, you receive $80,000 from your reverse mortgage on your $200,000 home. Let’s say you live until you’re 87. When you die, your estate owes $319,863 on your $200,000 home. To put it another way: your estate is bankrupt! Unless your heirs can afford to fork over $119,000, they will have little choice but to give the home to the bank to settle the loan’s balance.

[AndyC]

Originally Posted by boxcar

Really? He should do his homework? This guy is an expert on finances,and has helped untold numbers of people to get out of debt and get on their feet.

What part of this math don't you get?

But that’s simply not true. Here’s the math to prove it:

Home Value: $200,000
Reverse Mortgage: $80,000 (lump sum)
Interest Rate: 5.7%
Age at Time of Loan: 62
Term: 25 years
Total Interest Accumulated: $119,000
Total Owed at Death: $319,863(4)

In this example, you receive $80,000 from your reverse mortgage on your $200,000 home. Let’s say you live until you’re 87. When you die, your estate owes $319,863 on your $200,000 home. To put it another way: your estate is bankrupt! Unless your heirs can afford to fork over $119,000, they will have little choice but to give the home to the bank to settle the loan’s balance.

Here is a decent overview of what happens with a reverse mortgage when the owner dies. https://www.lendingtree.com/home/rev...e-after-death/

I get all of your math, it's just wrong. I am not sure how many reverse mortgage situations you have worked with but as a CPA I have seen many and am intimately aware of their pros and cons. Please read the article and either refute it or accept that perhaps you may be mistaken concerning some things that happen with RMs.

[AltonKelsey]

This has zero to do with black , white, or grey.


A suggestion that it does is idiotic

[MargieRose]

Originally Posted by boxcar

Tell that to all the poor black people losing their homes.

Also, people with an RM can only "cash out" 40% of their home's value.

The point to this thread is that there are real and dangerous downsides to RMs that I guarantee you banks make it a point to not disclose to these homeowners. The banks dangle that carrot of instant cash before these people and they are "blinded" by it, hence the term "blindsided" is used in the headline in the link of the opening post.

The second point is that this product was invented on the dimwits' watch and "enhanced" and modified and renovated again and again over the course of decades, all with the blessing and approval of our mighty fine government. Now...the libs are supposed to be the poor and downtrodden people's watchdog, protecting them from "evil" capitalists -- such as Big Banking. And this is especially so when the poor are "people of color" supposedly.So, with all this tweaking of the RM and its rules over all these many years, where is the rule that requires banks to fully disclose to potential buyers of this product all the downsides in addition to the dubious and questionable upsides to RMs?

And when it comes to banking industry, there's no such thing as "having your cake while eating it". That is the illusion!

Your information is outdated, Boxcar:

New Reverse Mortgage Rules 2019: Updated Reverse Mortgage Loan Changes

Every year, the Federal Housing Administration (FHA) sets lending limits on all FHA loans, including HECMs.

In December 2018, the Department of Housing and Urban Development (HUD) announced via Mortgagee Letter 2018-12 that the loan limit for HECMs was increasing for the third year in a row.

This loan limit is referred to as the maximum claim amount, or MCA, and is the maximum dollar amount FHA will insure for a HECM reverse mortgage. The MCA is equal to the appraised value of your property, or the current FHA lending limit—whichever is less.

Under these new HUD reverse mortgage changes, borrowers can make a maximum claim amount of $726,525 for the 2019 calendar year, raising it more than $46,000 from $679,650 in 2018.

Recent reverse mortgage changes passed by the Trump administration updated the cost structure for reverse mortgage insurance. This insurance is called mortgage insurance premiums (MIP).

REVERSE MORTGAGE PROS AND CONS

[Tor Ekman]

Proving once again that life is the ultimate IQ test and there will always be morons that are going to fail . . . as the saying goes: a fool and his money were lucky to get together in the first place. Which is why the notion of income redistribution is laughable . . . you could redistribute all of the wealth in the world to every adult equally and in very short order there would once again be extraordinarily wealthy people and completely destitute people, as well as all gradations in between.