The fact that foreclosure are in massive proportions throughout the United States is a huge problem. The biggest problem is that a large portion of them are seniors over the age of 62.
With seniors it is a big problem, simply because they do not have the time to rebuild themselves over years. They cannot go out and get a new career like someone in their thirties or forties. They are stuck in trying to figure out where they are going to get the money to payoff their mortgage.
But let’s take a look at how we got where we are with seniors have mortgages that in most cases are over valued in the first place.
Take Jim and Mary Sue they are 68 and 72 respectively, in 2004 Jim had health issues he needed a double bypass and also was told he had cancer. They have supplemental health insurance and medicare. Medicare unfortunately is designated as their secondary insurance.
When Jim went into the hospital and had the life saving surgeries they thought their insurance would cover them for the entire bill. But as soon as Jim cam home to recover they started getting bills that their insurance did not cover. The amounts that they received was more then they had in the little savings and certainly more then their small pension and Social Security they were receiving. (So what were they going to do?) All they had was their home, which was paid off.
Since the mortgage industry in 2004 was very liberal and they had great credit they call a mortgage company and applied for a $150,000 mortgage and they were approved. They went to closing and received the money and were able to payoff the bills. (Sound perfect all of the medical bills were paid)
A few months went by and they were paying the mortgage payments out of the money they had set aside after paying the bills. But one day they got a letter in the mail; that told them that the pension they were receiving was in trouble since they had invested in the company that Jim had worked for the 35 years. Jim called the pension fund and they told him that he was loosing over 75% of the monies that he had been receiving.
Now they only had a little over $1,800 per month coming in from all sources. The mortgage interest was now adjusting and the payment was going to go up to $1,500.00 per month. What were they going to do with only $300.00 per month of spendable income?
So now that Jim was on medication totally over $300.00 per month outside of the insurance and Mary was also on medications for around $150.00 per month. The money that they had in the savings was going faster then their electric meter.
Jim and Mary Sue heard a TV commercial talking about Reverse Mortgages, so they called the number and received the information. They thought our home is worth more then the $150,000 with owe, we can get a Reverse Mortgage and that will free up more money.
Here is where the problem really got worse, they Reverse Mortgage specialist came out to the house and went over the program in detail. All the time they were thinking this is our salvation, we will be ok, and this will put another $1,500 per month in our hands. The problem which they were not aware of is that it is now 2006 and values are starting to go down in their town.
The Reverse Mortgage Specialist had done a brief search of value and the home that Jim and Mary Sue had worked their entire life for was not worth only $125,000. As the specialist look at the information he found that the loan officer had, had the house over appraised back in 2004, just to get the loan approved. (Not uncommon for the times) So now we have a real problem, we have a loan of $150,000 and a home only worth $125,000. What can be done to help them in the hour of need! At this point Jim and Mary Sue are three months behind on their mortgage payments and they are receiving foreclosure notices. Jim is having heart palpitations and they are not sleeping at night.
Since they are now in trouble they really though since the loan officer who did the mortgage for them had only given them a loan for about 60% of the value that they could go and get an equity loan, but they were told they did not qualify. (Mortgage Industry had changed over the last two years)
They were now sitting at the table with the Reverse Mortgage Specialist and he was telling them that they did not have enough equity in their home to even get a Reverse Mortgage. This was because the home had been over values back in 2004 and now it was not even worth what the owed. Now here is the good news!
Fortunately; they are now sitting with someone who is an expert in Reverse Mortgages and is dedicated to helping seniors. Not to mention that this person has the experience to work out a problem.
What was the plan that would get them out of their problem?
The specialists plan was to speak with Jim and Mary Sues Mortgage Company and try to work out a bailout. He explained the situation to the bank and also offered them a market analysis from 2004 showing them that they had over valued the home at that time. In addition; he also had a current appraisal completed. In showing the bank that they in fact did not act on good faith back in 2004 that in less they wanted to have to spend a lot of money and time to foreclose on the property, not to mention throwing two Senior Citizens out in the street, they would have to work out a short payoff. The specialist showed the bank what Jim and Mary Sue where trying to do with a Reverse Mortgage.
Since the value of the home had dropped so significantly, the specialist was able to get the bank to except the amount available from the Reverse Mortgage as full payment. Jim and Mary Sue were able to save their home from the Sheriff Action sale.
This is not to say that this is going to happen each and every time, but the fact is having a specialist who understands the situation and markets, can figure out a solutions that is best and work to help provide a solution in many cases.
If a senior is in this type of situation; they need to seek out the right advice they Revere Mortgage is more they a source of additional monies, it can be a home saver.
Visit www.SeniorConsumerReport.com
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