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We are not seeking charity, we are seeking justice -- either from
Congress or judicial action. Many seniors with reverse mortgages need help to
keep from being thrown into poverty because of the banking crisis. Here is my
own predicament, which explains the problem.
Our HECM Reverse mortgage was made under the following conditions:
1.) that the homeowner will live in the home as a residence; 2.) the homeowner
pays homeowner insurance and property taxes on time; 3.) homeowner maintains
home in good conditions 4.) bank lends only a portion of the equity based on the
initial appraisal of the home, so, in effect, homeowner is retaining the
difference between that amount and the appraised value.
We took out a reverse mortgage with Bank of America in August 2007 on
basis that our home appraisal was $275K, our loan would be $148K, leaving us
with an equity of $127K. In making the decision on whether to take out the
reverse mortgage, we gave heavy weight to amortization schedule given to us by
the company who initiated the mortgage (Access Mortgage), as well as those
given to us by counsellors and Bank of America. All predicted that, after
making the loan, we would still retain at least $100K of equity for fifteen
years. . The schedules were predicated on increased property value of 4% minus
outstanding balances, which assumed an even greater interest rate than we
Based on these predictions, we planned to sell the property within a
year or so, take our equity out and move from Florida to Arizona. To further
insure we would still have good equity and comply with good maintenance terms,
we immediately used the money we borrowed to completely update our home with
new flooring, tile, outdoor vinyl siding, new lighting, new central heat/air,
new Renai gas heater, and many other small renovations. We assumed that would
increase the value even more. At the very least it should have maintained the
home value for at least another 10 years. Keep in mind that the appraisal was
made before we made these updates.
By 2008, one year later, the true total value of our home based on
comparables in the neighborhod was down to about $159K due to the banking crisis
and unemployment in a devastated economy. Our equity was zero. Over the next
five years we made many attempts to sell this home for at least $10K over our
HECM debt, but to no avail. It began to dawn on us that 1.) The banks knew or
should have known that there was a banking crisis just months ahead of our loan,
and that our equity would be zero within a year and/or 2.) We had a bad
appraisal to begin with, as well as bad counselling.
People with reverse mortgages are required to live in their homes, so
if the economy is bad in the area, they cannot move to another area to find
employment. My partner and I lost our business as a result of the economic crash,
and could only find employment of some kind by leaving the area. We took last of
our savings and moved to Arizona, keeping in mind we would return end of each
year and retain our residency requirements, which we did for the next three
Moreover, the insurance companies in the area increased their Home
Owner Insurance rates by as much as 38%. People with reverse mortgages are
required to pay HO Insurance and property taxes. Infuriated with State Farm from
whom I had HO insurance for close to 30 years, I cancelled my HO policy
immediately. Bank of America bought a new one and tried to overcharge us on it
until I forced them to correct it.
Being on Social Security, both of us had limited income and for several
years got no cost-of-living increases. (We are in our mid-70s.) By 2010 we had
lost everything we owned. Our equity was gone. Our business was gone. Our
expenses were up. In short, the banks, in our opinion, had robbed us of
everything! Then I came down with cancer of the throat, and, later, cancer of
the lungs. We spent more savings running around the country looking for cures.
Once my own medical problems began to resolve themselves, my partner had to have
knee replacement. We had this done in Arizona, where he had found a new job as
a caregiver at $10 an hour. This after having been in the tile business for 35
years. Everything that could go wrong, went wrong for us. We had had to borrow
money for our expenses, and the unpaid "banking" creditors were harassing us
In attempting to save our home in Florida by keeping it as a principal
residence, we were required to travel there from Arizona and stay there are
least two months at the end of each year. Finally, now, we have gone there for
the last time in December 2012 and came back in February 2013. We have informed
Champion Mortgage company (who recently purchased our loan from Bank of
America) that we have moved permanently to Arizona and will not return except
perhaps to move the rest of our possessions. There is no equity there, so we
are faced with foreclosure.
We attempted to negotiate with Champion Mortgage on a deed-in-lieu
deal, but no luck. The response of Champion Mortgage is that we should get
counselling and bring with us all sorts of evidence of our income, assets, etc.
However, we will not do that because we are not seeking charity, we are seeking
justice. We know we have been cheated out of our life's savings, and we are
hoping to be compensated. We would like help from any attorneys who are
litigating on behalf of elderly reverse-mortgage holders. We are also hoping
Congress will pass legislation that changes some of the rules on behalf of
elderly homeowners who are faced with foreclosure because of the banking crisis.
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