June 26, 2008 - 3:30 PM EST.
I am the owner of Seniors Home Reverse Mortgage Inc. in Decatur, Ga.
The information you are putting out on FHA insured Reverse Mortgages is uniformly untrue.
I just caught a segment of your show. You and a caller were discussing the overall concept of Reverse Mortgages. I heard you say that FHA insured Reverse Mortgages have an upfront cost of 10 %. This is in no way a factual statement. It averages 5 % to 5.5 %. This includes a 2 % fee of the appraised value of the home. (Metro Atlanta has a max lending limit of $252,890) This 2 % goes to FHA. The Mortgage Company can receive up 2 % of the appraised value. Often times this is negotiated to a lower fee. The final component is standard closing costs. Attorney, title, appraisal credit report and flood certificate. The state of Georgia collects a fee also.

It shocks me in summer of 2008; inaccurate information is still being put out over the airwaves.
Here is true and factual information: Borrowers can receive the proceeds from reverse mortgage in 4 ways.

1. 3 days after closing they can walk away with the entire amount to which they are entitled based on the age of the youngest borrower, appraised value of the home and the current interest rate.

2. They can elect to receive monthly payments.

3. Equity line of Credit. This is NEVER discussed on radio, television or print media. Here is how it works.
If the borrower does not need the cash now, they have an option to leave the money in a line-of-credit. The money is available to the borrower at anytime without qualifications or fees. They don’t have to get permission to access it. It can be wired into their bank account within 48 hours or they can receive a check in 3-4 days from the request. They can take all or any portion of the money at any time they choose. Here is what you NEVER hear discussed. Any money left in a line of credit with the lender grows at the same interest rate the lender charges the borrower on any money the borrower has taken or was paid on their behalf. Example, the reverse mortgage paid off an existing forward mortgage. It is not interest, so there are NO tax implications on the growth of the equity line of credit. Based on the rates today, if a borrower left $100,000.00 in the equity line of credit with the lender for one year, it would grow to $104,000.00. AND, they have not been charged one penny in interest. The interest accrues ONLY on the money they have received in their hands or has been paid on their behalf.

4. They can do any combination of the first 3 choices.

I wanted to add more information; I am only allowed 500 words. So my comments here are limited to
497 words.
Jack Wilkes

My husband is in discussion with Wells Fargo re. a reverse mtg. Based on your comments in this posting, I am against it, however, this seems negative because of the push to purchase annuities, and we've not been so approached. Could you give a more recent comment regarding just the reverse mtg. Thank you. C. Moore