Going Above and Beyond and Blazing New Trails In The Reverse Mortgage Market
Margie only has $624 a month in social security income and no other liquid assets. She got her reverse mortgage loan 6 years ago, 2010 for those that don’t want to do the math. Her loan was structured as term payments where she received a fixed amount of cash, $500 monthly for 6 years and then the payments would stop. She came to see me because those payments were stopping and she needed them in order to survive.
Fortunately for Margie, she took out her reverse mortgage at the bottom of the market. Since 2010 her home had increased in value significantly. Because of her estimated value, I calculated we would be able to get her into a new reverse mortgage and get her more cash.
Margie was excited and I was excited to help.
I looked at comps from other resources and thought the value she gave me was very realistic. Unfortunately, the appraised value did not come in as expected. It was $30,000 short of her estimated value.
Because the appraisal came in so low, she no longer passed the financial assessment and would be required to set up a LESA, Life Expectancy Set Aside, which is a lifetime escrow account. This obviously would help her as she would not have to worry about paying taxes and insurance, but she would not have the cash she needed to live on. Almost all of the equity she had available to her would have been set aside to pay taxes and insurance.
I was obviously dreading making this phone call to Margie. The call was worse than I imagined. It was so bad that after I hung up the phone I drove to Margie’s house to help console her. Sitting there with Margie, I remembered something I had read in the Financial Assessment Guidelines.
I raced back to the office, whipped out the guidelines and there it was in all its glory. I could use non-cash government assistance to help qualify Margie. Margie received $194 a month in SNAP benefits, food stamps. It was just enough to get her qualified for the loan without the need for the LESA.
Margie connected me with her case worker at DHS so I could explain what was needed to accurately document Margie’s government benefits. The case work was unable to provide the information requested.
Did I quit? Nope. I picked up Margie and we took a trip to the DHS office. We spent 4 hours wading through the bureaucracy of DHS to get the letter we needed.
I championed for Margie’s cause with the lender’s head underwriter. Using the SNAP benefit as an income source was unusual. The head underwriter said that it is up to the underwriter to determine whether or not it will be a lifetime benefit. Obviously, for Margie it would be. She is 75 years old and does not work. The only way she would not get these benefits is if she won the lottery or inherited a bunch of money. Neither of which is very likely.
I submitted everything and we had our approval in a couple of days. WOO HOO! Margie was extremely happy and very grateful. I was happy that I did not give up and was able to help.
This is the first loan this lender has done using SNAP benefits. I am a trailblazer. HA! It was not a fun process and there were plenty of ups and downs. But it was totally worth it to help Margie.
I work with clients all over Oregon that want or need a reverse mortgage. Although I am based in Southern Oregon I have talked to people all around the state. If you live in Klamath Falls, Roseburg, Corvallis, Eugene, Gold Beach, Tillamook, Portland, Beaverton, Hood River or anywhere else in Oregon, give me a call. Happy to answer questions, send you information and put an analysis together for you. 541-773-3131.