Reverse Mortgage Information

In the past some reverse mortgage appraisers were tempted to manipulate the appraised value of a home being evaluated for a reverse mortgage loan. These few fake appraisals have affected the image of the overall reverse mortgage industry somewhat negatively.

These days, it is much harder to get a fake reverse mortgage appraisal. If appraisal fraud is found out by the authorities, the appraiser can eventually lose his business license. So many reverse mortgage appraisers are very careful these days.

The reason for this crack down is that the fake appraisals in the general mortgage industry (not specifically reverse mortgage industry) were one of the starting points for the current economic recession.

Let’s examine how and why some appraisers used to manipulate the appraised value of a reverse mortgage home. In order to make some reverse mortgage loans work, appraisers may be asked to exaggerate or lower price a particular house valuation.

Many homeowners simply want a loan when there is equal or higher existing mortgage on the home. The lender may push the appraiser to raise the numbers a little just to get the borrower’s business. Now lenders are more careful and require that third-party licensed appraisers perform thorough home inspection to decide the appraisal value.

Sometimes loans allow a little twist in the numbers - a little adjustment in the valuation done by an appraiser can get a refinance. It may be difficult to control because the appraisal is subjective and dependent on the particular appraiser’s opinion. Two different appraisals on the same property can differ by several grand.

Reverse mortgage fraud can happen by charging large fees to assist in the reverse mortgage processing. The popularity of the HUD’s reverse mortgage program for senior homeowners has allowed a growth in reverse mortgage fraud too.

Some middlemen companies do charge between $5000 and $10000 for providing reverse mortgage counseling. HUD-approved counseling agencies provide such counseling free of charge or at nominal small fee. (HUD - Department of Housing and Urban Development).

Recently the HUD has been trying to advise FHA lenders not to deal with middlemen companies charging exorbitant fees. The intermediary company sometimes collects huge fees from seniors, and requires that the reverse mortgages are obtained in a lump sum, so that they can collect all of their commission at once.

So as a senior homeowner if you want to take out reverse mortgage be advised to take help from a reputed, renowned, and known ethical appraiser or expert.