There is nothing quite like the feeling of accomplishment when you close a difficult loan. The pieces fall into place, and you have helped secure the future for another senior.
Title and appraisal issues can pose enormous roadblocks. I never could close the loan in rural upstate New York where primary access to the property was by way of a stone bridge maintained by a neighbor. I did manage to close the loan where a well was located in the cellar by getting the local water authority to write a letter stating that the well could be “grandfathered in” by laws that were in place when the house was built. Sometimes it is a matter of asking what exactly would be needed to clear a tricky condition, then getting on the phone or in the car to find it.
A recent widowed borrower did not have a copy of her late husband’s death certificate. The hospital where he had died did not have a copy, and the New Jersey township where the couple had lived would not confirm on the phone whether they had a copy or not. The woman would have to go to the town offices and request a copy in person, and she would have to provide, in addition to adequate identification, a certified copy of her marriage certificate. The borrower refused to go—the town office was located, according to her, in an unsavory and dangerous part of town. My solution, maybe not the most creative but certainly the quickest, was to send a limousine to her home to drive her to the town offices, wait for her to complete her errand, and drive her home again.
Perhaps the most challenging set of circumstances is seen in a “short re-fi,” the reverse mortgage equivalent of a short sale. I met Rachel when her search for a solution led her from a debt counselor’s recommendation that she try a HECM reverse mortgage, to the Yellow Pages, to me. She was a 65-year-old single woman just scraping by on her salary as a bus driver when she was laid off by the bus company and went on Social Security.
When I visited Rachel with an application package, she took out her checkbook to show me how much Social Security income was deposited every month, as many prospective borrowers do. Then she gave me her mortgage statement. Her monthly mortgage payment was the same, to the dollar, as her Social Security payment. She explained how she had done a recent refinance but when she lost the bus company job she could no longer afford the cost of living in her home. She cried when she told me that her grandson was waiting for her to buy him new shoes, but she just didn’t have the money.
If she could just pay off the mortgage she would be able to live off her Social Security check, but the HECM proceeds were short by around $80,000 to cover the total owed. Thus began a six-month effort to propose and negotiate a settlement with the servicer. Rachel did not have the $400 to pay for an appraisal, and my operations manager was not enthusiastic about laying out the funds for a loan that might never close, so we based the value on a best estimate of $400,000.
We created a HUD-1 settlement statement and by estimating costs as closely as possible, and worked backward to a Principal Limit figure that we prayed the lender would accept. Hours were spent on the phone, mostly on hold with the automated system. A lengthy hardship letter and an explanation of what a reverse mortgage was were forwarded up the chain, step by tedious step.
Finally, the offer was accepted, but it was only good for 10 days. In that 10 days, we managed to get the appraisal and title done, and Financial Freedom got the file underwritten and closed. The servicer being paid off stipulated that no cash be given to Rachel, so when we worked out the final figures, the $20,000 or so overage stayed in a line of credit, earmarked for taxes. Rachel is still living in her home, and she calls me from time to time to tell me she’s OK, and to give me the name of one of her friends who will be calling me.
My experiences originating HECMs over the years continue to bring new challenges my way. But each time I am able to overcome the challenge the loan presents and help a borrower find financial security, I am reminded of the importance of the work that we do.
