Reverse Mortgages Are SCAMS!!! - Dave Ramsey Rant

now I'm often asked here on the air about reverse mortgages and 100% of the time I've told people to not do reverse mortgages good article in The Washington Post over the weekend and I tweeted out the link over the weekend a guy tweeted it to me actually is where I found it and I sent it back out and listen to this as she was getting on in years her resources dwindled Virginia Rayford took out a special kind of mortgage in 2008 that she hoped would help her stay in her three-bedroom Washington row house for the rest of her life Rayford 92 took advantage of a federally insured loan called a reverse mortgage that allows cash-strapped seniors to borrow against the equity in their house that has built up over decades but the risks of the financial arrangement are stark and today the frail widow finds herself facing foreclosure under the terms of the loan Rayford can defer paying back her mortgage debt that totals about four hundred and sixteen thousand until she dies sells or moves out she is however responsible for keeping up with the other charges namely the taxes and insurance on the property the loan servicer Nationstar Mortgage says Rayford owes six thousand and four dollars and unpaid taxes and insurance and if she cannot come up with it she stands to lose her home in Washington's Petworth neighborhood I've cried a million nights wondering about what I'm gonna do Rayford again she's 92 years old said across the nation an increasing number of seniors are facing foreclosure after taking out reverse mortgages either because they fell behind on property charges or failed to meet other requirements of the complex mortgage loans according to the federal data and interviews with consumer and housing specialists the Federal Department of Housing and Urban Development HUD which ensures most reverse mortgages in the country says it lacks details on the data detailed data on how many homeowners have lost their homes or facing foreclosure in the program by the way is alive they don't lack details on it which was launched in 1989 and covers about six hundred and thirty six thousand loans and Nationstar the lender on this case declined for comment kidding but a HUD report issued HUD who doesn't have detailed data issued a report that found that nearly 90,000 reverse mortgages held by seniors were at least 12 months behind in payment and taxes and insurance were expected to end in quote involuntary termination I don't think I want to be involuntarily that's correct that's that's federal bureaucrats speak for we're gonna shoot you in the face involuntary termination oh my god that's a scary phrase Oh in 2017 that's more than double of the year before but let me help you this folks okay let me walk you through some numbers there's six hundred thirty six thousand these loans out there ninety thousand of them are in default headed to foreclosure that's fourteen percent of the loans are failing as astra Freakonomics still he said reverse mortgages are a critical resource for seniors who wish to access their accumulated home equity and age in place thank you for the HUD spokesman for figuring this out they have a completely failed loan program that is causing senior adults to lose their homes at an unbelievable record but his answer is it's a critical resource for seniors who wish to access their accumulated home equity and age in place you sound like a lobbyist dude you know sound like somebody they can add before 2015 the only thing homeowners ages 62 and older needed to qualify for a reverse mortgage was equity in their home lenders weren't required to determine whether they could afford to maintain their homes or cover the taxes and insurance payments in the future since homeowners used the funds to pay off the original mortgages or ran out of money after covering living expenses over many years now HUD requires all borrowers to undergo a financial assessment Wow before we give a mortgage we actually do a financial assessment guys are rocket scientists unbelievable listen to this tens of thousands of troubled loans remain more than eighteen percent of reverse mortgage loans remember where earlier figure was 14 currently more than 18 percent of reverse mortgage loans taken out from oh 9 to 2016 are expected to go into default because of its 1 in 5 because of unpaid taxes and insurance according to a HUD report that compares with less than 3% of federally insured loans in the traditional mortgage market so your typical FHA loan about 3 percent of them go bad 18 percent of these reverse mortgages are going bad I told you these things sucked representatives of the National reverse mortgage lenders Association decline for comment well I would run and hide behind the biggest Bush I could find advocates of the loan including celebrity spokesman such as Tom Selleck and Henry Winkler say reverse mortgages can help seniors enjoy their later years no they don't really say that they read a script borrowers can receive listen there's the terms of reverse mortgage ocation in them borrowers can receive 50% to 66 percent of the value of their equity depending on their age and interest rate and the interest rate generally set about 5% now why do I tell you not to get reverse mortgages because you're gonna lose your home potentially because you get into all kinds of problems and because the interest rates and the fees are a really bad ripoff you ever heard me say that before ok so let's hear what they just said interest rates are generally set about 5% you know what the going rate on a 15-year fixed is today a traditional mortgage a HUD mortgage do you think it's do you think it's 5% anybody anybody out there you think it's 5% I get a report every morning I'll tell you what it was this morning 3 and 1/8 so you're paying almost double you old people that are getting ripped off thank you Tom Selleck and Henry Winkler we appreciate your endorsement you have the opportunity to pay double and potentially lose your house when you're 92 this is a dadgum mess people unbelievable for example the a 73 year old with a home worth a hundred thousand and no current mortgage could receive a loan or a lump sum on monthly installments up to a line of credit for 250 $7,900 not including cozen costs according to HUD so you can take your $100,000 house and get 60 grand out of it and potentially lose it it's anybody listening to this unbelievable the federal consumer finance Protection Bureau has long warned about deceptive advertising and reverse mortgages in December the federal agency fined three companies American advisers Group reverse mortgage solutions and Aegean Financial for alleged false claims saying they told seniors with reverse mortgages that they would not have to make monthly payments or face foreclosure omitting the risks of failing to pay property charges these companies tricked consumers into believing they could not lose their homes with a reverse mortgage said the bureau director the companies did not admit wrongdoing in settlements that required that they pay seven hundred and ninety thousand dollars in fees one of the companies was American advisers group which is where Tom Selleck's says he speaks on behalf of them many older Americans are in a tough spot right now why not use a reverse mortgage to make sure you completely lose your home oh no that wasn't what he said I put words in his mouth excuse me hey guys telling you for years reverse mortgages suck there's all your details interest rates are double the foreclosure rates are Eightfold this is ridiculous answers the question run this is the Dave Ramsey show hey guys thanks for watching if you enjoyed this video click the subscribe button to get the latest content and check out these other great clips from the show you [Applause] [Music]

Channel: The Ramsey Show - Highlights

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Id: _c-WtWSnRzU

Length: 8min 30sec (510 seconds)

Published: Sun Sep 10 2017