The Anna Maria Island Sun Newspaper

Vol. 12 No. 46 - August 29, 2012


Reverse mortgages under scrutny


Like good wine, humans improve with age or at least we like to think so. Whether age actually improves us can be debated, but the thing that can’t be is that the senior population is steadily growing. In 2009, when the most recent numbers on the aging population were published, 12.9 percent of the population was 65 or older. By 2030, that number is expected to be 19 percent, and of course, since we live in a state seniors migrate to, we can expect Florida’s senior population to be even higher.

One of the questions I get asked a lot is what is a reverse mortgage and how does it work. I have covered this topic several times, but the industry is dynamic and appears to be changing as the population is aging. Last month, the Consumer Financial Protection Bureau issued a report on reverse mortgages and said it was seeking information about consumers’ experiences with the loans with an eye toward increased regulations.

A reverse mortgage is essentially a home equity loan available to borrowers age 62 and older. The loans allow homeowners to tap into the equity in their homes without making monthly payments. The borrower is responsible for paying the taxes and insurance on the property and also maintaining the property at his/her expense. When the homeowner is ready to sell or dies, the bank takes its share of the proceeds from the sale, and the estate receives whatever is left.

Sounds simple and straightforward, however, reverse mortgages are complicated and not for everyone. The industry advises that you not take out a reverse mortgage if you are too young, since you may run out of money as you age. The older a borrower is, the more money he or she can borrow. Seniors are encouraged to consider regular home equity options or to investigate state and local programs that could help reduce property taxes and other homeowner expenses first.

If a reverse mortgage is the final choice, you will have several options. You can chose a line of credit withdrawing funds as you need them, a monthly payout to cover living expenses or a lump sum payment. Regardless of which plan you choose, you will be required by the federal government to attend housing counseling as a condition of the loan.

Since in a reverse mortgage interest is added to the loan balance each month, what happens if the value of the property either doesn’t increase or actually decreases? Since reverse mortgages are FHA insured loans they are termed a non-recourse loan. This means that even if the home value has exceeded your loan balance, you will still be able to withdraw funds based on your original agreement with the bank. As long as all other loan terms are met, the loan cannot be in default.

If you want to sell the home and the reverse mortgage is upside down, it will be considered a short sale, and you will need to work with the lender. If you pass away and the loan balance is higher than the value, your estate has no financial obligation and the lender will allow the home to go into foreclosure and attempt to get compensated through FHA for his/her loss.

There is a lot of information on line about reverse mortgages published by the National Reverse Mortgage Lenders Association at Also the Consumer Financial Protection Bureau has an on line brochure which provides information on getting in touch with counselors before you make a final decision.

I guess the one good thing about aging is being among a large group with a fair amount of clout, which is also the bad thing, since seniors can be an equally large target for scam artists. Know the facts before entering into a reverse mortgage so you can grow old gracefully while sipping some nice aged wine.

Real Estate Transactions
Real Estate Transfers from June 1 to June 30, 2012
Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

07/31/2012 679,000 679,000 115 Mangrove Ave. # A&B 1968 50x110 6Br/4Ba Inc.
07/10/2012 430,000 427,000 226 Gladiolus St. 1708 87x100 3Br/2Ba SFR

Bradenton Beach

07/13/2012 675,000 625,000 2600 Gulf Dr. N. # 17 1179 2 Br/2 Ba Condo
07/23/2012 115,000 115,000 1603 Gulf Dr. N. # 29 380 1 Br/1 Ba Bank Owned Condo
07/27/2012 285,000 275,000 1001 Gulf Dr. S. # 1 896 2 Br/1 Ba/2 Half Baths Condo
07/10/2012 289,000 260,000 100 12th St. N. 929 2 Br/2 Ba SFR
07/30/2012 325,000 280,000 1431 Gulf Dr. N.# 21 1524 3 Br/2.5 Ba Short Sale Th
07/11/2012 139,900 132,500 2501 Gulf Dr. N. # 102 416 1 Br/1 Ba Com


07/16/2012 679,000 565,620 12313 Baypointe Terr. 2535 3 Br/ 3 Ba SFR

Holmes Beach

07/17/2012 425,000 425,000 207 69th St. # A 1948 70x110 4 Br/3 Ba Half Condo
07/03/2012 199,900 187,450 3607 E. Bay Dr. # 110 1040 2 Br/2 Ba Condo
07/08/2012 172,900 171,000 5400 Gulf Dr. # 24 810 1 Br/1 Ba Bank Owned Condo
07/10/2012 399,900 375,000 6006 Gulf Dr. # 112 1154 2 Br/2 Ba Condo
07/16/2012 449,000 425,000 319 64th St. # 8b 2001 3 Br/2.5 Ba
07/17/2012 249,900 249,900 3705 E. Bay Dr. # 206 1146 2Br/2 Ba Condo
07/19/2012 207,000 185,000 6300 Flotilla Dr. # 71 1023 2Br/2 Ba Condo
07/27/2012 350,000 315,000 4200 Gulf Dr. # 204 1008 2Br/2 Ba Short Sale Condo
07/31/2012 319,900 298,000 4255 Gulf Dr. # 122 1254 2Br/2 Ba Condo
07/12/2012 300,000 240,000 213 84th St. 2173 3 Br/2.5 Ba Short Sale SFR
07/20/2012 759,000 692,000 622 Dundee Ln. 2368 95x115 3 Br/2 Ba SFR
07/20/2012 419,000 407,500 303 62nd St. # B 1200 3 Br/2 Ba SFR
07/23/2012 888,000 825,000 6405 Gulf Dr. 2876 66x100 3 Br/2.5 Ba SFR
07/25/2012 569,900 525,000 109 75th St. 1819 3 Br/2.5 Ba SFR
07/27/2012 849,000 800,000 207 70th St. 920 90x102 4 Br/4 Ba SFR
07/20/2012 549,000 529,000 108 77th St. 1839 68x80 3 Br/2 Ba SFR
07/31/2012 310,000 290,000 309 62nd St. 928 75x101 2 Br/1 Ba SFR
07/17/2012 425,000 364,000 3803 E Bay Dr # 3a 2354 5 Br/3 Ba Th
07/13/2012 259,900 237,000 3008 Gulf Dr. 1560 50x105 4 Br/2 Ba Inc
07/05/2012 489,000 415,000 3014 Avenue E 50x100 Vac

Source: Manatee County Property Appraiser’s Office

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