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Understanding Reverse Mortgages
By Hilary Gibson, Staff Writer
Closing Costs that are commonly charged
to a reverse mortgage borrower include:
-
Credit report fee:
Verifies any federal tax liens, or other judgments,
handed down against the borrower. Cost: Generally
under $20
-
Flood certification fee:
Determines whether the property is located on a
federally designated flood plane. Cost: Generally
under $20
-
Escrow, Settlement or
Closing fee: Generally includes a title
search and various other required closing services.
Cost: $150-$450
-
Document preparation fee:
Fee charged to prepare the final closing documents,
including the mortgage note and other recordable
items. Cost: $75-$150
-
Recording fee: Fee
charged to record the mortgage lien with the County
Recorder’s Office. Cost: $50-$100
The Role of NRMLA
Founded in 1997, the National Reverse
Mortgage Lenders Association (NRMLA) is a nonprofit
trade association set up as a central forum of
accountability regarding lenders and their practices
regarding reverse mortgages. As the national voice for
lenders and investors engaged in the reverse mortgage
business, NRMLA fulfills several roles, including
educating consumers about the opportunity to utilize
reverse mortgages, training lenders to be sensitive to
the needs of older Americans, developing Best Practices
and creating and enforcing a code of conduct, making
sure that lenders participating in the program treat
seniors respectfully and promote reverse mortgages in
the media in the right kind of light.
Peter Bell, the president of NRMLA, said
that the main goals of a reverse mortgage “are to keep
seniors in their homes comfortably and securely while
generating income that provides choices.” He’s very
concerned about some of the misconceptions that surround
the reverse mortgage program regarding the integrity and
the inner workings of the program. Many people think
that as a borrower, they get all the money up front;
however, the lender then immediately and automatically
will take the home. This is not the case with reverse
mortgages since the title of the home always stays with
the borrower. Mr. Bell also stated that the reverse
mortgage, combined with Medicaid in certain states, can
make homecare available and affordable for seniors,
enabling them to stay out of nursing homes.
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