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Understanding Reverse Mortgages

By Hilary Gibson, Staff Writer

(Page 3 of 6)  

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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