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Tuesday, January 6, 2009

Conservative Appraisals Not Helping Reverse Mortgages

By Scweezeme Vanrock

Two days ago I heard from a would-be client, who quickly became a never-would-be client. I say this because I can practically guarantee that I wont be contacted by him again.

He completemented me on my fine job of marketing to him as a lead-in to what he really wanted. He said, "how can you get me the most money out of my home, compared to another lender."

There is actually no way to do it another way. All of us in reverse mortgages use the same formula to establish the cash amount that can be removed from a loan.

After that he says he would like me to hire an appraiser that would do impressive work. I knew this meant he wanted someone who would alter his results a bit to have it work out in the end.

The point being for him, a reverse mortgage lender will lend him a greater amount of money if his value comes in higher.

He, like a lot of senior borrowers, are in a tough spot today with declining values. Most are looking to pay off a mortgage with a reverse mortgage, thereby eliminating the payment.

However, with a low appraisal the reverse lender cannot always give enough to complete this goal for them. Instead, the borrower has to continue paying on the forward mortgage until the worth of his house goes up enough to try again.

Appraisers are in a tough spot right now. Yes, they had the luxury for many years to trump up appraisals.

A totally "by the book" appraiser reading this might be a little hot under the collar. But everyone knows plenty of fudging was going on.

Fast forward to today when everyone is getting the blame for the mortgage fiasco, appraisers included. Appraisers are being scrutinized more so than ever.

With the frequency of appraisal reviews taking place, appraisers could possibly lose their license if they don't do things by the book.

So, that is what I told this guy. I haven't heard from him since. I told him other companies would tell him how their appraiser will definitely get him the greatest value.

Most lenders will promise it, but won't do anything differently when it comes down to it. I choose to let seniors know all the facts and risk losing them as a client.

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