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#3 Case: Victim of Predatory Lending
– Facing Foreclosure
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Age:
62
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Market: Miami,
Florida
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Need:
The client initially approached us for help at Congressman Kendrick
Meek’s first Foreclosure Prevention Initiative in April, 2008. Although the client
was a victim of predatory lending with an adjustable, double-digit interest rate
and a stiff pre-payment penalty, was facing foreclosure and needed money to finish
a remodeling that was 80% complete, he was not yet 62 years old.
He met with a Reverse Ultra Account Executive who executed the application, helped
the client to get his counseling and paperwork in order to start the loan processing.
Per FHA guidelines, we cannot close a Reverse Mortgage until 24-hours after a client’s
62 birthday, but everything else necessary to obtain a “clear to close” on the loan
may be processed prior to the 62nd birthday.
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Financial: As of
August 2008:
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- Home appraised for $310,000
- Home Repair Set-Aside $20,600
- 2 liens were discharged - one for $9,000 and another for $3,000
- Additionally, an $11,000 pre-payment penalty was waived
- Cash Available = $139,500
- Initial Interest Rate 3.19%
- Existing Mortgage Pay-off of $144,000
- Initial Cash Drawn by Client $4,500
- Available Balance Growing in Line of Credit was initially zero
until repairs completed. Repairs set-asides are 150% of the repair estimates. Upon
completion of the repairs, the 50% overage held in escrow for repairs, almost $7,000
would be made available to grow in the Line Of Credit (LOC) or used however the
client wished.
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Solution: The client
was, at first, very fearful because he had been taken advantage of so horribly.
Reverse Ultra worked together with his attorneys to make sure every dollar possible
was put in the pockets of the client.
Although these negotiations on the client’s behalf took time and added a month
and a half to the final closing date, the closing did not take place until all parties
were convinced that everything that could be rectified had been rectified.
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The client avoided foreclosure by obtaining a Reverse Mortgage. He got rid of a
predatory loan and remains living in his home, payment free. Once the repairs were
completed, he was able to purchase furniture and all the things he needed to live
comfortably in his home. A wrong was righted.
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More Case Studies 1-2-3-4-5...
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