Case Study: Reverse Mortgage and Avoiding Foreclosure (Part 1)

August 3, 2020

Hi Orange County! Pat Morrison here with Liberation Home Solutions.

I wanted to record this video to speak about a case study in avoiding foreclosure. You might think you have a situation that is impossible, but as you’ll see here, there are steps you can take and people you can talk to in order to get creative with your action and help you with avoiding foreclosure.

We worked with a client who was in foreclosure due to a reverse mortgage on the house. The situation was this: The client’s father had owned the house. The client’s father had taken out a reverse mortgage to supplement his retirement. The client’s father passed away, and the client inherited the house. As soon as the title changed over into the clients name, the company servicing the reverse mortgage began to request payment in full.

Check our our video on avoiding foreclosure linked below to learn about the first thing you should do as soon as you know you cant pay on a mortgage. 3 Tips for Avoiding Foreclosure in Orange County

With decent credit and income, she would have been able to qualify for a refinance and satisfy the reverse mortgage. However, the foreclosure proceedings complicated things for this client. She received a notice of default, and a notice of trustee sale. We came into contact with the client after she received her notice of trustee sale, which scheduled her house for auction. To help her with avoiding foreclosure, we offered her the following options:

1. Anytime we come into contact with someone in foreclosure we do the best we can to try and help them save their home by avoiding foreclosure, if that’s their goal. Why? Because we believe if we have the capacity to offer someone a merciful solution to their situation, then we should!

The first option we gave her was to make contact with a mortgage broker from our network to see what kind of a refinance she could qualify for. In speaking with the mortgage brokers, they recommended first pre-qualifying for a refinance. Due to the short time-frame, the refinance probably would not have closed prior to the trustee sale, so in the interim they recommend a high interest loan that could satisfy the reverse mortgage, and buy her time to complete the refinance. This would have come at the cost of points up front, plus a high holding cost for the short term loan, as well as other fees for the refinance due to the credit implications of the foreclosure. But she would have kept the house.

2. We make her a cash offer. The offer could purchase the house outright and give her the freedom to move from the home and start over fresh with a decent amount of cash in her pocket.

3. We make her a different cash offer, purchase the house but then rent it back to her. This would keep her in the family home, while putting a decent amount of cash in her pocket. This would allow her to rebuild her credit, and after some time we could offer a lease option agreement to give her a pathway to purchasing the house back.

4. Wait for the trustee sale and see what happens. We never recommend this option because the client gives up any influence over the situation.

Which option did our client choose? Leave a comment below to tell us what you think! Otherwise, stay tuned for the next video to find out.

In fact you can find that next video here: Reverse Mortgage and Avoiding Foreclosure (Part 2)

If you like this type of content or you have some suggestions, please feel free to leave a comment below!

Also, don’t forget to check out our blog for other resources and solutions to common real estate problems.

To see what we can offer you, Call or Text 949-41-MERCY that’s 949-416-3729, or go to our website, fill out the form on top of the page and we will be in contact with you. Remember: Mercy leads to freedom, and freedom comes from Liberation!

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