What causes a reverse-mortgage lender to deny loan?

DEAR BOB: I am a 74-year-old widow. About six years ago, Iadded my daughter’s name to my home’s title in joint tenancy with right ofsurvivorship so she wouldn’t have to worry about probate costs when I pass on.I’m doing pretty well, health wise, but am running low on income since myairline pension income was cut about two years ago. However, I am told I can’tqualify for a senior-citizen reverse mortgage because my daughter is on thetitle. Is this true? I asked her to quitclaim her interest back to me but sheis reluctant –Martha Y.

DEAR MARTHA: Because your daughter is obviously not yet 62,her being on the title to your home disqualifies you for a reverse mortgage.All co-owners must be at least 62 because reverse-mortgage eligibility is basedon the age of the youngest owner.

Purchase Bob Bruss reports online.

Your situation is another example why I do not recommendadding heirs to real estate titles to avoid probate.

However, your problem has an easy solution, which is goodfor you and your daughter. You can create a revocable living trust with yourdaughter named as the successor trustee and the heir of your living-trustassets after you pass on.

Before you do this, be sure she agrees and signs a quitclaimdeed to you. Then obtain your reverse mortgage. After it is recorded, you canthen transfer title to your home into your new living trust, thus avoidingprobate after you pass on.

The reason you should wait until after the reverse mortgageis recorded to transfer title into your new living trust is reverse-mortgagelenders insist the title not be in a living trust when the reverse mortgage isoriginated.

LAST RESORT TO REMOVE A LEANING TREE

DEAR BOB: My neighbor’s property has a big old tree thatleans dangerously toward my house. About a year ago, in a storm a big branchfell on my house but fortunately didn’t do much damage. However, I am concernedthe tree has become heavier and seems to be leaning more toward my bedrooms.I’ve tried being nice to the neighbor, even offering to pay for trimming orremoving the tree. But she refuses to allow me to hire tree professionals towork on her property. What should I do, as I am very worried about thisdangerous situation? –Herm W.

DEAR HERM: Check with your city officials to see if there isa city ordinance affecting your situation. If so, the local code enforcementofficer can probably help. That’s what I did a few months ago in a similarsituation. The local code enforcement officer contacted my absentee neighborswho agreed that two of their trees were dangerous and they had them removed attheir expense.

If the neighbor is not cooperative, your legal action is tofile a private nuisance abatement lawsuit. This is not a do-it-yourselfproject. You will need to hire a local real estate attorney. If the judgeagrees the leaning tree is dangerous, he can order the neighbor to trim orremove it as a private nuisance.

“FLEX MORTGAGE” CAUSES NEGATIVE AMORTIZATION

DEAR BOB: I have read several articles about “flexmortgages,” and they are getting a bad name. I refinanced my home inJanuary 2005 and have one of those loans, which expires in January 2008. No onetold me about how bad negative amortization can be. How concerned should I be?Should I refinance out of this bad loan? There is a prepayment penalty fordoing so. I am planning on selling my home by the end of 2007 –Juanita J.

DEAR JUANITA: I presume “flex mortgage” is anothername for an “option mortgage” where you have the choice of makingmonthly payments of interest only, below-interest only, amortized payments, orpartially amortized payments. Any unpaid interest is added to your mortgageprincipal balance. The result can be “negative amortization” whereyou owe more than you borrowed.

At least six months before your too-short three-year loancomes due in January 2008, you should list your home for sale and hope it sellswithin a few months.

Because your mortgage has a prepayment penalty, and you onlyplan to keep the home another year or so, refinancing now to a fixed-ratemortgage would be a waste of money.

The new Robert Bruss special report, “Five Easy Ways toBuy Your Home and Investment Property for Nothing Down,” is available for$5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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