Reversed Mortgage

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Handy reverse mortgage book reveals consumer choices
Author answers most basic questions effectively

Tuesday, November 15, 2005
by Robert J. Bruss
from Inman News

If you or your parents are a senior citizen homeowner over 62, "Pocket Idiot's Guide to Reverse Mortgages" by Jennifer A. Pokorney should be required reading. I've read lots of books about reverse mortgages, and I've written articles on this important topic, but I have never before found such a concise source that compares reverse mortgage choices in an easy-to-understand format.
Pokorney, a branch manager for a major mortgage lender who specializes in reverse mortgages, speaks with authority and writes with practical advice for senior citizen homeowners. Just in case you are not familiar with reverse mortgages, these financial devices pay money to senior citizen homeowners who are at least age 62. No repayment is required until the homeowner sells, moves out, or dies.
This new book has the best comparisons I've seen of the FHA, Fannie Mae and Financial Freedom Plan reverse mortgages. Pokorney doesn't hesitate to say which type of reverse mortgage is best, depending on the many typical situations she explains.
The basic rule is that reverse mortgage amounts available depend on the borrower's age, the home's appraised market value, and the type of mortgage chosen. Although FHA reverse mortgages are the most popular, the author explains when the Fannie Mae and Financial Freedom offerings are the best choice.
This handy guidebook, in a small format of only 7 inches by 4 inches, has just a few key points on each page. Pokorney uses lots of examples to relate the information she explains to practical senior citizen homeowner situations. Her comparison charts are especially simple and easy to understand.
Although I already know quite a bit about reverse mortgages, I learned new information, such as these mortgages are available on New York City co-ops but not elsewhere. Also I discovered why reverse mortgages are "declined" on some properties, mostly due to repair issues or where the residence is unusual or substandard. I especially enjoyed the author's explanation of how to best handle lender-required repairs.
The author's explanations of the differences between FHA monthly interest rate adjustments and FHA annual adjustments are the best and easiest to understand that I've seen. She has a knack for simplifying what can be confusing.
With a little study, this book will answer most basic reverse mortgage questions senior citizen homeowners and their concerned friends and relatives may have. It explains all the choices, such as lifetime income, credit lines (except in Texas), lump sums, and combinations that the homeowner can select.
A valuable feature is "The least you need to know" summary at the end of each chapter. This quick review highlights the most important topics explained in that chapter.
A key topic that Pokorney doesn't hesitate to tackle is the issue of up-front costs. She explains reverse mortgage costs are paid at the time of obtaining the mortgage and they might seem high depending on the mortgage amount. But she emphasizes loan representatives expect to be paid (from the loan proceeds, not from the borrower's pocket) and that's only fair.
However, the one topic that the author only mentions briefly is Fannie Mae's Home Keeper Reverse Mortgage for home purchase. This very special type of reverse mortgage is rarely used (perhaps because most senior citizen home buyers don't know about it). But it can enable seniors to buy a retirement home and never have to worry about mortgage payments.
Chapter topics include "What is a Reverse Mortgage?" "Is a Reverse Mortgage Right for You?" "Single-Purpose Mortgages"; "Home Equity Conversion Mortgage"; "Home Keeper"; "Cash Account"; "Applying for a Reverse Mortgage"; "The Approval Process"; "The Property Appraisal"; and "Living with a Reverse Mortgage."
This new book can't be recommended too highly if you are interested in senior citizen reverse mortgages that pay money to the homeowner and require no monthly repayments. The author obviously knows her topic very well. She explains it in a direct, simple format, which is easy to comprehend. On my scale of one to 10, this well-written book rates an off-the-chart 12.
"Pocket Idiot's Guide to Reverse Mortgages," by Jennifer A. Pokorny (Alpha-Penguin Group, New York), 2005, $9.95, 152 pages; Available in stock or by special order at local bookstores, public libraries, and www.amazon.com.