Posted by Terry Alexander - email
RICHMOND, VA (WWBT) - More seniors who need money now, opt for reverse mortgages. They don't have to pay back, until they die or sell their home. But, a local man called 12 on Your Side, when his line of credit started to dwindle and he wasn't using the money.
Reverse mortgages can be taken out as a line of credit, lump sum or monthly payments for seniors, 62 and older, who own their home. Donald Conn's lender, Wells Fargo, admits he's losing money but, it's blaming H.U.D.
Donald Conn started making calls to Wells Fargo, his lender, the moment it registered with him, that dollars were disappearing from his reverse mortgage line of credit. Small amounts: $3, $5, and $7 every month. Factor in other seniors, like him, and the amount is large.
"We're not talking about a little bit of money like me, we're talking about probably 300 thousand of these loans," said Donald.
He says Wells Fargo gave this explanation.
"They say it's because of the computer program that HUD wrote. So, they're blaming HUD," Donald said.
Donald blames his lender for not telling him sooner.
"Yea, yea, they admit there's a boo boo, but they don't know how to fix it," he said.
In a letter from Wells Fargo to Donald, all lenders are asking HUD to fix it. It's a service fee. The difference between the expected rate at closing and the low accrual rate.
Donald's reverse mortgage enabled him to pay for a new roof for his house. He doesn't have to worry about money to live on.
HUD referred us to one of its approved lenders who says there is no mistake. Donald's finance charges are more than the interest the loan is accruing because of the economy and a drop in housing values.
"The interest rate he has a monthly adjustable interest rate so that is increasing," said Dianna Herndon of Southside Community Development & Housing. "If the interest rate is increasing then that's more debt and that's going to lower the amount that's in the line of credit."
The HUD spokesperson also says, this happens with the line of credit, loans. She also says he could have re-financed.
Meantime, Donald has withdrawn his money from Wells Fargo and placed it in his bank. That way he's not hit with additional fees.