Continuing Education - Reverse Mortgage

Charleston, South Carolina

While you are reading this, I will be in Oxford, England, thanks to my reverse mortgage. I began to toy with the idea of a reverse mortgage as I studied the history of my declining stock investments.

I began to toy with the idea of a reverse mortgage as I studied the history of my declining stock investments.

Today, my investments are valued at only a third of what they were worth under the Clinton administration. My stockbroker and my CPA think I may live to be 100 years old and they want to parcel out my assets over the next 20 years.

As far as I know, my health is good and I want to keep on dancing the Charleston and traveling this fascinating world as long as I can.

The first step in obtaining a reverse mortgage is to choose a real estate attorney with whom you have complete trust. I chose Ted Hostetter. He told me to call Paul Franklin, a reverse mortgage specialist with Franklin Funding.

Paul told me that the first step was for me to go for mortgage counseling. This is required by the federal legislation that guarantees these loans.

I thought to myself, “This is going to be kind of fun, me, an 80-year-old attorney going for mortgage guidance!”

The counselor was approved by HUD. He told me the history of these kinds of mortgages, explained to me, among other things, that this kind of mortgage is designed for those senior citizens who have their major asset in their home and would like to have cash when they need it.

The federal government guarantees these mortgages, which makes them very desirable to a lender. He gave me a certificate that showed I had graduated from counseling.

The second step was for me to have my house appraised, and I was given a list of Fannie Mae-approved appraisers.

The principal limit came back in excess of $600,000, the maximum for any of these mortgages. If the appraiser had recommended certain improvements to my house, the mortgagee would withhold the funds to pay for the improvements.

The next step was to meet with Paul, give him my counseling graduation certificate, sign the many pages he had prepared for my application to FHA, requesting that it permit me to be on this program.

Paul assured me that it was his best judgment that I would be approved.

I began to surf the Web for summer school programs at that great Oxford University in England.

I knew that E.K. “Booper” Pritchard of the Charleston Bar was spending the first week in July at Oxford taking a course on Churchill.

“Oh, it is enjoyable,” Booper said. “We sit around on couches and daily receive two one-hour lectures, with no tests, no exams.” It wasn’t very long before Paul called me to set a time for closing, and he asked how much money I wanted in my first draw. I told him I’d take $20,000.

The mortgagee would give me a line of credit for $430,000. I could have requested monthly payments.

Paul had placed my application for a loan with the Generation Mortgage Company of Atlanta. Closing costs could be paid out of my line of credit.

The note says this obligation is to be paid off Dec. 16, 2078, when I will be 150 years old, or within a year after my death, whichever comes first.

My estate will pay an interest rate of 5 percent, which can go up or down two points per year.

The closing was held at Ted’s office and he had prepared all the documents.

With this line of credit, I could pay for home health care, put in an elevator if necessary, and fly to London to study at Oxford!

— Ruth Cupp

Editor’s note: Cupp began practicing law in 1954. She served in the S.C. House of Representatives and was an associate judge in the Charleston County Probate Court.

Reprinted with permission of South Carolina Lawyer’s Weekly