Pat & Dick Hickerson
This story is about my parents, Patricia and Richard Hickerson who were sold a reverse mortgage they didn't need. Dad was in the last month of his life with terminal cancer on narcotic pain medication. Mom had Alzheimer's Disease was unable to complete a sentence. It’s a tragic story of deceit, fraud and purposefully targeting vulnerable seniors to deprive them of their property, retirement, dignity and quality of life.
Mom and Dad were good, caring, and trusting people who worked all their lives to provide for each other and their family. They lived in a modest home they took pride in for 25 years. Mom and Dad volunteered together delivering “Meals on Wheels” and Mom volunteered for the city and thrift shop. They enjoyed giving back to the community where they lived.
MOM AND DAD'S HEALTH
In April of 2002 Mom was diagnosed with Alzheimer’s disease and could no longer balance a checkbook or manage the family finances as she had all her married life. By 2003 mom was unable make change for a twenty dollar bill. She required assistance in basic activities of daily living.
Dad suffered from 9 major illnesses for more than 10 years, including heart disease, lung disease, and diabetes. By 2004 he had metastatic cancer and advanced liver cancer. The day before my Mom and Dad signed the reverse mortgage contract Dad was in the hospital under a general anesthesia for a liver biopsy. He learned that day he was terminal with days to live.
In January 2005 Dad applied for long term care insurance for Mom and himself. They were denied coverage because of their medical history and the fact that Mom would need long term care for Alzheimer's disease.
REVERSE MORTGAGE TIMELINE:
In 2004 Dad noticed the TV ads featuring (actors) James Garner and Robert Wagner talking about the benefits of Reverse Mortgages. Dad responded to a mailer wanting to know what a reverse mortgage was.
Les Barnhart, a reverse mortgage salesperson came to my parents home in March 2005. He had 2 months of reverse mortgage sales experience. He had 10 years long term care insurance sales expertise and was still selling it when he met with my parents. He would have known from his Long Term Care sales and "Certified Senior Advisor" expertise that mom and dad lacked the capacity to understand or sign a reverse mortgage. Not one of the promised benefits in Barnhart's flip chart presentation applied to my parent's circumstances or financial situation. At the end of the presentation, he presented a company generated loan application, good faith estimate, disclosures, loan comparison sheet, and amortization schedule based on property value guesstimated by my dad to be $550,000.
Mom and Dad had HUD counseling over the phone without any verification by the counselor of who they were talking to, what they understood or if they had any capacity to comprehend what was being said. In 2005 the only purpose of counseling was to inform the borrower of the process of getting a reverse mortgage. Most borrowers believe they are being given the financial and legal advice by the "counselor" they need to determine if a reverse mortgage is suitable for their particular situation. They are not.
There is no counseling on the things that should matter - what is the financial situation, health, long term need, legal and tax consequences specific to each borrower on these critical end of life issues?
A formal property appraisal was done after the counseling and came in at $530,000 - 20% less than Dad's estimate. The salesman's only disclosure was the appraisal came in lower but Dad would get about the same amount of money.
In May 2005 a couple of hundred pages of the reverse mortgage contract were presented to my parent's for signature. This was the first and only time my parents would see the contract with the correct figures based on the formal appraisal. ONLY 12 pages of the contract were left with my parents, none of which contained any of the critical terms such as the lien amount, right of rescission, HUD closing statement, deed of trust, closing costs, and an amendment to my parents trust (created by a clerk of the lender). My parents were never told to speak with their financial advisor or attorney about the consequences of a reverse mortgage to their
retirement, or if it would meet my dad's goal to provide long term care outside the home for Mom.
My parents did not need a reverse mortgage: They had a $200,000 investment portfolio, $60,000 in the bank, $3,000/mo income and approx. $1,500 expenses. They had a 30 year fixed mortgage paid at $650.00 per month by their investment interest. Being sold a reverse mortgage under these circumstances has been financially devastating for my parents, their estate, and our entire family.
The Reverse Mortgage my parents received was:
One time lump sum payment $ 81,000
For this the lenders:
Paid off existing mortgage $121,000
Charged Fees and costs* $25,000
Property LIEN $470,000
HOW THE REVERSE MORTGAGE AFFECTED OUR FAMILY
One month after signing the reverse mortgage contract Dad passed away. It breaks my heart that Dad's dying wish to provide mom the needed care outside the home for the rest of her life, was stolen from him. If the terms were explained simply and honestly that for a one time payment of $81,000 (15% *of their property value) they would pay $24,000* in fees and costs in exchange for their home with $400,000 equity, dad would never have agreed. Let's be real - who in their right mind would agree to these terms?
Financial Freedom, the Servicer filed a wrongful foreclosure claiming my mom didn't live in the house - ignoring the occupancy certificates sent in, the representative they sent to our door who verified she lived there, our letters and those of our attorney stating she occupied the property as her primary residence at all times. HUD forced a rescission in 2011. Financial Freedom filed a second defective Notice of Default in 2012 and then rescinded it voluntarily so we could not get an injunction to stop their foreclosure. Concurrently with the 2nd rescission they recorded a 3rd defective Notice of Default, cut off all communication with us, and sold our property illegally at auction, ignoring our right and request to payoff the loan to get rid of them.
This didn't just happen to my parents. There are thousands of other families with similar devastating reverse mortgage stories. It is happening everyday to someone's parents, relatives or friends.