California Reverse Mortgage Accusations Put Product in Spotlight
According to the Tracy Press, Debbie George knew her business could be hurt after hearing about a real estate scam that involved the promise of a reverse mortgage.
George is branch manager of American Pacific Mortgage, one of six loan companies in town authorized by the federal government to offer reverse mortgages.
Like others in the business, she was skeptical of reverse mortgages until the Department of Housing and Urban Development (HUD) instituted stronger regulations on these types of loans in the 1990s.
It’s still a small part of the California home loan business.
“In Tracy, there doesn’t seem to be a large number of people interested. I think it’s mostly out of fear. They worry that the bank wants to take their house, and that’s not it,” she said.
The case that caught the attention of police and the San Joaquin County District Attorney involved the sale of a house, though investigators allege, among other things, that Michael Llamas of Mountain House represented the deal as a reverse mortgage.
The issue at hand is that Llamas’ company, Property Line Investments, is not on the list of HUD-approved reverse mortgage lenders.
California mortgage brokers say reverse mortgages are, essentially, the same as regular mortgages and work in the following way:
- A homeowner takes out one of the loans based on the value of the house, and maintains the title to the house while the mortgage lender holds a lien on the property.
- In a standard mortgage, a lender provides the money up front to buy the house.
- In a reverse mortgage, the amount of the loan grows as the lender makes regular payments to the property owner.
The amount can be up to 55 percent of the value of the property. Monthly payments depend on the borrower’s age. The minimum age is 62, but older borrowers tend to be given larger monthly payments. Then the California mortgage loan is paid off when the borrower dies and the house is sold or refinanced.
Bronwyn Belling, a reverse mortgage specialist at the AARP Foundation in Washington, D.C., said other safeguards are built into federal regulations to make sure lenders are legitimate and borrowers know what they are getting themselves into.
“If it was a federally insured reverse mortgage, they have to give a list of five HUD-approved counseling agencies. There is a piece of paper that has to be signed by a counselor before it could be processed by the lender,” she said.
Belling said AARP’s studies of the housing needs of seniors show that as people grow older, increasingly they want to stay in their homes.
“That’s the beauty of a reverse mortgage, because it gives them money to make home repairs and meet day-to-day needs.”
People often become interested in reverse mortgages when they need cash to pay for repairs on aging houses. But the loan fees, which can be between $15,000-20,000, means people who have pensions or other reliable income should not take on a reverse mortgage just to cover short-term needs.
Janis Rainey, manager of Mission Hill Mortgage in downtown Tracy, said a reverse mortgage is a practical option for elderly people who otherwise wouldn’t have much income.
“My whole thought on reverse mortgage has changed because I helped people get them and they couldn’t be happier. If the house goes to a family member, they can refinance or sell it and pay off the reverse mortgage.”
George added that to become a HUD-certified reverse mortgage broker she had take classes, and both HUD and her parent company also closely scrutinized her first four reverse mortgages.
“Even after that the loans are very strictly monitored by not only the company but by HUD also.”
She added that federal involvement not only regulates mortgage interest rates and fees, it also ensures that people maintain ownership of the house.
January 3rd, 2007 at 2:15 pm
Please keep publishing everything you can on Michael Llamas…he’s not even a licensed Real Estate Agent. I hope they find out more about this person.
May 4th, 2008 at 2:50 pm
first of all lori, it wasn’t a reverse mortgage that michael llamas introduced to any of his clients, second what does having a real estate liscense have anything to do with this. Everything was by the books and legal if it wasn’t than why has nothing happened with the case??? Hmm… There is no case. Get your facts straight
June 10th, 2008 at 7:53 am
I beg to differ Lori. I have lost my home to Micheal Llamas. He did promise me a reverse mortgage, I would not be taken off the title. Then we did the paper work. Then he calls and says” Oh no, we did the wrong paperwork” we have to do it again. That is when they slipped in the quit claim deed. All of this was done uner a limited time , so sign quickly to get this deal done. I filled out 2 separate packages of paperwrk for this loan. I never intended on selling my house. Never. It was stolen from me by that loser that needs to spend the rest of his life in jail. If you think for one minute “nothing” wil come of this , think again. I do intend on following up to mak sure justice is done. He has not won.
June 19th, 2008 at 3:37 pm
Well, well, Belle. Big bust made headlines oday. This is not over by along shot. Mike Llamas will answer for his crime. It is only a matter of time. How can you be so nieve to think otherwise? I have proof that he commited fraud. So, you get your facts straight.
July 18th, 2008 at 1:52 am
ya!
July 18th, 2008 at 2:15 am
ohhh it works if you just click it. even easier!
July 18th, 2008 at 2:17 am
cool man.
August 9th, 2008 at 7:44 pm
Pillsbury, your such a joke. you placed hidden cameras did you? is that your proof. what did u find out with those hidden cameras of yours? haha. what a joke. I HAVE ONE, JUST ONE QUESTION. if this man who has been accused for well over a year of all these felony charges, why, WHY has he not been charged? this horrible man why has he not been charged? Im trying to find the justice of what you people are saying but all your talking about is what he looks like and how attractive he is, wow i can see what your trying to get out of this, you dont even care about justice your just a low life with nothing better to worry about. and he spent hundreds of thousands of money on hookers? who are you, get a life and stop spreading untrue rumors, you are merely pathetic.
YA it must suck for him that his name is a google search option that repeats that he has been accused NOT charged for all this stuff that YSIT or whatever that dumb tracy cop has investigated. why is she working at the west high parking lot then??? wow she must have done so good on this case that she went and got herself DEMOTED. good job YSIT keep it up!!!
and you have no idea what Michael has or what he payed for or how he payed for it because that is all wrong. and your whole LONG response is so POINTLESS i cant even respond to the rest of it. its like why do you waste your time writing that whole response if it is all BULLSHIT.
August 9th, 2008 at 7:46 pm
Pillsbury, your such a joke. you placed hidden cameras did you? is that your proof. what did u find out with those hidden cameras of yours? haha. what a joke. I HAVE ONE, JUST ONE QUESTION. if this man who has been accused for well over a year of all these felony charges, why, WHY has he not been charged? this horrible man why has he not been charged? Im trying to find the justice of what you people are saying but all your talking about is what he looks like and how attractive he is, wow i can see what your trying to get out of this, you dont even care about justice your just a low life with nothing better to worry about. and he spent hundreds of thousands of money on hookers? who are you, get a life and stop spreading untrue rumors, you are merely pathetic.
YA it must suck for him that his name is a google search option that repeats that he has been accused NOT charged for all this stuff that YSIT or whatever that dumb tracy cop has investigated. why is she working at the west high parking lot then??? wow she must have done so good on this case that she went and got herself DEMOTED. good job YSIT keep it up!!!
and you have no idea what Michael has or what he payed for or how he payed for it because that is all wrong. and your whole LONG response is so POINTLESS i cant even respond to the rest of it. its like why do you waste your time writing that whole response if it is all BULLSHIT.
August 27th, 2008 at 3:45 pm
Llamas has a jury trial scheduled for January 26, 2009 for the charges brought against him. For verification go to the San Joaqiun County Superior Court Web site. I hope the nail his XXX!