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Introduction Reverse Mortgage Explained Reverse Mortgage Pros & Cons Advantages Of A Reverse Mortgage Training & Help Getting Reverse Mortgage Training Bankruptcy & Foreclosure Bankruptcy With Reverse Mortgage
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Reverse mortgage on a leased plotJohn D Benjamin of the American University Kogod School of Business observed, in relation to ownership of property, that there is an apparent paradox in household wealth accumulation in the United States. He also points out that there is a relatively small holding of financial assets and the large holding of housing wealth. He further notes that there is a higher marginal propensity to consume from housing rather than from financial assets thus leading households to concentrate their wealth in real estate. These conditions provide a rationale for the concentration of household assets in housing. Leasing of property in the United States is wide due to cut throat competition for wealth accumulation and general speculation. As more and more Americans decide to fight it our for the ownership of real property, more are being left as tenants in houses owned by these who have the means to own them. A lease can be defined as a right to use or occupy personal property or real property given by another person usually called the lessee or the tenant. The payments to the landlord (lessor) can be periodic, contractual or tax deductible payments. The existing relationship between the lessor and the lessee is called a tenancy and can be for a fixed or an undefined period of time. Position of lessor vis a vis that of the lesseeIt may be noted from the above short definition that the period of the lease means that the property does not pass on to the lessee, only the possession does. Technically, there are different rights and duties that will attach to these two terms, ownership and possession. Unlike the lessee, the lessor can do whatever he/she pleases with the property as long as they do not infringe on the basic rights of the lessee which include non interference with the quiet enjoyment of the property by the tenant in lawful possession. Plots and reverse mortgagesFor reverse mortgages to operate there are certain requirements that must be met. The age of the applicant is a very important factor. It is closely followed by the homeowner’s equity (the difference between the fair market value of the house and the outstanding encumbrances) in the house or plot being the subject matter of the reverse mortgage. Other statutory requirements include period of stay in the house and the actual value of the home or plot. Banks and non bank lending institutions will look to more than the above scenario while considering an application for a reverse mortgage. However, even if they consider the technical requirements that include the use of interest rates while allocating credit or underwriting standards like the loan to value ratio for non banks, they will still be required to comply with the law. (Brent D Ambrose). It is therefore possible to conclude form the above that the lessor being the owner will qualify for a reverse mortgage based on the leased plot for as long as he/ she has complied with the other requirements of loaning. For the tenant or lessee, the situation is bleak. They have no legal title to the property (which is lack of ownership). This is a most critical requirement during evaluation by a reverse mortgage appraiser. Extensive counseling is necessary when the owner intends to get a reverse mortgage from the leased plot or house.
References
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Interest & Income Tax Reverse Mortgage Income Taxes Types Of Reverse Mortgages Reverse Mortgage For A Farm Highlights Cost For Reverse Mortgage |
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