The Good, Bad, & Ugly of Reverse Mortgages

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As a Reverse Mortgage professional and Licensed Mortgage Loan Originator (NMLS # 18438), Salvatore Petrozzino, CEO and President of Worldwide Capital Mortgage Corp. (NMLS # 2642) Bay Shore, NY advises Seniors on how to navigate through the different programs and changes regarding a Reverse Mortgage.


Reverse Mortgage applicants must be 62 years old or older. Most Reverse Mortgages are Federally Insured (depending on the state). In New York where Worldwide Capital Mortgage Corp. is located, only FHA Federally Insured Reverse Mortgages are authorized.

If approved by FHA, the amount the applicant is eligible for is based on the borrower’s age, home value and equity in the home. Borrowers never have to make another mortgage payment ever again! The proceeds are tax free and will not affect the borrower’s income tax, Social Security or Medicare. The proceeds can be taken in 3 ways: 1) a lump sum, 2) a line of credit, or 3) monthly income.

There is a requirement that all borrowers must be counseled by a certified HUD Counselor. The Counselor’s job is to just state the facts. Counselors have no interest in the transaction; that is between the borrower and the Mortgage Loan Originator.

Reverse Mortgages can be used in a variety of ways, there are no restrictions: a) pay off an existing mortgage or other debt; b) purchase a new home or a second home/vacation home. Some Seniors dream of becoming a snowbird; c) home improvements; d) purchasing life insurance or long term health care insurance; e) foreclosure bailout; f) helping grandchildren pay for college g) buying a new car; h) taking that dream vacation. There are no restrictions on what a borrower can use the money for.


The Federal Government recently made some changes and now requires Income verification so they can see if the borrower can afford their property taxes and homeowners insurance, but this requirement has been postponed by HUD until at least March or April of 2014. This is not good for the many Seniors who live in the Northeast or California, where the cost of living is more expensive than other States. As a result of this new requirement, they might not get approved for a Reverse Mortgage based on their income and expenses.

Mr. Petrozzino said that Reverse Mortgages are not for everyone. There are still a lot of misconceptions about Reverse Mortgages. One of the biggest erroneous beliefs is that when someone gets a Reverse Mortgage, the Lender now owns the home. This is totally false, but because a lot of older Seniors don't navigate on the Internet for information which is right on the Government website or they’re not as sharp as they used to be, they don't get the correct information or can't and don't understand the concept. This is why Seniors and their families need more education so everyone understands all the ins & outs about Reverse Mortgages.

One of the most common things heard from borrowers is that “my neighbor, friend or relative said it’s not a good loan and they would never do it.” Mr. Petrozzino says that everyone is in a different situation. He explains it's easy for someone else to say that if they have the ability to pay their bills every month. As a Senior, you need to talk to people such as Social Workers, Estate Attorneys, the HUD Counselor etc...
Get the facts from someone who is a professional in this area, not a non-professional who is just stating their opinion.


As the population keeps getting older and living longer, FHA and HUD keeps coming out with more and more changes. The problem is they are not thought out as good as they can and should be. These are Government employees that will receive pensions & Social Security, so they won't have the same issues that plague the rest of the population. Making better decisions needs to be addressed with the public and government agencies. The public needs a real voice.......

The hardest decision a Homeowner can make is: When is the right time to apply for a Reverse Mortgage? The younger the borrower is, the less they will receive, and if the Senior has a large mortgage and debt to pay off, they might not be able to receive enough money to live in their home, which means they have to sell it.

Our elected officials need to do more for the Senior population because if it weren't for them.... we wouldn't be here.

Mr. Petrozzino has been in the mortgage industry for the past 15 years, the last 12 in his own business. He is a retired NYC Police Officer who has brought his public service to the mortgage industry. He is a member of National Association of Mortgage Brokers, Association of Generational Experts for Seniors, Fraternal Order of Police, Retired Police Association, NY 10-13 Association, International Police Association, and Long Island Shields. Worldwide Capital Mortgage Corp. covers Nassau, Suffolk, Queens, Brooklyn, Staten Island, Westchester, Yonkers, and the Bronx.

Worldwide Capital Mortgage Corp. is a Registered Mortgage Broker (NMLS # 2642) with the NYS Department of Financial Services. All loans are arranged through third party providers.

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Sal Petrozzino
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