AIG Reverse Mortgage Problems – Please Help!

September 18, 2023

I’m going through a company called AIG Reverse Mortgage. However, I was told to replace 2 wall furnaces first, but I don’t have the $2,500.00 to get it done. The company told me I was responsible before we started the reverse mortgage. Is this true? Please Help!

AIG would be correct in that HUD requires a permanent heat source in the home to function in all but just a few zip codes in the United States to close a reverse mortgage. HOWEVER, no, it does not have to be working before you can even start the process, and to be honest with you, you would want to see that you qualified for the loan before you would like to begin the repairs.

But then you still have your “chicken or the egg” scenario. What do I mean by this? Which comes first? Do you find out if you qualify or get the repairs done first? How do you do that if you don’t have the $2,500.00 to do the repairs in the first place?

That’s where working with a company like All Reverse comes in. Please let me explain.

I suggest you go to our website and run your numbers on our calculator to see if the reverse mortgage works for you, especially since you will need $2500 immediately to pay for the heater repairs. If the numbers you see work for you, we will check the sales of similar homes in your area to determine the most likely value for your home.

This is not an appraisal at this point, and the only thing that will be a value we can use for the home is an appraisal by an FHA-approved appraiser. Still, we usually get a good idea of the value (assuming recent sales of similar homes in your area).

The next thing you would have to do would be complete your counseling if you still need to. The counseling allows us to begin some processing on your behalf.

We don’t have to order an appraisal yet, so there won’t be any high costs at this point, but we do need to take a loan application and run credit to see if there is anything that would require a life expectancy set aside or would otherwise change the numbers you saw on the calculator.

Everything is subject to the appraised value, but we want to eliminate as many surprises as possible before you spend any money you don’t have to. Once we know that all the credit and income information meet the requirements for your needs and that there are no other issues to stand in the way other than the heater, then we are almost ready to move forward with the appraisal.

I say “almost” because we work with several national companies with contractors available to complete work. We know they will not get paid until the reverse mortgage is closed, so we would have them contact you to set up a time to visit your home and prepare a bid for the work to be done.

They are not our affiliates; all we can do is introduce you, and you must decide based on their bids if you wish them to do the work.

We order the appraisal if you are satisfied with their quote and wish to proceed. After the assessment, the value is substantiated, and you have loan approval. You can authorize the work, and the contractor agrees to allow you to pay them after closing the loan.

We do not pay it or get involved in the payment; that is between you and the contractor. The contractors do not work for All Reverse, and we have no knowledge or control over which contractors the national company uses.

We encourage all borrowers to do their due diligence when selecting a contractor. We have seen many borrowers use this type of solution to complete their repairs to get the reverse mortgage they needed, but we always caution borrowers to do their homework and check local reviews.

This whole process I have just laid out does take a little longer than a reverse mortgage that does not require repairs, so keep that in mind.

But you don’t make repairs before you know you have an approved loan; you don’t have to advance the funds to pay for those repairs, and therefore, you are not stuck with a contractor’s bill that is due only to find out later that the appraisal came in lower than you hoped. There is not enough money in the loan to pay for the repairs.

If you want to see if this works for you, please visit our calculator to see what you can expect from a reverse mortgage on your home.

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21 Comments on this Article

Michael Branson
May 18th, 2021

I suspect my mortgage broker committed some dishonesty when they are refinancing my home. A lot of promises, like my interest rate would be lower. As it turned out, the interest rate was higher, and they can change the rate monthly. The other mortgage reset years. Also, then the value of my home came in, they said I had to get another, which turned out $50K less than the original. I think I was taken advantage of. No response from AIG. Should I go to the California authorities?
Reply to Michael
- Michael Branson
  May 18th, 2021
  
  Hello Dan,
  
  This is hard for me to tell you that your originator was guilty of anything other than extreme miscommunication for sure. Let me explain...
  Reverse mortgage interest rates are not locked until the loan documents are drawn and any good originator should make this very clear to the borrower from the very start. In addition, interest rates and indexes are subject to change based on market conditions and the lender may not have had the same programs available by the time you went from application to the time you were ready to sign loan documents.
  We recently had a phenomenon in the reverse mortgage world when some programs disappeared, and lenders were unable to continue to originate loans for defunct loan programs. But again, your originator should have made you aware of that as soon as it happened if you were one of the ones affected by those changes. It is just bad communication and poor business skills not to tell your borrower as soon as you are aware of an adverse situation like this in the marketplace - but not necessarily dishonesty.
  No lender can control the lending product that is available, but they can be open and honest with people as things change and there were plenty of articles out at the time, they could have also sent you if you were affected by the market changes to show you they were not just being dishonest as you are thinking now.
  
  Your last issue is hard for me to address. There could be a couple of reasons why they had to get another appraisal. It could be because the first appraiser did a poor job that was rejected at underwriting or what is more likely is that HUD required a second appraisal and if it were due to HUD, they had no choice. All appraisals are now delivered to HUD BEFORE it even goes to the lender through the HUD EAD Portal (Electronic Appraisal Delivery).
  HUD does a review and if they do not like the results of the first appraisal, they will require a second appraisal. There is no rebuttal the lender may make and regardless of the time it takes to get the new appraisal, it must be done to close the loan for an FHA-insured reverse mortgage. HUD is so adamant about this process that lenders may not even give borrowers an approval until HUD has passed the appraisal(s) through this system.
  If this was the reason for a second appraisal and a value adjustment because of that appraisal, the lender had no say in the matter - it was a HUD call. You can rebut the appraisal if you have sufficient information that the second appraiser made material mistakes on the report that would indicate a higher value if corrected but you cannot contest a value based solely on a difference of opinion.
  
  The lender has no motive to lower the value because the loan is insured by HUD and as long as they follow all of HUD's rules and protocols, they are covered. Under the appraiser independence laws, they cannot even suggest a value, higher or lower, to the independent appraiser and could only ask an appraiser to justify or explain something the appraiser did so if the value was brought down, it was another independent, HUD-approved appraiser who did it (and by the way, that appraiser does not know the value another appraiser assigned either so that was their independent opinion of value after HUD felt the first appraisal was not accurate - if that was why a second appraisal was required).
  In the end, you can contact any licensing or lending authority you deem appropriate, but I would try to get them to explain the circumstances first. It honestly sounds like they are not really good at communicating more than anything.
  Reply to Michael
Joseph S.
April 27th, 2021

I went through AAG. Completed all the required counseling (waste of money). My own research educated me. Received the appraisal after signing multiple pages. Last minute I am informed that I do NOT have enough residual income according to HUD for the reverse mortgage. I need to pay off credit cards. I will have social security in about 3 months. I have no mortgage. House appraised at $255,000.00. The day after I was hoping to close and receive my money ALL my credit cards would be paid off. NO MORE BILLS! But AAG said that there is nothing they can do? I thought the whole idea behind a reverse mortgage was to PAY OFF bills??? AAG/HUD is including my monthly credit card payments into my monthly output vs income. But this is backwards because all those monthly expenses for the credit cards will be gone! I am interested in a NON-HUD proprietary reverse mortgage. Can you help?
Reply to Joseph
- Michael Branson
  April 27th, 2021
  
  Hello Joseph,
  
  I am not aware of a proprietary reverse mortgage that will serve your purpose as the ones I have seen would have minimum values that were above the value you listed. Also, even the proprietary loans look at revolving credit the same way.
  Have you been told that even with the dissipation of the loan proceeds and the social security income you would not meet the Residual Income requirements?
  It seems that with no debts and the social security income about to start they can structure a loan that would make sense for you still, but I do not know what your income and debts total.
  A proprietary loan, if it were available, would require a new appraisal and to be processed under the new loan terms which could mean another 60 days anyway. It would seem that 90 days for the social security to begin might be a better option is all else fails.
  Reply to Michael
BARBARA K.
October 29th, 2020

AAG LIED TO ME AND THEY ARE CLOSING MY LOAN
Reply to BARBARA
- Michael Branson
  October 29th, 2020
  
  Hello Barbara,
  
  I am so sorry to hear this and I do not know the circumstances, so I hesitate to comment.
  I don't know if the situation stemmed from an honest mistake, a miscommunication, an individual who just doesn't like to give bad news and in their heart they really thought or hoped the loan would close and that's what they conveyed to you or if it was a deliberate deceit so I really do not want to get into it.
  I can ask you if you have specifically asked them what the issues are and if it is just a delay or if they turned the loan down completely?
  If it is a delay, you need to determine if they can ultimately close the loan and if you are willing to give them that opportunity.
  I do not advocate borrowers jumping from lender to lender because it often causes problems with appraisals and the borrower must start over with the new lender but sometimes it cannot be avoided.
  
  My suggesting is that if you do not feel like you are getting a straight or full story from your loan officer, contact a manager at the lender to determine the exact reason your loan is not closing.
  Find out if it is property, credit, value or program related and see if there is anything that can be done.
  If not, then check with another lender to see if they can work with the situation based on the correct facts.
  Do not try to sugar coat things because any new lender will discover anything that the first lender found as well and you do not need to go another several weeks before getting the same answer if there really is some reason the loan cannot be closed.
  
  But you deserve a straight, honest answer and you need to find out what the issues are before you can determine if there is a resolution you can accept.
  I think you should make your decision based on what works best for you and your circumstances, but you need all the information to make that call.
  Reply to Michael
Lesley
May 26th, 2020

I have a reverse mortgage with AAG. I am in Kansas. I have a buyer for this place, but I would need to move out and rent another place, and buyer would rent this one, until their loan goes through. How long til the mortgage is called due?
Reply to Lesley
- Michael Branson
  May 26th, 2020
  
  Hello Lesley,
  
  I am a little hesitant to give you a set answer on this. The loan could be called due and payable as soon as the lender becomes aware of the fact that you are no longer living in the home as your primary residence.
  How long that would take could depend on several factors and I simply could not begin to know when AAG might become aware of the move. If you are talking about 30 days or less, the chances are very slim that they would even know of your vacating the home and then they would not have a chance to do much more than send out the preliminary paperwork.
  
  But suppose the loan did not go through and 30 days stretched out to 6 months? What if your buyer fell through or lost a job or anything happened to where they found themselves unable to complete the transaction and unable to move out of your place or even pay their rent during this difficult time?
  It's your call as to how you proceed but you may want to make sure you won't be in a bind if something happens on the buyers side that is out of your control and they have possession of your home.
  Reply to Michael
Debra P.
February 21st, 2020

I have a reverse mortgage with AAG, do to miss communication with my lender, I only received a portion of what was quoted to me. That lender is no longer there, and I was told I need to wait 18 months to apply again with AAG.

Is this standard law on applying for a new loan with the government, or everyone? The money borrowed was put back in my home to update and home repairs.

The original info I received from AAG was I qualified for Approx. $70,000, and they also make my property tax payments. I received 25, plus thousand last February 2019, and 6 thousand and change Feb. 2020. Never got to finish my home updates.

Appreciate if you have any new info for me. No other loans beside AAG. Monthly income Approx. $1,900 a month. Before AAG, no loans.
Reply to Debra
- Michael Branson
  February 21st, 2020
  
  Hello Debra,
  
  The 18-month waiting requirement is not a HUD requirement. It is an industry-imposed requirement to ensure that borrowers are not approached by originators who would have them engage in predatory lending by refinancing over and over for little or no benefit.
  HUD does require the borrower meet certain benefits, but the time requirement is not one of them. The 18 months was a time frame determined by the National Reverse Mortgage Lenders Association and its members to be a responsible waiting period to allow borrowers to take legitimate advantage of increases of value while not targeting older homeowners to engage in constant refinances that can be expensive and bring little value to the homeowner.
  
  I am uncertain from your comment why the amount available to you were less than you anticipated. If the reason for the smaller payout was the need for the LESA account to pay for the taxes and insurance for life, then the chances are very good that you would be required to have that same account again unless you opted for the account voluntarily not realizing that the amount being set aside would be so high.
  The only other reason that might make a very large difference in the amount you would receive from what you expected was if you elected a fixed rate loan not knowing that you would lose about 40% of the funds available to you (both the fixed and the adjustable rate line of credit limit the amount of money you can draw at closing or in the first 12 months but then with the line of credit you are eligible to draw again after 12 months but with the fixed rate, there can be no further draws).
  If your issue is due to the type of loan you chose (fixed vs adjustable) or that you voluntarily opted for a LESA account and it is not required but now they will not allow you to drop the set aside, I would suggest that you check with other lenders to request that the loan be considered on a case-by case basis.
  You still have to meet the HUD requirements and I do not know if you will, but if the funds are available and you need them, another lender may be able to waive the 18-month requirement.
  Reply to Michael
Carolyn S.
July 21st, 2019

Which loan institution will loan on a berm house. Interested in reverse mortgage. AIG will not loan on a berm house.
Reply to Carolyn
- Michael Branson
  July 21st, 2019
  
  Here is what HUD says about non-traditional type homes or non-standard house styles:
  
  iii. Non-Standard House Styles
  For unique properties such as a log house, earth sheltered housing, dome houses, houses with lower-than-normal ceiling heights, etc., the appraiser must provide a comment that the property is structurally sound and readily marketable, and must apply appropriate techniques for analysis and evaluation. The appraiser may require additional education, experience, or assistance for these types of properties. The appraiser must provide a comment that the property is structurally sound and readily marketable, and must apply appropriate techniques for analysis and 19 evaluation. In order for such a property to be fully marketable, it must be located in an area of other similar types of construction and blend in with the landscape.
  
  HUD puts all the onus on the lender to determine whether the appraiser has met the conditions stated above and whether the home meets their requirements as outlined. Lenders are typically not even choosing the individual appraiser any longer with the Appraiser Independence Rules.
  The appraiser must be an FHA/HUD approved appraiser and then an appraisal management company chooses the actual appraiser. Because the lender cannot possibly know each appraiser's qualifications for unique properties, lenders are required to make some decisions on what properties they will entertain. If they have no Log Home or Berm Home experts on their own staff, the lender is unable to comply with HUD requirements for these homes.
  
  I am not aware of any lenders currently lending on this property type but would suggest that you check with each lender (not mortgage brokers) and ask them if they are accepting this product. Remember though, if there are not ample sales of similarly constructed homes to use for comparable sales on the appraisal, it will not meet HUD guidelines anyway and you might incur costs for counseling and appraisal without the possibility of obtaining the loan.
  Reply to Michael
Amy
May 6th, 2019

My Aunt has been in and out of the psychiatric ward for years. She can live on her own, but we oversee her. Without our knowledge she saw a commercial with AIG and has apparently gotten a reverse mortgage. She is not of sound mind and we have the hospital records to prove it. Do we have recourse?
Reply to Amy
- Michael Branson
  May 6th, 2019
  
  Hello Amy,
  
  This is a question for your attorney, I am afraid I cannot answer this for you. A lot may depend on state law, whether your aunt has ever been adjudicated incompetent or if you are just "unofficially" her caretakers, if AIG knew she was not of sound mind and proceeded anyway or several other factors.
  If you knew her to be unable to handle her own financial affairs, did you seek to file with the courts to keep her from obtaining financing on her property (conservatorship, etc)? A conservatorship would have been recorded on the property and the lender and title company would have been notified when they did the title search, was there any notification to third parties they missed?
  
  If she got the loan, she had to pass the application process from the lender and had to pass the counseling process from a third party, HUD-approved counselor who also must provide the counseling and your aunt had to pass a series of comprehension tests.
  Any recourse you seek would likely look at the steps she had to complete to get the loan as well as the steps you did and did not take to protect her interests as well as notify others of the potential risk. Absent any misdeeds, your only recourse may be to pay off the loan which you have the right to do now (or at least your aunt does, I do not know the full extent of your supervisory rights).
  Unfortunately, I could not begin to quantify those factors and you really need to seek the advice and assistance of qualified legal counsel. Only an attorney licensed to practice in the area where the home is located can tell you what recourse is likely available to you, if any, and at what cost.
  Reply to Michael
Douglass
April 23rd, 2019

My Mother recently passed away and had a reverse mortgage loan on her home with AIG. The loan was sold. Do the heirs have to deal with the current mortgage company/debt collector even though they are not the original creditor/lender that our Mother officially signed the loan papers?
Reply to Douglass
- Michael Branson
  April 23rd, 2019
  
  Hello Douglas,
  
  Just like any other loan, a reverse mortgage is an asset that companies can sell. If the lender (AIG) who originally closed the loan no longer has an interest in the loan, you cannot choose to deal with them over the new lender that owns the rights to the loan.
  You always have the right to close the account and go with another lender if you do not like a lender who has purchased a loan, but just like any credit account, there is always a possibility that a bank or loan could be sold to another entity at some point and that does not invalidate the provisions of the loan.
  They also must live by the terms in the loan. Since it is now due and payable with mom's passing, they will be out of your lives soon enough.
  Reply to Michael
Janet M.
December 26th, 2018

William Powell at AIG says that I can only net $3300 from the reverse mortgage and I don't understand why? I was recently told that my home is worth $450,000 and I owe about $216,000 on the house. His excuse is that I am only 72 years old. Are their closing costs that large. Please explain as I am about to drop the whole thing.
Reply to Janet
- Michael Branson
  December 26th, 2018
  
  As with all loans, there are costs to close the loan. This loan is an FHA-insured loan which means the single largest cost will be the HUD mortgage insurance. Then you have all the typical third-party costs as with any other loan. Title insurance, any state and local taxes and fees, credit reports, etc. these costs can be financed but they will impact the amount of money available for you to receive in cash.
  It is true that your age does affect the amount of money every borrower will receive, but in this case, most of your benefit is going to pay off you existing loan. Because you can remain in the home for life without making a mortgage payment, borrowers don't receive a benefit equal to their full equity in the property. If you had no loans on the home, you would receive over $216,000 but since you do, you must decide if the benefit of having no more monthly payment is enough of a benefit in your case to do the loan without receiving cash as well. In other words, if the relief you receive from that alone does not make enough positive in your life with your circumstances, then the reverse mortgage is not right for you.
  Finally, you owe it to yourself to be sure that this is the best deal for you.
  Reply to Michael
MS
November 15th, 2018

First, this is the most informative site on RMs! Great job! I am working with AAG, (you're not in my state) and everything was going "okay" except some things told to me were not exactly factual. I made it to the appraisal stage, home appraised well, 100% equity, no problems, it seems. However, despite many attempts, the company will not give me a copy of my appraisal. I've requested it at least six times. Are they allowed to keep the appraisal from me? Again, thanks so much! I hope everyone reads your site, you have great people working on your team.
Reply to MS
- Michael Branson
  November 15th, 2018
  
  Thank you for the compliments, we do our best! The Equal Credit Opportunity Act requires lenders to give borrowers a copy of the appraisal (not the original but a copy) or other Written Valuations of borrower's homes under an amendment based on the Dodd-Frank Act known as Regulation B. Prior to the change under Regulation B, lenders were required to give borrowers a copy of their appraisal only upon written request and then had a period to do so (30 days if I remember correctly but don't quote me on that). They also only previously had to supply the appraisal for which the borrower paid, and no other written valuations obtained by the lender such as desk reviews, etc. Regulation B changed those rules.
  
  The new Rules apply to ALL written valuations (not just appraisals). And now it covers all first liens on homes including closed-end and open-end loans. The ECOA Valuations Rule requires lenders to automatically send you a free copy of your appraisal and other written valuations of your home "promptly" (our emphasis) after they are completed whether you get the loan or not. So, whether your state also has a law regarding sending you the appraisal or not, any lender refusing to do so is in violation of Federal Regulation B of the Equal Credit Opportunity Act.
  
  We send a complete electronic appraisal out to borrowers as soon as we receive them. We are only required to send a copy but then you have bad pictures and a barely legible copy in most instances whereas a pdf file prints a new original with color pictures if you want it but is certainly viewable as such if you just want to look at it on your computer. Some lenders are afraid that borrowers may try to transfer their case to another lender and mistakenly think that by holding the appraisal, they can prevent this from happening -especially if they paid for the appraisal on behalf of the borrower to start the loan.
  
  Aside from being illegal to hold up the appraisal, it's a bad policy. Borrowers can always transfer their loan to another lender if they choose to do so and always have to pay for the appraisal before the lender must transfer the appraisal rights which would prohibit the borrower from closing the loan if they do not ultimately pay for the appraisal. And borrowers should beware of any lender encouraging them to transfer a loan and telling them they won't have to pay for the appraisal already completed by doing so because HUD will not allow them to ignore the appraisal already done to which the new lender does not hold the rights. Often, borrower make a lender change only to find out later that the appraisal issues they thought they could avoid only follow them because the HUD appraisal stay with the Case Number and the property.
  
  But in your case. The lender is required to provide you with a copy of that appraisal promptly after completion and if they do not do so, failure to do so is a violation reportable to the Consumer Financial Protection Bureau (CFPB) under ECOA https://files.consumerfinance.gov/f/201305_compliance-guide_ecoa-appraisals-rule.pdf. I think they will see the light once you remind them of this fact and you will receive your appraisal.
  Reply to Michael
John Van Luven
July 6th, 2018

I did contract work for AIG reverse mtg, I gave them a bid, it was approved, I did the work, They said i would get paid in 10 days. it has been a month and no payment. pictures from inspector taken. NO CHECK I bought all materials, I need my money.
Reply to John