How does a reverse annuity mortgage work? When first obtaining a loan, the major

Question

How does a reverse annuity mortgage work?

When first obtaining a loan, the majority of the mortgage payments go towards principle instead of interest.

The poorer the homeowner is, the less they have to pay the lender each month.

The homeowner receives monthly payments based on accumulated equity.

The homeowner sells the property to the government who pays him or her a larger social security check each month.

A broker received referrals from a neighbor of his, and paid him $100 for each referral that resulted in a sale. Which is true regarding this situation?

This would be legal if the neighbor was a lawyer.

The broker cannot pay referral fees.

It would be legal if the broker held the neighbor’s real estate license.

This would be legal if the neighbor held an inactive license.

Explanation / Answer

Answer- The homeowner receives monthly payments based on accumulated equity.

Explanation- Reverse Mortgage is a type of real estate financial financing in which the lender pays the homeowner in monthly payments. These payments are purely based on the accumulated equity and not as a lump sum. After the death of the homeowner or after the sale of the property, the loan has to be repaid at a specific pre-arranged date.

Answer- The broker cannot pay referral fees.

Explanation- The broker cannot pay referral fees because most of the state laws prohibit payment of any referral fees to unlicensed persons. In this case, the neighbor is an unlicensed person. Hence, the broker cannot pay any referral fees.

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