A recent article in the Chicago Tribune highlights HUD’s concerns about Reverse Mortgage borrowers who are not paying their real estate taxes and/or their homeowners’ insurance. Eliminating mortgage payments is paramount to many of these borowers who may be strapped for income; however, there is a continuing need to maintain tax and insurance payments or risk falling back into the soup. The danger – again – in that soup is the possibility of losing the house…either by a tax auction or the Reverse Mortgage bank filing for foreclosure to protect their interest, which is mandated by HUD. In the interim, HUD is working with lenders to find ways to help the seniors who are in arrears.
Due to the growing number of Reverse Mortgage borrowers who have fallen behind, the government is spending $3 million dollars to upgrade the counseling agencies’ approach to the counseling session. There will be more questions about potential borrowers finances, dependents, health and marital status, as well as more emphasis on the borrowers responsibilities after the closing. It’s important for the borrower and the lender to be comfortable with and realistic about the borrowers’ abilities to maintain their obligations.
The Reverse Mortgage Gazette 