Reports have circulated that HUD has given lenders approval to foreclose on seniors whose properties have gone into “technical” or other default, with specific instructions coming sometime this spring. “We are aware of HUD’s decision” to allow the foreclosures, one prominent originator told RMD, after much speculative discussion among reverse mortgage professionals at a recent industry conclave.
There is broad agreement that such foreclosures – typically for failure to pay tax and insurance bills – would bring much negative and unwanted scrutiny not only upon individual companies but the industry as a whole. It is “a sensitive matter that is being discussed by a working group of servicers and HUD,” said a high-level industry figure.
Meanwhile, a HUD spokesman tells RMD there has been no official agency pronouncement on the subject, adding: “We can assure you that it is now and has always been FHA’s goal to keep seniors in their homes.”
“No one wants to foreclose on a senior,” said Sherry Apanay, senior vice-president, Generation Mortgage Company, repeating HUD’s official position. “However, servicers are now in a position where [other] options are no longer available. But,” she quickly asks: “How many seniors has a reverse mortgage helped save from a tax sale or foreclosure? I hope we see some balanced reporting” on the subject, she concludes.
Another possible indicator of a coming policy shift on foreclosures is word that counseling agencies are already creating resources for seniors who may ultimately require alternate, affordable rental housing. Representatives of one, major counseling group could not be reached for further comment.
Written by Neil Morse
Note: a previous version of this article read that “HUD has made the decision to not allow servicers to add to the borrower’s balance for unpaid taxes or insurance.” This has not been decided, we apologize for the confusion. We are stil investigating and will post another update.