Mortgage Orb is reporting that the taxes and insurance default situation facing the reverse mortgage industry is moving towards resolution.
Writing for the Publication, Marc Helm, president of Reverse Mortgage Solutions writes:
Home equity conversion mortgage (HECM) borrowers may have forgotten that T&I was part of their old forward mortgage, included in their escrow accounts. Or, they simply may have been unable to pay T&I in today’s economy, with their investments having lost value, other sources of income down and no increases in their Social Security payments (all the while seeing their living costs go up).
Although it is never a popular move to put borrowers – especially seniors – out on the street, the reality is that borrowers are responsible for T&I, and if they have not made those payments, a foreclosure may have to be pursued. Seeking to avoid such undesirable results, many HECM servicers have taken steps to try to assist seniors.
According to the article, most estimates project T&I defaults at about 4% of all outstanding HECM loans. An analysis by Reverse Market Insight indicates that a significant percentage of those loans are in repayment plans. HUD has had no overall default or foreclosure figures, which is one reason for the mortgagee letter’s new reporting requirement, according to the department.