A New Jersey court case has determined that reverse mortgage proceeds can be legally garnished in order to satisfy a personal injury judgment.
In the case, 85-year-old reverse mortgage borrower Roy Ewing was sued by Charles and Christine Cameron for personal injuries as a result of a car accident. Ewing, the driver, was not insured, and a judgment was entered against him, determining he owed $400,000 to the defendants.
Ewing had previously taken a reverse mortgage with Wells Fargo that paid him $959 per month over the course of the loan.
The reverse mortgage payments, initially determined to be off-limits by a trial court in the case, were found in the recent appellate court decision to be garnished as payment in the lawsuit.
“The trial court determined the payments were beyond the reach of the judgment creditors, and denied their motion to compel the mortgagee to comply with a writ of execution,” the appellate court documents state. “We reverse, reasoning the mortgagee’s obligation to make monthly payments to defendant, the judgment debtor, is properly construed to be a ‘debt’ against which plaintiffs, the judgment creditors, may obtain an order directing execution and garnishment.”
Reportedly, Wells Fargo raised arguments asserting that reverse-mortgage payments should be kept beyond the reach of creditors, but the court rejected those arguments.
Written by Elizabeth Ecker