In light of an increasing focus on tax and insurance defaults among reverse mortgage borrowers, one counseling agency is dong its part to rescue struggling borrowers through a short-term loan program that helps defaulting homeowners get back on track.
Asian-American Homeownership Counseling, Inc. (AAHC) this week announced its Home Savers program will extend to seniors with reverse mortgage defaults, allowing them to take advantage of the interest-free, micro-loan program.
“We want to help those people who cannot come up with Condo/HOA fees to stay in their homes,” Song Hutchins, president/CEO and founder of AAHC, told RMD. The program helps those who are behind on property tax payments as well.
Through Home Savers’ no-interest and no-penalty micro-loan, homeowners can receive a loan of up to $4,000 to pay off any outstanding taxes or fees and repay the loan over 24 months.
To qualify, borrowers must either be U.S. citizens or Green card holders, have household income that is less than 80% of area median income, go through an orientation and two financial education classes, and ultimately, have the ability to repay the loan.
AAHC determines this last bit by looking at homeowners’ income sources, monthly expenses, and assets to see if they can afford Home Savers’ monthly payments on top of any other borrowers’ existing expenses.
The repayments will then go back into the Home Savers account to reuse for future Condo/HOA fee delinquent services.
A year in the making, AAHC was created in response to a number of complaints that the surrounding Maryland communities lacked programs to help homeowners with Condo/HOA fee delinquencies. The program recently received a grant from Maryland’s Montgomery County that allowed it to expand into reverse mortgage assistance.
In addition to the loan, delinquent borrowers who have not previously gone through the process of a Benefits Check-Up will review with a housing counselor the benefits they may be eligible to receive. Additional counseling services will be available to borrowers to help maintain their tax payments on an ongoing basis.
AAHC takes the initiative further with the help of Montgomery County, Maryland. By cross-checking county tax default records and observing the number of seniors who did not undergo benefits screening, AAHC uses the checkup program for guidance in determining which seniors might qualify for assistance.
“There are a lot of seniors that need the help, we just have not been able to reach them yet,” said Hutchins.
Still young in its operations, Hutchins assures Home Savers continues to seek funding from county grants to provide counseling for endangered borrowers.
“If people get to know this program, I think we are going to see a lot of demand, because we are promoting a program without spending any marketing money,” said Hutchins.
At this time, AAHC’s Home Savers program is only catering to residents of Montgomery County.
With Maryland, Virginia, and Washington D.C. areas among top-5 in reverse mortgage performance, according to the latest report from Reverse Market Insight, AAHC has the potential to reach many in need of counseling.
“Counties are interested in the program,” Hutchins continued. “It will take a few months to see how it goes, but there is a demand there.”
Written by Jason Oliva