Despite an uptick in the number of borrowers facing foreclosure under the Federal Housing Administration’s reverse mortgage program over the past two years, there is help available for those who need it.
Yet many don’t know about that help under a little-known federal guideline, according to a Wall Street Journal article published this week.
Citing Department of Housing and Urban Development data indicating delinquencies have increased from 8% of borrowers in 2011 to 9.8% of borrowers outstanding today, the WSJ notes an important requirement that lenders must notify borrowers before commencing foreclosure proceedings, that there is free financial counseling available to them.
“The good news: Help is available,” the WSJ writes. “Under guidelines HUD released in 2011, lenders—before initiating foreclosure proceedings—are required to notify borrowers who fall behind of free financial counseling. Such sessions can help them get back on track by, among other things, tapping benefit programs for some older individuals.”
Yet many of the borrowers who could benefit from the counseling don’t know about it, those who provide the counseling told the WSJ.
“‘Unfortunately, many older borrowers don’t know about these programs,’ says Ramsey Alwin, senior director of economic security at the National Council on Aging, one of a handful of nonprofits that provide the free counseling.”
Additionally, HUD is working on program changes that would help to cut down on the instance of delinquent borrowers under the program, the article notes, outlining the recent suspension of the fixed rate standard reverse mortgage product that paid the highest amount to the borrower under a lump sum agreement.
The agency is seeking authority from Congress to make additional changes including underwriting, set asides for taxes and insurance payments and caps to the amount that can be borrowed, the WSJ writes.
Written by Elizabeth Ecker