While many American homeowners have seen their home values improve substantially in the years following the housing market crash, many seniors have been left struggling with heavy mortgage debt burdens, according to a recent Miami Herald article.
The article cites data from the Consumer Financial Protection Bureau (CFPB), which states that 30% of homeowners age 65 and older were paying a mortgage in 2013, an increase from 22% more than a decade ago in 2001. Additionally, data from the Federal Reserve indicate the share of 75-year-olds carrying home loans rose from 8% in 2001 to 21% in 2011.
Since the start of the millennia, the median mortgage held by American seniors age 65 and older has more than doubled since 2001, from $43,400 to $88,000, according to additional CFPB data cited in the article.
While the housing market and subsequent economic downturn had an impact on seniors and their struggles with mortgage debt, the article also touched on some of the troubles experienced by reverse mortgage non-borrowing spouses.
“Problems can arise when only one spouse signs a reverse mortgage—in order to qualify for a bigger loan—and dies relatively soon,” the Miami Herald writes. “The lender can then demand repayment in full—and foreclose if it doesn’t collect.”
The article references one instance involving a surviving spouse who “didn’t even know that her husband” had taken a $225,000 reverse mortgage on their Las Vegas townhouse. The loan became due following the husband’s death in 2010, leaving the surviving spouse until July 24 of this year to move out of the home.
Instances like this occurred before the Department of Housing and Urban Development (HUD) expanded options for non-borrowing reverse mortgages spouses last month. Under the revised policy, lenders are allowed defer foreclosure for non-borrowing spouses that meet certain eligibility requirements. The updated guidelines apply for non-borrowing spouses with Home Equity Conversion Mortgage case numbers assigned before August 4, 2014.
The update was applauded by various consumer advocacy groups who view the new policy as beneficial to thousands of senior homeowners across the country.
Read the Miami Herald article.
Written by Jason Oliva