Maine Gov. Touts Reverse Mortgages in New Legislation

Reverse mortgages could become a central part of Maine’s foreclosure law if the governor has his way.

Under new legislation proposed by Gov. Paul LePage, a Republican, any town considering foreclosure on a home due to unpaid taxes would have to first inform the residents of several potential relief options, including a home equity conversion mortgage, tax abatements, or a lien in which the town takes ownership of the property until the residents die, according to the Morning Sentinel of Waterville, Maine.

LePage’s concerns about foreclosures on elderly and lower-income Mainers intensified after he learned about the story of Richard and Leonette Sukeforth, two 80-year-olds who lost their home after the town of Albion, Maine foreclosed on it in December 2015 due to nonpayment of property taxes. LePage was reportedly angered by the situation and attempted to intervene directly, even inviting Richard Sukeforth to his State of the State address in February.

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Though LePage didn’t specifically reference reverse mortgages in that speech, he did speak at length about foreclosures and elder housing issues.

“Communities and the Maine Municipal Association may do things right — they follow the law regarding tax liens and foreclosures. But they should do the right thing: Help the elderly stay in their homes,” LePage said, according to the state’s transcript of the address.

“It is unethical and immoral to take away a senior citizen’s home,” the governor continued. “They lose all the equity they built up during their lives. They end up on the street.”

The state has yet to release any specific details about the legislation, and multiple members of LePage’s press team did not return requests for comment from RMD. The Morning Sentinel reported that the governor expected to have the legislation before the state’s legislature sometime in February.

LePage, known in New England and across the country as a conservative firebrand, has advocated for HECM products in the past, telling a Turner, Maine beef farmer at a 2015 town hall meeting that “maybe we can get you a reverse mortgage,” in response to his concerns about his tax burden.

More recently, LePage suggested at a January town hall meeting in Biddeford, Maine that all fixed-income homeowners should have a home equity loan.

Written by Alex Spanko

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  • I commend the governor of Maine for his passion and concern over our seniors facing this ever growing problem. I am a senior myself but I also have been in the reverse mortgage space for 20 years.

    However, homeowners, regardless if they are a senior or not, must pay their property taxes, home owners insurance, HOA fees and any other related property charges. Many seniors who have forward mortgages in place are fortunate enough to have their property charges escrowed in their monthly mortgage payment. This way, the only way for foreclosure would occur, is due to the lack of one not making their mortgage payments and being delinquent for multiple months.

    On the other hand, many seniors that have a forward mortgage do pay their T&I on their own, annually, just like they have to do on a reverse mortgage.

    I don’t know if the governor should be angered or saddened or both! As far as the reverse mortgage lenders and servicers, most do try and work with the senior who have a HECM with them if their T&I payments are in default.

    The last thing any of us in the reverse mortgage space want to have to face is foreclose on one of our senior borrowers! This was one of the main reason for the establishment of the Financial Assessment (FA) ruling by HUD back in April of 2015. We recognized the industry had to have certain individual qualifying standards that bowers had to go by, rather than just their property as the collateral.

    In fact, prior to FA, we did many of our senior borrowers a disservice by putting them into a HECM in the first place. In many cases we were creating a Band-Aid fix for our seniors to have to eventually face the inevitable, “Foreclosure”!

    Yes, I feel there should be something established to assist and help seniors out in this position and it could be a state funded program! We also have to realize that the burden can not be solely put on the backs of the lenders. Yes, we can help to a degree but there are other factors the governor of the state of main may not be taking into consideration and that is the security in which most of these loans are placed in and sold in the secondary market!!!!

    In short, the lender can only do so much, as sad as it is. Thank God for FA, this will at least help the situation some what, however, At times, I wonder about the way LESA is structured, if that is the end answer or what?

    John A. Smaldone
    http://www.hanover-financial.com

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