The Washington Post on Friday analyzed several stories of seniors facing reverse mortgage foreclosures, incorporating the voices of both Home Equity Conversion Mortgage supporters and those who have had problems with the products.
Citing a 2016 report from the Department of Housing and Urban Development, the Post noted that 18% of reverse mortgages originated between 2009 to last June are projected to result in tax-and-insurance defaults; in addition, 90,000 had at least 12 months of unpaid property charges.
Though the Post article explains the introduction of Financial Assessment rules other updated protections for HECM borrowers, AARP attorney Joanne Savage notes that many of the issues stem from the pre-FA days, leading the Post to characterize people struggling with tax-and-insurance issues as “victims of a past system.”
“There needs to be a little more mercy,” Savage told the Post. “We are going to have a steady stream of these clients for five to 10 years.”
For instance, the Post profiles Washington, D.C. resident Virginia Rayford, a 92-year-old who took out a lump sum HECM of about $60,000 in 2008. She began having trouble paying her taxes in 2013, and currently owes Nationstar Mortgage about $6,000 in back charges, according to the Post.
The piece also quotes Leslie Flynne, a senior vice president at Reverse Mortgage Solutions, who notes that HUD-mandated deadlines for accelerating the default process sometimes leave servicers with few palatable options.
“You have people who have run out of money, they can’t pay their taxes, and they are awaiting a miracle,” Flynne told the Post.
Read the full piece at The Washington Post.
Written by Alex Spanko