The Orlando Sentinel is reporting that Florida has the most HECM loans in default from failure to pay for taxes and insurance.
CredAbility, a non profit consumer credit counseling agency based in Atlanta told the publication the state has nearly 5,300 or about 18 percent of all defaults.
Sue Hunt, director of reverse-mortgage counseling for the agency told the paper, “we are just starting to look at the problem and assess the extent of it. What we have is an accumulation of several years of possible defaults that have never been addressed. The hope is that, by working with people, we will be able to solve most of the problems, and that will leave only a small bucket of them still in trouble.”
The Department of Housing and Urban Development recently published guidance on how to handle the loans and is providing nearly $3 million to housing counseling agencies to specifically help reverse mortgage borrowers facing this issue.
But what’s driving the defaults? According to the article, it’s soaring property-insurance rates, rising property taxes, shrinking incomes, health problems and other factors could also be responsible for pressuring their finances.
“With the ever-increasing costs of maintaining a residence, you have seniors living on fixed incomes who are really vulnerable to problems in the economy,” said Richard Schram, interim director of CredAbility’s Central Florida operation. “The people who have defaulted in this case could have ended up in the same position even if they didn’t have a reverse mortgage.”
Growing reverse-mortgage defaults put homeowners at risk of foreclosure