Reverse mortgages are offered by Federal Housing Administration (FHA) approved lenders to people who are 62 years old or older who have equity in their homes. The homeowner and the property have to meet all the requirements outlined by the lender to get approved for the reverse mortgage. Reverse mortgages allow homeowners to use some of the equity in the home to augment their income. For many seniors with equity in their homes who need supplementary income, reverse mortgages are a great way to support themselves as they approach or enter retirement.
What is the catch? Although there certainly are benefits for those who qualify for reverse mortgages, there are also several pitfalls that homeowners need to be aware of before they become reverse mortgage borrowers. There are quite a few ways that these reverse mortgage borrowers can end up involved as Defendants in a foreclosure lawsuit by defaulting on these reverse mortgages. Becoming a defendant in a foreclosure lawsuit puts these seniors at risk of losing the homes they worked hard for their entire lives.
What are some ways that these homeowners expose themselves to the risk of a foreclosure lawsuit? One way a reverse mortgage borrower can default on the reverse mortgage loan is by failing to certify their occupancy every year. The terms of reverse mortgages require borrowers to occupy and use the property as their principal residence. On an annual basis, reverse mortgage lenders will require these homeowners to verify their occupancy. Typically, a certificate is sent to the borrower to complete and return to the lender in order to comply with this certification process. If the homeowners fail to meet this requirement this can trigger a foreclosure lawsuit.
How could a reverse mortgage borrower fall into this category of default? If the borrower forgets to complete and return the certification to the lender, the lender will interpret the failure to send in the certification as a breach of the terms of the reverse mortgage and accelerate the loan. Sometimes these senior reverse mortgage borrowers become ill or need additional care which puts them in a situation where they have to leave their home for extended periods and take up residence with a friend or family member, or perhaps at an assisted living facility to be able to attain the support that they need. When this situation occurs, the home ceases to become the principal residence of the borrower. At that point, the situation can also trigger a foreclosure lawsuit.
How do I avoid this pitfall? If you or someone you know is contemplating the pros and cons of a reverse mortgage or already has a reverse mortgage, keep this requirement in mind so that the certification requirements are complied with.
If you find yourself in a situation wherein you have already defaulted on the reverse mortgage and you are looking for a way out of foreclosure, contact our foreclosure attorney for a free consultation to see how we may be able to help you. Loan Lawyers has helped over 7,000 South Florida homeowners and consumers with their debt problems, we have saved over 3,000 homes from foreclosure, eliminated more than $100 million dollars in mortgage principal and consumer debt, and recovered over $25 million dollars on behalf of our clients due to bank, loan servicer, and debt collector violations. Give our foreclosure defense lawyer a call today.
