A number of individuals in the financial industry convinced a staggering number of elderly homeowners to enter into reverse mortgages before the public came to understand that reverse mortgages should almost always be avoided. As a result of this widespread trend, a number of heirs are now being affected by the reverse mortgages entered into by their parents and elderly loved ones.
When an elderly loved one enters into a reverse mortgage, he or she is granted the ability to borrow money against a home’s value. This loan is then essentially deferred so that the homeowner may avoid paying it back until he or she either dies or moves out of the house. Some individuals have used reverse mortgages as a stop-gap measure to avoid bankruptcy or foreclosure, however the consequences of these loans tend to be uniquely troublesome.
Many heirs are experiencing a number of these consequences firsthand. Federal regulations protect heirs’ interests in a number of ways. However, many reverse mortgage companies are failing to respect the spirit of these regulations. For example, heirs to homes affected by reverse mortgages are entitled to settle their loans for a certain fraction of the full amount due. Yet, many companies are threatening heirs with foreclosure unless the affected mortgage is paid fully.
If a reverse mortgage company is treating you unfairly in this way or in any other way, please contact an experienced attorney. You have rights under the law and an attorney will help to ensure that these rights are properly respected.
Source: New York Times, “Pitfalls of Reverse Mortgages May Pass to Borrower’s Heirs,” Jessica Silver-Greenberg, March 26, 2014