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Foreclosure Suits Targeting Seniors

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According to South Florida foreclosure defense attorneys, there is a growing trend of mortgage lenders filing foreclosure suits targeting seniors with reverse mortgages. In this foreclosure litigation strategy, lenders often allege that senior homeowners no longer live in the home and therefore violated the terms of the loan triggering a default. However, those claims are often not true, resulting in seniors who still live in their homes being threatened with foreclosure.

Below our team of South Florida foreclosure defense attorneys, who are experienced with defending senior homeowners in Florida against this type of foreclosure litigation, summarize some key points of this alarming trend.

Consider Reverse Mortgages Carefully

Reverse mortgages are federally insured loans offered to qualified homeowners age 62 and older, allowing them to borrow against their property’s equity. As a result, they are not required to make monthly mortgage payments; instead, they receive loan proceeds. These types of loans are especially popular with Baby Boomers who want to supplement their retirement income or fixed income.

Senior homeowners are still responsible for paying property taxes, homeowners’ insurance, and maintenance fees. Reverse mortgages deplete homeowners’ equity and accumulate interest, but payment is not due until borrowers move out, die, sell the property, or fail to pay for their home’s taxes, insurance, maintenance, and other expenses.

There have been many cases of reverse mortgage companies using deceptive advertising to aggressively market to seniors without disclosing critical information. Consumer advocates like the American Associations of Retired Persons (AARP) and the Consumer Financial Protection Bureau (CFPB) warn against ads that downplay the high costs and risks of reverse mortgages.

In actuality, these mortgages are expensive since they often generate title insurance costs, credit report fees, appraisal costs, closing expenses, government mortgage insurance fees, and additional costs. If senior homeowners fail to pay these expenses plus their taxes, insurance, and upkeep — default and foreclosure are very likely.

Various Methods of Residency Verification

To avoid defaulting on their reverse mortgages, senior homeowners must live in the property. Verifying residency often becomes a complex issue because real estate debts are often exchanged between multiple mortgage companies, and each company uses different processes in order to verify mortgage holders’ residency. Some companies use a combination of documentation and in-person inspections, while others use only one method.

Problems arise when inspectors use deceptive methods such as taking a picture of the property without the homeowners being present to make it appear abandoned. Other times, the verifying forms are mistaken for junk mail. Some South Florida foreclosure defense attorneys argue that reverse mortgage companies rely on the required verification forms and occupancy certificates not being sent back as a means of obtaining late fees and even facilitating foreclosure.

The Foreclosure Suit

If residency is not verified, the foreclosure litigation strategy which is affecting a growing number of senior homeowners in Florida begins.

  1. Reverse mortgage lenders sue to foreclose on the government-guaranteed home loan alleging the borrower no longer lives in the property, which qualifies as a default.
  1. The lawsuit calls for the payment of the loan’s principal, plus interest, escrow, attorneys’ fees, and other charges to be due.
  1. The lenders file motions to show cause, shifting the burden of proof to the borrowers and requiring them to appear in court to avoid foreclosure.

Lenders are supposed to immediately halt all legal action if senior homeowners send signed residency verification forms and occupancy certificates. However, in many cases, lenders do not stop the foreclosure suit and continue to claim the homeowner moved out despite documentation that proves otherwise. In such instances, the expertise of an attorney is needed to prevent foreclosure.

If you took out a reverse mortgage and are being threatened with foreclosure under the false claim that you no longer live in your home, consult with an experienced South Florida foreclosure defense attorney. Call Graham Legal today for a free consultation.

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