Reverse mortgages give older Americans the opportunity to utilize the equity they have built up in their homes as a means of generating supplemental cash. In order to get a reverse mortgage, one needs to be aged 62 or older, use the home as their primary residence, and have sufficient equity in the home, ideally owning it outright. Once approved, only a triggering event can render the loan due for payment. Most often, that event is the homeowner’s death, but it could also be the case if the property is sold, the homeowner moves, or the homeowner fails to keep up with property tax and insurance payments.
So, what happens when the loan becomes due? If one does not handle the situation properly, the home could be foreclosed on.
Avoiding Foreclosure on a Reverse Mortgage
The way that one should handle a reverse mortgage that has become due will depend on a number of factors, the primary one being whether or not the borrower is still alive. If death was not the triggering event, then the borrower will be responsible for repaying the loan. For those who wish to keep their homes, they can satisfy the debt with a cash payment or by securing a traditional mortgage. However, if keeping the home isn’t desired, the debtor might elect to deed the property to the lender so that it can be sold, or even to sell it themselves. If these steps are not taken, the home could be foreclosed on, which could disrupt the borrower’s financial future.
In the event that the triggering event was the homeowner’s death and it’s an heir who is tasked with repayment, the steps that must be taken to avoid foreclosure are the same. However, the potential outcome of foreclosure will not have the same detrimental effects. The heir’s credit score will not take a hit, and unlike with traditional mortgages, the lender will not be able to pursue a deficiency judgment. That said, particularly for those who wish to keep the home or sell it for a profit, foreclosure is still not ideal.
Defending a Foreclosure on a Reverse Mortgage
When foreclosure is looming on a reverse mortgage, seeking out guidance from an attorney with experience in reverse mortgage foreclosure defense can always be beneficial. This is even more true for those who hold the reverse mortgage in their own name. Since reverse mortgages are not eligible for loan modifications, an attorney’s assistance is even more crucial, as there will not be as many options for preventing the action at the borrower’s disposal.
If you have a case for our foreclosure defense attorneys, call us today to begin seeking justice, together. We are here to offer personalized legal guidance and our full dedication.