A D.C.-based housing agency recently launched a program to help reverse mortgage borrowers facing foreclosure because of their failure to pay property taxes and homeowners insurance.
Called ReMIT, which stands of Reverse Mortgage Insurance and Taxes, the program aims to prevent HECM borrowers from losing their homes because they cannot afford the tax and insurance payments required to comply with the terms of the loan.
According to Todd Lee, executive director and CEO of the District of Columbia Finance Housing Agency, the need was first brought to light by D.C.’s Committee on Housing and Neighborhood Revitalization, which found that a number of reverse mortgage borrowers in the nation’s capital were facing default.
The committee allotted funds in its 2019 budget for the cause and tasked the DCHFA with creating a program that would help save these borrowers from foreclosure.
“Property tax rates have risen in the District as a result of the value of its real estate increasing at a rapid pace,” Lee said. “Unfortunately for seniors, their incomes have not increased along with the value of their homes and their higher property tax bills.”
Lee said that data from the National Reverse Mortgage Lenders Association indicates there are currently 2,246 reverse mortgage loans in the District. Of those, just over 11% are in some stage of delinquency or foreclosure due to nonpayment of taxes and insurance.
Lee said 140 – or 6% – of delinquent mortgages are in default but are not yet in a loss mitigation payment plan.
“Mortgage servicers have reported to DCHFA that there are 325 reverse mortgage holders that are currently in default in Washington, D.C.,” Lee said. “DCHFA anticipates assisting at least 50 homeowners with reverse mortgages.”
While this may not seem like a great number of borrowers will receive help through this program, Lee said he thinks the concept could be easily applied in other parts of the nation with a high percentage of loans in default.
“The response from mortgage servicers has been extreme excitement,” Lee said. “We believe that this program is replicable and would certainly be beneficial nationally, particularly in areas where the cost of insurance and property taxes have risen dramatically, creating a financial burden for senior citizens.”