Reverse mortgage rules may prove too complex for some homeowners even with the required counseling needed prior to loan closing, according to a Tampa Bay Times article.
The article describes a scenario involving an elderly couple who obtained a reverse mortgage on their St. Petersburg home in 2007, ended up falling behind on their property tax and homeowner’s insurance when their premium jumped, and are now facing foreclosure.
“The couple now wish they had better understood the seemingly simple reverse mortgage, a frequent lament of homeowners who turn to what is actually a complex financial product,” writes the Times.
Though the couple was required to meet with a government-certified housing counselor before they could obtain the reverse mortgage, the article suggests neither of them paid much attention to the terms of the loan.
Obtaining a reverse mortgage from Kansas City, Missouri-based lender James B. Nutter & Co. the couple agreed to have their existing $153,750 mortgage paid off, therefore eliminating their previous $800 monthly payment.
They would in turn owe that prior mortgage debt, plus interest, to be deferred until the husband—the sole title holder—died, moved out or failed to pay the required taxes and insurance.
In 2012, the mortgage company began foreclosure proceedings after the couple ran into trouble when two difference companies cancelled their insurance, first because of “hazardous tree limbs” on the property, and then because they had failed to make a payment.
By Tuesday of last week, the amount the couple owed toward the balance of their reverse mortgage totaled $217,402.
A circuit court judge ended up ruling against the couple, citing their delinquent insurance payments, and gave them until July 25 to vacate their home.
Read the Tampa Bay Times article.
Written by Jason Oliva
