Seniors Were Sold A Risk-Free Retirement With Reverse Mortgages. Now They Face Foreclosure.

These are true and tragic situations, but if you can read past the somewhat biased opinions of the article, you’ll see that lenders would honestly prefer to work with the borrowers and heirs.
Seniors Were Sold A Risk-Free Retirement With Reverse Mortgages

Urban African American neighborhoods are hardest hit as nearly 100,000 loans have failed.

This is the headline from a USA Today article that ran on the front page of on June 12th. It was written by Nick Penzenstadler and Jeff Kelly

Printed out, it’s a nine-page article that also has a 8:50 video with homeowners crying and heirs talking about losing the family home. Unfortunately,
these are true and tragic situations, but if you can read past the somewhat biased opinions and wording of the article, you’ll see that lenders would
honestly prefer to work with the borrowers and heirs, but HUD guidelines are strict and unforgiving. They must follow these guidelines or risk losing
protection the mortgage insurance provides against loss.

One borrowers’ situation who weaves his way in and out of the article is 86-year-old Leroy Roebuck. Ten years ago, he “forgot” to pay his homeowners insurance
of $2,000. The requirements to keep the reverse mortgage in place are that the homeowner must keep current on homeowner’s insurance and property taxes
as well as maintain the home. While the company servicing the loan can, and should, work with the homeowner to pay the taxes and or insurance, by all
rights, Mr. Roebuck probably should have been foreclosed on nine years ago. However, he has been able to fight and delay the foreclosure through a
special health exemption to foreclosure the city offers.

There is also a profile of a “grieving spouse” facing foreclosure. Patricia Blair was 60 years old and her husband was 62 when he took out a reverse mortgage
on their Philadelphia home in 2010. Because she was below the threshold age of 62, the loan was made to her husband and she was taken off the title
to the home. When her husband died, Patricia thought she took care of the paperwork so she could remain in the home, but she missed getting the home
in her name within the HUD required time line of 90 days. Because of this issue, the servicer began foreclosure.

(Please note that in 2014 HUD changed the rule and non-borrowing spouses no longer must be removed from title and have protection if the borrowing spouse
dies – but the article doesn’t mention this until about a half-dozen paragraphs further into the article).

Throughout the article, the overarching theme is that lenders took advantage of minority homeowners in predominantly black, lower income neighborhoods.
The authors back up their assertions with facts and lawsuits filed against lenders by regulators like the Consumer Finance Protection Bureau (CFPB).

However, the article completely relieves the homeowners of any responsibility for their actions. They should have taken some responsibility for making
sure they understand what they are signing. In addition, it doesn’t matter what kind of mortgage you have, as a homeowner, you should be aware that
it is a requirement to have homeowners insurance in place. With all the letters and notices sent, I have a hard time imagining that someone can simply
“forget” to pay this bill.

Having said this, I do believe 100% that some unscrupulous lenders did target people and also used high pressure and unethical sales tactics, but I also
believe that this practice is no longer part of the industry and hasn’t been for half-a-dozen years or more. In fact, some of the companies mentioned
in this article are out of business now, as they should be.

Unfortunately, the fact that the people and businesses that took advantage of these homeowners have been fined or are no longer in business cannot ease
the pain endured by the people highlighted in the article. But the authors should make more of a point that the people suffering in this article took
their loans out six to ten years ago and these practices have been banned from the industry for years now.

I recommend reading the article, but understand that it appears the authors have an axe to grind and are writing from what I believe is a biased point
of view.

You can view the full USA Today article here.

Bruce Simmons

Bruce Simmons

I absolutely love what I do - working with senior homeowners to help them live a more comfortable, flexible and secure retirement. I have the absolute best customers in the world, and even though I worked in the forward mortgage business for a number of years, I could never go back to doing conventional loans. I'm a 100% reverse mortgage specialist.

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