Reverse mortgage debt pressures home heirs

Children of borrowers say they are forced to pay back parents' loans

New York /
Mar.March 27, 2014 03:35 PM

Some lenders that allowed elderly homeowners to take out mortgages without requiring a payoff during their lifetime are now shaking down surviving relations to pay back the loans.

Homeowners older than 62 years of age qualify for a reverse mortgage, which allows them to borrow against the value of their home without being required to pay it back until after their death or when selling the property. Mortgage providers are giving the children of deceased borrowers an ultimatum, however: pay up or risk foreclosure.

Many families are unaware that federal law requires lenders to offer a settlement at a percentage of the postmortem debt, lawyers told the New York Times. In other words, some heirs may opt to foreclose, assuming they owe the full balance.

The Federal Housing Administration declared a moratorium on the standard reverse mortgage at the end of 2012, as previously reported, and the number of such loans decreased to 51,000 in 2012, compared with 115,000 in 2007, according to the Times. Still, about 13 percent of the country’s reverse mortgages underwater, a New York consulting firm, New View Advisors, told the Times. [NYT] Angela Hunt


Related Articles

arrow_forward_ios
Freddie Mac’s economists said the slowdown will be caused by a hike in mortgage rates and limits on housing supply. (iStock)
Fannie, Freddie say housing market could see slight hiccup
Fannie, Freddie say housing market could see slight hiccup
Mortgage requests, refinancings continue to drop
Mortgage requests, refinancings continue to drop
Mortgage requests, refinancings continue to drop
Philip Falcone and his homes at 142 Crestview Lane in Sagaponack and 22 East 67th Street (Getty, Corcoran, Google Maps)
Phil Falcone files appeal halting foreclosure of UES, Hamptons homes
Phil Falcone files appeal halting foreclosure of UES, Hamptons homes
Philip Falcone and his homes at 142 Crestview Lane in Sagaponack and  22 East 67th Street (Getty, Corcoran, Google Maps)
Foreclosure on Phil Falcone’s homes can move forward
Foreclosure on Phil Falcone’s homes can move forward
1440 Broadway and One Park Avenue (Google Maps, Vornado)
These were the largest Manhattan real estate loans in March
These were the largest Manhattan real estate loans in March
Better CEO Vishal Garg and SoftBank CEO Masayoshi Son (Better.com, Getty)
Better.com lands $500M investment from SoftBank
Better.com lands $500M investment from SoftBank
An index tracking applications for mortgages to purchase homes decreased 5 percent. (iStock)
Frenzy ending? Mortgage requests fall 5%
Frenzy ending? Mortgage requests fall 5%
(iStock/Illustration by Kevin Rebong for The Real Deal)
March madness: Homes sold faster than ever last month
March madness: Homes sold faster than ever last month
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...