Reverse mortgages have been one method that seniors have used as a way to get funding for various expenses later in life as a line of credit may be beneficial if excessive costs or the lack of retirement funds have led to financial strains in the lives of homeowners who may have paid off their home or who have more equity in their home than they owe on their mortgage. Obviously, reverse mortgages have been highly debated by many advisors as some feel that this is an excellent way for homeowners who are struggling to find the relief they need in their personal finances, while others feel that a reverse mortgage should only be used as a last resort for homeowners who are struggling financially.
Typically, a reverse mortgage usually offers homeowners the option to borrow a sum of money or access a line of credit based on the equity they have built in their home, and this type of home loan does not require a repayment as long as the homeowner keeps their property taxes current, remains in their home, and keeps the home in a decent condition. Many homeowners who acquired a reverse mortgage have been able to use these funds later in life and, after they pass away, the home is either sold or refinanced by their heirs and the bank is then repaid, which when done properly, may be beneficial if a homeowner does not plan to leave their property to family members after they pass.
However, there are some homeowners who have had trouble when it comes to meeting the requirements of these reverse mortgages and, recently, it was reported that the Department of Housing and Urban Development implemented a plan that may help seniors who have taken out a Home Equity Conversion Mortgage and may now be suffering from further financial distress which has resulted in the possibility of foreclosure. According to a report from the National Foundation for Credit Counseling, there have been homeowners who are delinquent on property taxes or insurance, which is a violation of many reverse mortgage agreements and could result in a homeowner facing the loss of their home as a result of being unable to repay their reverse mortgage debt.
Yet, the NFCC is said to be working to provide assistance through loss mitigation counselors that may be beneficial to homeowners in these situations where they have been unable to meet requirements of their reverse mortgage, as these forms of assistance could help homeowners if they are delinquent on their taxes or insurance and as a result remain in their home.
It’s hoped that these counselors will be able to provide more solutions for homeowners who fear that because they have hit an area in their life where they are suffering further financial setbacks and are simply not in a position to repay their reverse mortgage debt, but are looking for ways to become current on taxes or insurance they may have missed related to their property, but again, these efforts are not a guarantee for all homeowners in trouble. However, this program could be beneficial and advisors are prompting homeowners who may be behind on their property charges or who fear that they may fall behind due to financial problems to contact one of these counselors before their situation becomes too problematic.
Again, assistance from either HUD or the NFCC may be helpful to homeowners who are struggling with the requirements of the reverse mortgage, but waiting until property charges have been missed or a homeowner is severely delinquent could hinder the amount of help that may be available, so homeowners are being urged to be proactive about these problems if they have arisen.