Have you heard about reverse mortgages or perhaps you have one? Reverse mortgages let people that are at least 62 years old convert their home equity to cash. The homeowner has the option of taking out one lump sum or payments over time. Normally these reverse mortgages are not paid back by the homeowner, but they are due with interest if the homeowner dies, moves or sells the home. How can someone default on such a mortgage?
To be considered delinquent you need to be behind on your insurance and or property taxes for the home. If you fall into default, you can end up in foreclosure just as any delinquent mortgage will. Because the homeowners with reverse mortgages are normally on a fixed/limited income, there is help available if you become delinquent. The NCOA (National Council on Aging) 800-510-0301 may be able to help or find you help. Another resource is benefitscheckup.org which is a database of over 2000 government and nonprofit programs that may provide assistance.
In 2012, there were about 600,000 active reverse mortgages with 9.8% being in default, in 2011 there were only 8% in default. If you are in default on your reverse mortgage, don’t ignore it! Go out and get help before it is too late!