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!
New mortgage delinquencies are down to the lowest levels since the middle of 2007 according to the Mortgage Bankers Association. For those behind on 3 or more payments the rate of delinquency is the lowest since the end of 2008. The majority of the delinquent loans, some 60%, originated at the height of the housing boom from 2005 – 2007. The good news is that this means that in the future there should be less and less loans going into default.