Reverse Mortgages And What You Need to Know About Them
Reverse mortgages are generally available only to homeowners who are 62 years of age or older. The purpose of the reverse mortgage is to allow the homeowner to turn the equity in their home into cash while retaining the ownership of their home. This is often used by seniors who may find themselves real estate rich and cash poor. This is not necessarily a route that every senior should take. It is strongly advised that you consult with an attorney who deals with reverse mortgages before you get involved in placing a reverse mortgage on your home.
Interest on Reverse Mortgages
Interest on reverse mortgages is compounded. This means the homeowner ends up paying interest on both the principal and the interest which has already accrued each and every month of the loan. Compounded interest rates are different than the simple interest rates. Compounded interest rates increase the amount of the loan and cause it to grow at an increasingly faster rate than the standard mortgage. In most cases the large part of the equity in the home ends up being used up by the reverse mortgage.
Non-Recourse Loans
Reverse mortgages are non-recourse loans. This means when a homeowner defaults on the loan or the loan cannot otherwise be repaid, the lender cannot look at your other assets or the homeowners’ estate assets to meet the outstanding balance on the mortgage loan.
The law firm of Schlissel DeCorpo LLP has been helping families deal with mortgage and foreclosure problems for more than 30 years. We can be reached at 718-350-2802, 516-561-6645 or 631-319-8262 or by e-mail at info@sdnylaw.com.
Video : What you do if a process service shows up at your house and serves you or other family members with foreclosure lawsuit documents
Foreclosure Timeline
Foreclosures are initiated when homeowners miss their mortgage payments. If a homeowner is between 16 and 30 days behind on their mortgage, a late charge is assessed against them. In these situations the financial institution, or its loan servicing company, will usually notify the homeowner with regard to the late payment issue.
3 Months Behind on Mortgage Payments
When a homeowner is 3 months behind on mortgage payments the financial institution, if they decide to move forward with a foreclosure, must send the homeowner a foreclosure notice a minimum of 90 days before initiating the foreclosure lawsuit. The purpose of the 90 day window is to give the homeowner an opportunity to work out an alternative resolution of the mortgage issue with the financial institution. The 90 day notice must provide how much the homeowners are behind and what they would need to pay to bring the mortgage current. In addition, the 90 day notice must provide the homeowner with names and telephone numbers of a minimum of 5 government approved not-for-profit housing counselling agencies serving the area where the homeowner resides.
90 Days Behind on Mortgage Payments
If the homeowner falls 90 days or more behind on a mortgage, the financial institution or its servicing agency may bring legal action to foreclose on the home. It involves the hiring of an attorney on behalf of the financial institution to file a Summons and Complaint against the homeowner and file a “Lis Pendis” which has a negative impact to the title of the homeowner’s home.
Once the Summons and Complaint has been Served
After the Summons and Complaint has been served on the homeowner and the lender files the proof of service with the court, a Foreclosure Settlement Conference is usually scheduled by the financial institution’s attorneys. During the Foreclosure Settlement Conference a judge or referee meets with the homeowner, the homeowner’s attorney, and the attorneys for the financial institution. The referee or judge looks into whether there is an alternative resolution of the case instead of the house being sold in the foreclosure. The attorney for the homeowner or the homeowner must bring to this Settlement Conference proof of income, a minimum of 2 recent pay stubs and recent tax returns.
Foreclosure Mediation
The Foreclosure Settlement Conference in the court does not relieve the homeowner of the responsibility of providing a written Answer to the Summons and Complaint. The failure of the homeowner to respond to the Summons and Complaint can result in a default which will allow the foreclosure to go through the courts more quickly.
The law firm of Schlissel DeCorpo LLP has been helping families deal with mortgage and foreclosure problems for more than 30 years. We can be reached at 718-350-2802, 516-561-6645 or 631-319-8262 or by e-mail at info@sdnylaw.com.
