Reverse mortgages are made to homeowners aged 62 or older. They allow the homeowners to access the equity in their home to pay their bills while allowing them to continue to live in their homes. In situations involving reverse mortgages the homeowner no longer makes monthly payments. The amount owed to the financial institution gets charged against the homeowner’s home equity and these loans are usually insured by the Federal Housing Administration. The reverse mortgage is not due and payable until the homeowner’s death.
Taxes and Insurance on the Home
Although the homeowner does not have to make mortgage payments, the homeowner is usually responsible for paying the property taxes, school taxes and maintaining their homeowner’s insurance. The failure by homeowners to pay these expenses can cause the financial institution that provided the reverse mortgage to bring a foreclosure lawsuit based on the homeowner’s non-compliance with the conditions involved in the mortgage.
Reverse Mortgage Foreclosure Default
New legislation requires reverse mortgage defaults now have to receive a 90 day preforeclosure notice under the Real Property Actions and Proceedings Law Section 1304. The amendment to this law causes financial institutions to participate in mandatory settlement conferences with regard to working out alternatives to foreclosing on the home regarding reverse mortgages.
The new reverse mortgage law indicates a list of the items that can trigger a reverse mortgage foreclosure. These include:
- failure to include a required certificate of occupancy on an annual basis
- death of the named borrower
- failure to pay real property taxes
- failure to maintain homeowner’s insurance
- failure to pay water bills and sewer bills
- failure to make required repairs
- failure to occupy the home as a principal place of residence
Conclusion
This new legislation provides homeowners who have reverse mortgages many of the same protections homeowners who have conventional mortgages have. In addition, it provides them with notice as to any of the possible items which could cause their home to go into foreclosure.
Elliot S. Schlissel is a foreclosure lawyer representing homeowners throughout the Metropolitan New York area for more than 45 years. He can be reached at 800-344-6431 or e-mailed at Elliot@sdnylaw.com.
