Many seniors in New York are facing reverse mortgage foreclosures. These seniors often are at a stage in their life where they are on fixed incomes. If they lose their homes they may end up living in the street!
Unpaid Property Taxes
The failure of seniors to pay their property taxes has been the reason for the recent increase on reverse mortgage foreclosure proceedings. In many cases the homeowner does not know how much is owed in property taxes and homeowners insurance payments. Many of these foreclosures are triggered by outstanding financial obligations by the homeowners of only $10,000.00.
There are many consumer oriented protection statutes which protect homeowners in regular mortgage foreclosures but do not apply to reverse mortgage foreclosures. There are no mandatory foreclosure settlement conferences with regard to reverse mortgages. In addition there is no 90 day notice requirements prior to the initiation of the reverse mortgage foreclosure, as would be required in a traditional bank foreclosure.
Lump Sum Reverse Mortgage Payments
Many of the problems faced by seniors result from their taking lump sum payments on their reverse mortgage and thereafter spending all of the money. A better route is for seniors to receive steady payments over a period of time from the funds from the reverse mortgage. This will enable them to pay for the homeowners insurance on their home and the taxes on their property.
In 2015 New rules went in to effect designed to ensure seniors have the financial ability to repay the tax expenses on their homes.
Conclusion
Under certain circumstances a reverse mortgage is a reasonable option for a senior to take. It allows the senior to utilize the equity in his/her home to support themselves. However it is usually a bad idea for the senior to take all of the funds out of the reverse mortgage in lump sum. Reverse mortgages work properly when the seniors receive periodic payments that allows them to live with dignity and to pay the taxes and homeowners insurance on their homes.
Elliot S. Schlissel and his associates are foreclosure lawyers representing homeowners throughout the Metropolitan New York area.
