Senior Focus Newsletter

The news these days is filled with horror stories of those who are facing foreclosure. Like many stories in the news, the stories about foreclosures often make the problem seem more onerous and prevalent that is actually true.

Having said this, however, in the states of California and Nevada, new foreclosures are twice what they were one year ago. Sadly, some of those facing foreclosure are seniors who may have lived in their home for many years.

If you know anyone over the age of 62 who is facing a foreclosure crisis, a reverse mortgage could save the day.

Reverse mortgages are not short term, hard money, bridge or balloon loans normally associated with the type of loans people are forced to get to stop a foreclosure proceeding. But for seniors aged 62 and over, a reverse mortgage can be a life-line that rescues them from the danger of foreclosure. Many seniors are faced with rising living costs with which their fixed incomes do not keep pace. Rising costs of everything from food and gasoline to new medical expenses leaves many seniors with impossible decisions. Do they make the mortgage payment, or purchase the food and medicine they need to live for that month? These decisions have placed many seniors in peril as they near or enter foreclosure on their homes.

Now for the good news! A reverse mortgage requires no income or credit qualification. What this means is that if you are behind in your payments, even if the lender has filed a notice of default, you may get a new reverse mortgage loan—and once you get it, you will never make another payment for life. You still have to meet the other mortgage criteria but, if you do, a reverse mortgage may be just the right thing for you or your loved ones to live payment and worry free for life.

So what are the criteria to get a reverse mortgage? The youngest borrower has to be aged 62 or older for the HUD government-insured mortgage. Some programs go down even lower, but they also lend much less in relationship to the overall value of your home. Your property must meet minimum requirements as set forth by HUD and must be an acceptable property type. Single family residences, townhomes, modular homes on permanent foundations, condominiums are all generally acceptable but there may be additional requirements if you have anything other than a single family detached home. Therefore, be sure to let your reverse mortgage lender know what type of property you have and if you are subject to a homeowner’s association. The lender will also need to know if your zoning is not residential or if your property contains excess acreage. Your property has to be in reasonably well-maintained condition with no major repairs needed (some repairs can have funds set-aside to be completed). The only real credit requirement is that borrowers cannot be in default on a federal obligation or a federally insured loan. This means that if you are in default on an SBA loan, an FHA insured mortgage or other federal obligation, you would not be eligible for a reverse mortgage. Therefore, if the current mortgage that is delinquent is an FHA loan, but has not had a notice of default filed yet, you can still get a reverse mortgage. Once the notice of default has been filed, the borrower would need to be able to bring in funds to cure the default before the reverse mortgage could proceed. Those funds could come from a family member, etc. Once the reverse mortgage was completed and funded, the borrower would never have to make another mortgage payment for life!

The borrower(s) must go through counseling, the loan has to be processed including property appraisal, and all title issues including trusts, conservatorships, etc. must be reviewed and approved. A reverse mortgage, therefore, is not a 4 or 5 day loan. If you are going to use a reverse mortgage to stop a foreclosure, it is a long term solution that must be dealt with in a timely manner and without delay.

Contact me, Harry Gordon, today if you or a loved one find yourselves in a foreclosure situation. You can reach me directly at (775) 823-8400 x101.