AARP Sues HUD Over Reverse Mortgage Foreclosures
For the last 10 years, reverse mortgages have been marketed as an easy way for aging seniors to pay for living expenses by tapping the equity in their home. Now an AARP lawsuit claims that policy changes governing reverse mortgages have made it easier to foreclose on older Americans.
The lawsuit centers around so-called reverse mortgages, which allow those over 62 to collect monthly payments based on the equity in their home instead of making monthly mortgage payments. The loan balance on the home is not due until one of several…
The problem: The new rules state that a surviving spouse who is not listed on the mortgage is required to pay off the mortgage in full — even if the amount due is more than the home is worth.ﾠ
The AARP lawsuit says that this consequence is in direct violation of another key reverse mortgage provision which explicitly prohibits the amount of a reverse mortgage (which grows over time) from exceeding a property’s value.
Protect yourself: Taking out a reverse mortgage should be a choice of last resort. Make sure you take the required “reverse mortgage counseling” before you sign anything. And if you have a spouse, make sure BOTH of your names are on the mortgage.
For more info about how changes in reverse mortgages are pushing elder homeowners into foreclosure, check out this brief video from CNN.