Reverse Mortgages on the Rise, Elderly Risk Foreclosure Consumer Bureau Warns

For many of the country’s seniors, their homes are their most valuable asset, but it doesn’t generate regular income, so they often look to a reverse mortgages. But there are risks, including foreclosure, and the Consumer Bureau wants seniors to be fully informed before taking out these loans.

A reverse mortgage is granted to people 62 and over, and unlike a home equity loan there is no monthly payment. But the loans must be paid back with significant interest when the borrower dies or sells their home. Borrowers are allowed to take the loan in a lump sum or monthly payments. Over 70 percent of the reverse mortgage holders take the lump sum so they can enjoy their retirement.

But they become vulnerable to foreclosure if the fail to pay homeowners insurance or taxes on their homes. Close to 10 percent of the seniors, who have taken out a reverse mortgage, is facing foreclosure.

For seniors facing the possibility of losing their home, a foreclosure lawyer can offer them legal means to prevent this.

The reverse mortgage industry has taken steps to make certain borrowers are fully informed about the terms of the loan and potential risks. But the Consumer Bureau says that some of the advertisement and materials contain false or inaccurate information about loan repayment options.

Foreclosure is a risk at any age and can be stopped with the assistance of a foreclosure attorney. There are a number of alternatives to foreclosure, such as legal challenge, a mortgage modification or a short sale. Only a foreclosure lawyer can determine what course of action the troubled homeowner can take to stay in their homes.