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19 Feb ’12
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KVR said
so the house doesn't get sold?
I don't know enough about it, so I won't dispute B17's statement, but I would imagine that 99% of the time, the house gets sold anyway, even if it's by the heirs to repay the loan
4 Mar ’12
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When the "owner" of the home dies, the government pays the bank any difference between the amount owed (interest plus principal) less the sale price of the home. If the heirs want to keep the home, they must pay the loan off in full. If the amount owed is more than the value of the home, the heirs must pay 95 percent of what is owed to the bank with the government paying the rest.
15 Feb ’12
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Came across this
Kenneth and Sadako Miller were struggling to pay their bills six years ago when they saw a TV commercial that seemed to provide an answer to their financial woes.
The elderly couple, a disabled Vietnam veteran and his Japanese-born wife, called the number on the screen and soon obtained a government-insured reverse mortgage – a product marketed as a way to turn the value of your home into cash payments without a sale and still live in it.
But instead of feeling secure in their modest three-bedroom in Gardner, Massachusetts, the Millers have been dealing with a foreclosure notice. The stress made Kenneth ill and drove Sadako to bouts of crying, Kenneth said.
“I’m sorry we ever did it,” said Miller. “We thought it would make it easier.”
The Millers, aged 69 and 68, have joined a growing number of reverse mortgage holders who are learning they can be thrown out of their homes after all. That’s because of what consumer advocates say is a poorly-understood loan feature that allows foreclosures when borrowers fall behind on real estate taxes or house-insurance premiums.
Recent directives from the federal government have caused more lenders to get tough about the unpaid property charges, according to mortgage companies and others familiar with the market.
15 Feb ’12
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wonder if more and more of these stories are going to be popping up in the next decade
LARGO, Fla. (WFLA) – Advertisements for reverse mortgages for the elderly are tempting.
You sign some paperwork and a bank pays you a monthly mortgage, instead of you paying them. And for those who don’t plan to leave their home to their heirs when they die, it sounds great because the bank simply takes the home back.
But is it really that simple?
What happens when the bank fail to do that? Could your heirs find themselves in legal trouble, despite your best efforts to keep things simple?
That’s what happened to Sandra Proulx. Her parents took out a reverse mortgage on their Largo home years before they died in 2009. Her father told her this would make things easier on them financially and when they passed away, “you kids won’t have to worry.”
And that is exactly what she thought happened until she was served with a lawsuit two days before Christmas last year.
“I did not understand what was happening,” Proulx said.
For some reason, Bank of America did not take back the home in 2009. Instead, the house just sat empty and continued to slowly lose value. Now, a company called Reverse Mortgage Solutions filed for foreclosure and named Proulx in the suit. Then she started to get nasty phone calls and a letter from lawyers that worried her she would be on the hook for money for her parents’ home.
And worse than that:
“It is dragging up all these old feelings about my parents’ death,” she said, in tears. “I loved them so much.”
So she called 8 On Your Side’s Better Call Behnken. Attorney Matt Weidner looked through the court file and said Proulx and the bank made mistakes after the death of her parents. She should have contacted the bank and made sure the home was sold, Weidner said, because she likely would have received money from the sale.
That’s because, in a reverse mortgage situation, the bank sells the home. Depending on the way the reverse mortgage paperwork was written, heirs may be entitled to a piece of that equity in the house.
“Adult children should really know what that paperwork says before their parents die, or they could be leaving money on the table,” Weidner said.
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