There are Two Sides to Every Story: The Truth Behind Reverse Mortgage Loan Pitfalls
A recent article in The New York Times, Pitfalls of Reverse Mortgage May Pass to Borrower’s Heirs, detailed the story of heirs whose parents took out a reverse mortgage on their home and have since passed away, making the reverse mortgage loan they took out on their home due and payable.
However, not only is the story one-sided, focusing on the possible consequences for heirs whose parents got a reverse mortgage loan, it is also vague in explaining how and why the homes were foreclosed on after the borrowers’ passed away.
The article states: “Some lenders are moving to foreclose just weeks after the borrower dies, many families say.”
If a lender comes to the heirs and asks what they are doing (selling the home, refinancing, etc.) and get no responses after many weeks or months, then they can foreclose. However, the writer of the article uses the word ‘weeks,’ but exactly how many weeks is it? Weeks can mean 2 weeks or it can mean 20 weeks.
The article makes it seem like the lenders are out for blood and simply want to hurt the heirs but it costs the lender more to foreclose and hire attorneys than it does to resolve repayment with the heirs. However, if the heirs are doing nothing or have made no effort to start repaying the loan, then they have no other choice.
The article states: “But because of delays in uploading her letter and a missing trust document, the lender ultimately sped up foreclosure proceedings on her father’s home last month.”
This sounds like the heir did not take any steps to truly begin paying off the loan or sell the house. She was irresponsible, period, but has since made it seem to the media like the lenders are predatory. I mean, does it really take 3 months to “upload a letter”? This excuse sounds farfetched to me.
In all honesty, there are two sides to every story and I can bet anything that the lenders have many notes showing all the attempts at communication between themselves and the heir.
In the end, while the article has some truth to it, for example, heirs can short sale the house at no less than 95% of the value, however, how much of the truth has the article left out?
If you want more information on the reverse mortgage program or have any questions, give PS Financial Services a call at (888) 845-6630 or via email at info@PSReverseMortgage.com. We do not pressure those who inquire. We are simply here to help.