The 2015 federal fiscal year, which ended in September, saw almost 24,000 borrowers receive notices that their reverse mortgage had become due. Data from the Department of Housing and Urban Development (HUD) shows that figure is three times the number of reverse mortgages that came due in 2014. Reverse mortgages can be declared due and payable by several different actions, the most well-known of which is moving out of the home. However, few homeowners understand that falling behind on their insurance premiums or real estate taxes can also make their reverse mortgages due immediately.
Recent changes made by the federal government have resulted in a larger number of lenders threatening foreclosure on properties if reverse mortgage borrowers aren’t able to get caught up on their taxes or homeowners’ insurance. If lenders do not foreclose on these properties, they may lose their federal insurance that protects them from loss on reverse mortgages.
While 2015 saw three times the number of reverse mortgage homeowners being threatened with foreclosure, 2016 may see even more if the trend in Massachusetts is repeated across the country. In the state, 2015 saw 266 reverse mortgages declared due and payable. By the end of February 2016, five months into the 2016 federal fiscal year, a total of 292 additional reverse mortgages were declared due, more than what the 2015 fiscal year saw in total. If lenders continue to be this aggressive, 2016 may double or even triple the numbers from last year.
Moneytips can help you refinance your existing home loan.