REVERSE MORTGAGE INFORMATION
Reverse Mortgage Rescues Retirees from Foreclosure
In communities all across the nation, an increasing number of retirees are faced with the very real
threat of losing their home because they can no longer afford to make their mortgage payments.
According to RealtyTrac’s U.S. Foreclosure Market Report, more than 2.2 million foreclosure
filings were reported nationwide in 2007, up 75 percent from 2006. This amounts to one
foreclosure filing for every 92 households.
One of the driving forces behind the increase in the number of properties in foreclosure is the
impact of monthly mortgage payments increasing for homeowners with riskier types of
adjustable-rate and subprime mortgages.
These types of mortgages are especially risky for senior homeowners who are on a fixed or
limited income. The higher interest rate and payment increases can put their ability to make their
monthly mortgage payment at risk.
AARP has expressed concern regarding the growth of subprime mortgages among seniors. They
claim that studies have shown that minority and older borrowers are disproportionately
represented in the subprime mortgage market. In addition, AARP is concerned that aggressive
“push marketing,” often conducted by subprime lenders, leads to loans that may not be
appropriate for senior borrowers.
Twenty-seven percent of senior households currently have a mortgage on their home and could be
at risk. Growth in riskier mortgages for these seniors is primarily due to escalating housing costs,
medical expenses, and energy prices, as well as an increase in credit card debt.
Along with the rising cost of living expenses, seniors are especially vulnerable to foreclosure due
to the cost of a prolonged illness or the loss of part of their income from Social Security when
their spouse passes away.
Retirees facing foreclosure typically only have two options. They can try to refinance their
mortgage, which includes past-due payments, late fees, collection fees, and legal fees assessed by
the lender. With today’s tighter credit standards, this option may not be possible for many
retirees.
The other option is to try to salvage some equity by selling their home. However, after
paying the added default and sales transaction costs, the retiree may be left with little money to
buy another home and will be forced to rent.
The reverse mortgage provides a third option: it enables homeowners 62 and older to pay off their
existing mortgage and to have no mortgage payment for as long as they live in their home.
Because credit and income are not used to qualify for a reverse mortgage, we are able to help
our senior customers save their home from foreclosure. There is nothing more gratifying than the relief on a customer’s face when we tell them that they will be able to stay in their home.
The reverse mortgage option may not work for all senior homeowners, especially those with a
high mortgage balance. If possible, it is a good idea to explore the reverse mortgage option
before they go into default on their mortgage. This way they can avoid the increase in their
mortgage balance from added fees so they have a better chance of qualifying for a reverse
mortgage.
threat of losing their home because they can no longer afford to make their mortgage payments.
According to RealtyTrac’s U.S. Foreclosure Market Report, more than 2.2 million foreclosure
filings were reported nationwide in 2007, up 75 percent from 2006. This amounts to one
foreclosure filing for every 92 households.
One of the driving forces behind the increase in the number of properties in foreclosure is the
impact of monthly mortgage payments increasing for homeowners with riskier types of
adjustable-rate and subprime mortgages.
These types of mortgages are especially risky for senior homeowners who are on a fixed or
limited income. The higher interest rate and payment increases can put their ability to make their
monthly mortgage payment at risk.
AARP has expressed concern regarding the growth of subprime mortgages among seniors. They
claim that studies have shown that minority and older borrowers are disproportionately
represented in the subprime mortgage market. In addition, AARP is concerned that aggressive
“push marketing,” often conducted by subprime lenders, leads to loans that may not be
appropriate for senior borrowers.
Twenty-seven percent of senior households currently have a mortgage on their home and could be
at risk. Growth in riskier mortgages for these seniors is primarily due to escalating housing costs,
medical expenses, and energy prices, as well as an increase in credit card debt.
Along with the rising cost of living expenses, seniors are especially vulnerable to foreclosure due
to the cost of a prolonged illness or the loss of part of their income from Social Security when
their spouse passes away.
Retirees facing foreclosure typically only have two options. They can try to refinance their
mortgage, which includes past-due payments, late fees, collection fees, and legal fees assessed by
the lender. With today’s tighter credit standards, this option may not be possible for many
retirees.
The other option is to try to salvage some equity by selling their home. However, after
paying the added default and sales transaction costs, the retiree may be left with little money to
buy another home and will be forced to rent.
The reverse mortgage provides a third option: it enables homeowners 62 and older to pay off their
existing mortgage and to have no mortgage payment for as long as they live in their home.
Because credit and income are not used to qualify for a reverse mortgage, we are able to help
our senior customers save their home from foreclosure. There is nothing more gratifying than the relief on a customer’s face when we tell them that they will be able to stay in their home.
The reverse mortgage option may not work for all senior homeowners, especially those with a
high mortgage balance. If possible, it is a good idea to explore the reverse mortgage option
before they go into default on their mortgage. This way they can avoid the increase in their
mortgage balance from added fees so they have a better chance of qualifying for a reverse
mortgage.