Monterey, CA Seniors Thrown Out Of Their Own Homes Because Of Bad Reverse Mortgage Situations
by Richard Kuehn on 10/17/12
View From A Non-Profit Serving Carmel, Carmel Valley, Gonzalez, Greenfield, King City, Marina, Monterey, Pacific Grove, Pebble Beach, Salinas, Seaside And Soledad California There was a sad story recently in the New York Times about a number of senior citizens which were duped into taking reverse mortgages despite the fact that they could not afford the fees associated with them which result in foreclosure if not paid. These include property taxes, maintenance, etc. Widows, the article says, are now facing eviction after they were pressured to keep their name off of property deeds following the death of their husband. Linda McMahon, a 65-year old widow, told the reporter than in 2005 when her husband was 82 and she was 58, Wells Fargo sold her husband a reverse mortgage and said she could be put on the deed at age 62. Caregiving for her husband during that period she didn't think to do it, and after he died the bank changed the locks on the doors, told her to get out and put the house on the market. There are many of these sad stories. The good news is that the Consumer Financial Protection Bureau (a new government agency) is getting ready to implement new rules which would require better disclosure for consumers and well as stricter supervision of lenders. This wouldn't help the 775K who have already taken out reverse mortgages, but it could help seniors in the future. The situation, unfortunately, is bleak. A whopping 9.4% of those with reverse mortgages are in default on their loans, up from just 2% a decade earlier. The problem appears to have been created because major players like Bank of America, MetLife and Wells Fargo have left the once lucrative market after the recession. That has left smaller players, many of them using high-pressure tactics, selling reverse mortgages to seniors. There is also some fraud going on. One former subprime mortgage broker is being sued for fraud by the Federal Trade Commission after seniors claimed he sold them reverse mortgages and pocketed money from the loans and didn't put money towards home repairs as promised.
Please note that this blog reflects my personal opinion and may or may not reflect the opinion of HandsTo Help Seniors and the individual members comprising the Board of Governors.
