Reverse Mortgage Guide

U.S. News & World Report has an interesting reverse mortgage article entitled How the Housing Law Affects Reverse Mortgages.

It makes the point that “even after taking out a reverse mortgage, you remain responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses. If you don’t maintain homeowner’s insurance, for example, you risk the loan becoming due and payable. ‘If there is hurricane or flood damage to the home that you can’t repair, the loan is due,’ cautions Prescott Cole, an attorney and elder-care advocate who has worked with numerous reverse-mortgage borrowers. ‘If you can’t repay the loan, you will lose your house.’”

I suspect this information would have been better had it mentioned that an FHA-insured reverse mortgage is a non-recourse loan. A borrower is never liable for the debt beyond the value of the home.

Moreover, as to “losing” your home if it cannot be repaired because of a hurricane or flood, in effect with a reverse mortgage in such a situation you have sold it, woeful condition and all. You may well have done far better than neighbors with a forward mortgage where the loan amount is due and payable regardless of what happens to the property.

For the full story, see: How the Housing Law Affects Reverse Mortgages.

This entry was posted on Wednesday, August 20th, 2008 at 3:30 am and is filed under Uncategorized . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.