Woman Forced to Repay Stolen Funds with Help of Reverse Loan

A former bookkeeper for the town of Merrillville, Ind., was forced to repay money she stole from the town. She was able to use a reverse mortgage to make reparations and stay out of jail. The woman, who had a gambling problem, stole $300,000 from the town between 2000 and 2006, according to the Post-Tribune.

Reverse Mortgage Used to Get Assets

The town aggressively pursued the stolen money, and went after the woman’s pension in addition to the reverse mortgage proceeds. So how exactly did a reverse mortgage help the town recoup lost funds?

Reverse mortgages allow homeowners aged 62 and up to convert home equity to cash. The former bookkeeper obviously had sufficient equity to qualify for a reverse loan, so a court ordered her to borrow the money to pay back a portion of the stolen funds. So far the town has been able to recover about $200,000 from her.

House Rich and Cash Poor

This story illustrates an extreme use for a reverse home mortgage, but borrowing money could help you out of a financial jam. If you are house rich and cash poor it may be difficult to make ends meet. Money borrowed with a reverse loan can be used for any purpose and the money doesn’t have to be repaid until you move or die.

Common uses for reverse mortgage proceeds are medical bills, paying off debt, and home repairs. You may have other expenses that a reverse loan can help you manage.

Use a Reverse Loan with Caution

There are pros and cons of reverse mortgages, so don’t just focus on all the stuff you can buy with loan proceeds. Some of the drawbacks to these loans include giving up home equity and reducing the amount of your estate for heirs. Also, borrowing money this way could affect your ability to receive some government benefits. Finally, if you stop using the home as your primary residence, for example if you steal money to gamble and end up in jail, the balance becomes due.

This entry was posted on Monday, April 26th, 2010 at 11:46 pm and is filed under Reverse Mortgage . 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.