Although I have always held the belief, and felt strongly that it was correct, as usual, I like to have hard irrefutable facts backing up my opinion, no matter how strong or how much I feel I can justify my belief. As mentioned in several of my blogs lately, I have said most people that get reverse mortgages are helped and it can prevent foreclosure, and rarely are they foreclosed upon. The fact that a reverse mortgage can prevent foreclosure, is just that, a fact. The HUD/FHA backed HECM reverse mortgages are designed that if a borrower qualifies with enough equity, their application is processed much quicker - usually 1-2 weeks as opposed to about 4-6 weeks on a normal application. I can speak for that, as I have helped five different companies over the past three years get their reverse mortgage loan application paperwork signed, and then returned to do the signing as well. So I knew the time frame and their averages. What I believed strongly to be the case, but didn't have the evidence to back up, was how rare or not rare a foreclosure was on a reverse mortgage.
Until now of course! I looked at Lis Pendens filed in Charlotte County for the week of June 16 to June 20, 2008. While LP is not the exact foreclosure, it is the first step in the process. Obviously, if it will be foreclosed upon, this step must happen first. Most LP's that are filed, will usually end up in foreclosure. Obviously, not all, but the majority probably will be. here is what I found
- I found 306 people listed
- Of these 208 were different people served - that is, eliminating the 'from' portion of the website and leaving only the 'to' people
- Of these, after deleting commercial foreclosures, and multiple people served the same summons (ie: husband & wife - count this as one) I was down to 61
- The number of these that had reverse mortgages on them - - - - ZERO
As I felt all along, it was very few. I'm not surprised, and am curious how long I would have to search to come across one, but I'm sure it would be a while, and I just don't have that extra time. But 0/61 makes my point very load and clear - reverse mortgages CAN be foreclosed upon, but they are VERY, VERY rare, and as stated before, they actually can HELP a person stay in their home and PREVENT foreclosure! Another belief of mine now backed up by proof of hard statistical facts that cannot be denied.
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Ronald- They can be foreclosed upon? How is that? As arent they only required to make a payment when the homeowner either sells the home or passes away? I had a lawn care client who had a reverse mortgage that passed away several months ago and the family tried to give the house back to the bank as it is not worth what is owed on it and the bank said they won't take it for atleast a year, and the family cannot sell it for less, unless they want to pay the difference. The only way I can really see for them to be able to foreclose on a home with a reverse mortgage is if the homeowner passes away and the family doesn't sell it.