Some reverse mortgage lenders are accused of using deceptive and aggressive tactics to lure senior homeowners into taking out a reverse mortgage. Among the complaints about information on reverse mortgages seniors say they are given are allegations that seniors were not informed of the risks associated with reverse mortgages and were told there was no risk of a reverse mortgage default leading to foreclosure. In truth, there is a possibility of defaulting, and many seniors have had their homes foreclosed when they were unable to pay the reverse mortgage.
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A reverse mortgage allows senior homeowners (over the age of 62) to borrow a certain amount of money against the value of their home without having to make any interest or principal payments. The mortgage is only due when the homeowner dies, sells the house or moves out. Accrued interest is added to the loan balance.
But, interest rates are typically higher than on traditional mortgages and the interest compounds, meaning by the time the homeowner has to pay back the reverse mortgage, he or she could owe more than double what was initially loaned. Furthermore, homeowners are still responsible for paying the insurance and taxes.
In some cases, older spouses have been put on the deed for the reverse mortgage and the younger spouses told their names could be added later. When their name wasn't added and their older spouse passed away, the lenders came looking for repayment and threatened foreclosure if they did not get it.
Information on Reverse Mortgage
In addition to how quickly the interest compounds, there are concerns with how aggressive lenders are in marketing to seniors. Complaints include lenders marketing to seniors who cannot afford the fees, not explaining the risks associated with reverse mortgages and deceptive sales tactics. Some lenders have been accused of marketing reverse mortgages as free money. Others reportedly told seniors there was no risk of losing their home.
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Some reverse mortgage lawsuits have been filed against lenders, alleging their tactics are illegal. In 2011, lawsuits were reportedly filed against Wells Fargo and Fannie Mae, alleging they used illegal means to foreclose on homes that were subject to reverse mortgages. According to the lawsuits, the people who took out the reverse mortgage paid insurance that guaranteed when the borrower died, heirs would have the opportunity to buy the home at its appraised value, not at the value of the full mortgage balance, if home prices fell. Despite this, some lenders are accused of forcing heirs to pay the full mortgage balance, not the appraised value of the home. When the heirs refused, they lenders allegedly pushed the home into foreclosure.
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Chicago, IL For some seniors, the money offered through a reverse mortgage can be a lifesaver. People living on a fixed income might not have enough money to make ends meet in the case of illness or injury, so money obtained from a reverse mortgage lender can seem like the ideal solution. Unfortunately, some reverse mortgage lenders are accused of unethical tactics, including misleading seniors about the risks associated with a reverse mortgage so they experience a reverse mortgage default and their home is foreclosed [READ MORE]
My mother did a reverse mortgage about six years ago. She is the only owner of the property, still resides there and pays the taxes and insurance as required. The yard and residence are kept up and the house looks better than most on the street. But, yesterday she received a letter from the mortgage company telling here that they are going to foreclose in November! WTF? Naturally, she is very upset and I can foresee her trying to get a straight answer out of anyone at the mortgage company being a three ring circus. She has proof that her insurance and taxes are paid. What should she do now? She was planning to call the mortgage company this morning, but I have not heard from her. I hate to have to say it, but if they people mess with my mother, they're going to have to deal with me, too and they are not going to like that.
Posted by Nancy Fookes
My mother was a victim of predatory loaning . She was well into her 80's with a brain disease and was not represented by anyone on her behalf helping her make this decision. SHE DID NOT NEED the money nor did she use any of the money from said loan. They secured themselves by paying her taxes which I believe started AFTER her death in 2012. I cared for her and lost everything in the process along with this house, so I thought. I left for Colorado to be with my daughter as I was suffering from a nervous breakdown. My brother moved into this house and didn't care for it and has some damage from his neglect. He failed to pay the HOA fees for almost 4 years adding up to 12,000 $, he got a lawyer and signed off on the house. I have done some digging and I'm not giving up on my rights to this house ! Can anyone tell me if I have a good case to reclaim this house ? With the sale I will payback her taxes and the HOA . What steps should I take from here ? Any advise would be most appreciated.
Posted by Nancy S
I too have become an heir to my deceased parents reverse mortgage. I am on disability myself and lived with my parents. I was their sole caregiver, tending to them round the clock, changing diapers, etc. for about 9 years. It was in 2008 they were coerced into a reverse mortgage by another bank to pay off that loan of 40,000.00. I found out from Suzy Orman's show that a bank is not supposed to do this to a person to pay off another loan!! SO, what gives. Now I have a foreclosure notice in my name at my doorstep(last May 2015) and I told my parents not to sign for the loan. It was my sister who talked them into this mortgage and a loan officer at East Carolina Bank in our hometown. I believe HUD and the Mortgage lenders are elder abusers. I had no say in this mess, but now since I am an heir to my mother's so called estate( of which nothing is left), I'm fighting to keep this roof over my head on my disability salary. I think they have also abused me while on disability. When two people are dying in you arms, they don't need to be coerced into a loan that mushroomed from $40,000 to $270,000 or more now!!! You know, I sent them a hefty bill for $649,000 for the abuse and damage and I am not finished yet. You know what, God's word says "Thou shalt not steal", right! And God saw it all!!!! God's word also says to forgive the debt right, " Our father who art in heaven, hallowed be thy name, thy kingdom come, thy will be done, on earth as it is in heaven. Give us this day our daily bread, and forgive us our debts as we forgive our debtors( forgive our trespasses as we forgive those who trespass against us), etc....
Since 2009 when my father died, my mother and I paid the bills and taxes on this property, and when Mom died in 2013, I have been the sole bill payer of the utilities and some of the taxes. I think my sister who changed the taxes in her name last year paid the balance, who knows!! I also got an insurance bill in my name and Mom's name in 2014-2015 and that was paid by someone and not me!!! Well well well, there's a snake in the grass in this mess!
Posted by Tania M. Lewis
Of all the publications I've read online concerning reverse mortgage fraud, I have yet to see anything regarding a reverse mortgage being granted to someone who was not sole owner of the property.
My father ~ James E. Lewis ~ who owned only 5/7ths of his property, was granted a reverse mortgage in 2011. There were others who owned the remaining 2/7ths. None of them were qualified for the loan nor did they benefit.
They found out about the reverse mortgage after my father passed away on 2014. Needless to say, they're enraged.
As heir & administrator of my father's estate, I feel I owe my family some kind of solution to a 2 year painful probate process. As it stands now, title is clouded because there are 4 different estates we're dealing with.
Right now, we're going through a default judgment suit. However, the 2/7ths titeholders are not responsible for paying back this loan! They had nothing to do with it.
Basically, what they're asking is to have tbis loan dismissed, or at least, negotiate more money in the settlement.
For almost 2 years, I've been trying to find pro bono attorneys, or attorneys that will work on contingency. I've even looked into law clinics where law students can take on unique cases such as this. So far, I've had no luck.
In sum, Generation/Champion Mortgage should not profit from such a serious mistake (in neglecting due diligence concerning title).
Posted by Don
Uncles house went into foreclosure with a date of sept 6 to be removed from home. Back taxes of $3,500 was paid by champion. I was told by them I could repay the 3,500 to them to stop the foreclosure. I am a little concerned if I paid it for him how do I know that the foreclosure will be stopped. How could I guarantee that this would rectify the problem.
Posted by Sandra Eszlinger
Major banks, four to be exact made 4 different loans within 9 months with closing costs and fees. Never met any one representing these banks. Everything was conducted over the telephone. The payoff on the original loan was $64,000 in 2008, now in 2016 it's estimated value is over half a million dollars.
Posted by Holli hysell
My name is holli Hysell and I'm 43 years old. Since March 2015, I had lost my mother, my child good home due to reverse raw mortgage my, my apartment, my car insurance, my cat is at a friends house and my dog is with me. From 1999-2015 I took care of my parents while my siblings started their lives and family. My dad died in 2006 and my mom in 2015. I took care of both of them. I have t dated since 1999. Since my moms passing I have been battling severe depression and anxiety and nightmares. I have run out of life insurance.y siblings cannot help me. I can't live in my car for long bc I'm about to lose the tag. My mom reversed mortgage the house and the banks have not put a lock on it. I want to go home but legally I can't. There isn't anyone living there. Can you plz help me find a way to go home. I have a cat an a dog and I'm afraid of losing them. Plz. I don't want to be homeless. I can't listen to your show in have no radio. What can I do?
Posted by donna s dixon
my mother was talked into a reverse mortgage in 09. they are harrasing her monthly. proof of insurance, paying taxes we are trying to pay in payments, saying they will take the house, they have run a 90k loan up to 140K with fees that were not disclosed, and we are faced every month with a new threat from them. I do not know what to do anymore. we are paying back a tax repayment to the mortgage now because they told her they would be paying taxes, they did but then came back at her after a few years saying she had to pay them back. now they just paid county taxes and not city taxes again! help!
Posted by John
Champion declared me in default because I never sent them evidence that I paid for homeowners insurance and rewrote my loan to lower my monthly payments a lot. I had insurance the whole time.
Posted by Debbie Neel
Sold home in a reverse mortgage 10 23/15 . Loan paid off by the Trust. The day my Father passed it became the property of the trust.
We Received 1098 in our Father's name and social security number. I Called RMS the company the reverse mortgage is thru, they said they couldn't change the 1098 to our Trust name and assigned EIN #. SO THE TRUST CAN CLAIM 108 K IN INTEREST. Is this true.
IS THIS LEGAL?
Posted by Houston
My mother took out a reverse mortgage in 2008. The loan was sold several times since then and she is now being told that her loan has been sent off to an attorney for collections amd to start the foreclose process. This is the first time she has heard of this. The last time she was contacted from the loan company was that she needed to show proof of her home insurance coverage. We contacted them and they said everything was fine. We don't understand what is going on.
Posted by Grass Valley
A friend of ours has come to us in tears. She is 75 years old and before passing away her husband took out a reverse mortgage that has been sold a few times. Most recently to Champion mortgage company. A few months ago they wrote and told her they were going to foreclose on her home for back taxes. She has never had any of the other companies tell her there was a problem and they are refusing to take her payments any longer. She has no savings and is in poor health which this doesn't help. Has anyone else gone through this with Champion Mortgage? All I see of them is one legal battle after another.
Posted by jeane petersen
Had I known that the interest rates on the reverse mortgage would amount to $900 a month I would never have considered it. My property taxes are $400 a month so together with the interest I am paying as much as my original house payment. This is not a good option for anyone to consider.
Posted by catherine mcnally
I also got reverse mtg, along with my husband who passed from als in 2011, Our bank at the time held house in trust. So Bank of America put lien on property for the loan ,understood,We have an adjacent lot which we were going to sign over to my son after my death, well I just found out because I put lot in same trust that house is in by mistake thinking they were still seperate because different tax numbers, Now because I want to sell to my son (the lot) Champion Mtg who bank of america sold my loan to will not write a letter to my bank releseing any interest in lot and are askiing all kiinds of questions about it and wants it surveyed and legal description. This lot has nothing to do with my original loan for reverse mtg. But my bank will not let me sell lot to my son without their(Champion mtg letter).
Posted by Doris Avery
my husband and I have a reverse mortgage . it's been sold to at least 3 different holders now. However, that's not been my problem. my question is this.
Say my husband and I, or just one of us, has a car accident , then perhaps it's our negligence [ God forbid ] we are only in our young 70's mind you...but, if that did happen and we didn't have enough ins. liability on our car or motorcycle polices and the injured parties sued us... how would that affect our reverse mortgage ?
I assumed that their/ Mortgage co. being the first lien holder nothing would come of it in that respect except they/ injured parties, would be entitled to whatever would be left over after our deaths and the house is sold...am I correct ? that's supposedly we couldn't afford to pay any judgement of the amt. over our policies. Is this interesting enough to answer me back ? or do I need an attorney to answer my questions ? thank you
Posted by New Jersey
My father had a reverse mortgage on his home; he passed away in 2008. I lived with him and remained in the home after his death with financial freedoms permission. I was never on the mortgage. Now that they are foreclosing, they took his name off the mortgage and are suing me personally. My father never put the house in his will and it was not left to me.
Posted by New Jersey
Elderly parent entered into a Reverse Mortgage loan. She died in 2007. Five servicers have attempted to collect this debt. We feel our mother entered into this agreement as a result of predatory
lending. At 81 years old, she was unable to make that kind of decision. The foreclosure process is now accelerated to final judgement stage.
Posted by Anonymous
I have to figure how to get hud to step up hud was given fordged falcefied documents intending to defraud hud and regsterrs office becoies of electronic recording from 2001 till eviction documents given in 2008 hud assured me a home gifted in wills of mom and dad trust and grant deed in 1993 and regersted that eney property buy trstmentery transfer!!irrovacible at death 2001 trust&wills agrementes Hud Fha world alliance the providers of reverse mortages rull book and prociduers revised 8/2008 no home being held for but in living trust to allow famley to have control my sister and myself co extutors and in will as co trustees the house for over 21/2 years no onw will provide singed documents no onw will show me the documents that were foraged made mom sine blank documents and blank places and no whitness no notary at singing od documents numbers don't add up I don't think hud was given assignment of deed not examond not verified stamped but also deed uses as proff was second deed first seven days earlery stamped no confederation ????//I requested change of deed but they made up a faxe to use non judicial state gives theves a unquestioned right to bo as they wish and make up deeds trustee documents with no proff WELL LETS JUST SEE THE REASON I COUDENT FIGHT AS HARD AS I NEED TO WITHOUT A LAUWER MY SSISTERS HELTH MORE IMPORNTENT WITH AN ANURISERIM BEHIND HART NOT OPRATABLE SPECIAL NEDS HANDYCAPED AND DISABELD IAM DISABELD AS WELL I AM GOWING TO TRY AND GET ANCERS AND IF I FIND OUT I WILL SHARE