Companies that are selling reverse mortgages to elderly borrowers are now engaged in practices of swift foreclosures, sometimes days after the death of their customers, despite a federal regulations allowing heirs more time and also allowing them to pay 95% of the current fair market value of the property.
The foreclosures are happening nationwide, according to an article in the New York Times. Children of elderly parents are seeing the property pushed into foreclosure before they have time to obtain financing to pay off the mortgage. A reverse mortgage allows homeowners 62 and older to borrow money against the value of their homes that does not need to be paid back until they move out or die.
Under federal rules, the children of the owner are supposed to be offered the option of settling the loan for a percentage of the full amount. However, reverse mortgage companies are threatening to foreclose unless the heirs pay the mortgages IN FULL.