A reverse mortgage is a loan that is only available to homeowners who are 62-years and older. Unlike other mortgage loans, the loan does not have to be repaid in monthly payments. Instead, it has to be repaid when the homeowner/borrower moves out of the house or dies.
The fees tend to be very high. The interest builds up over the years. When the homeowner/borrower moves out or dies, the amount borrowed, plus the fees, plus the interest have to be paid. It is possible then that the family must sell the house or the house goes into foreclosure.
Most reverse mortgages are insured by the federal government, through the Department of Housing and Urban Development (HUD).
Reverse mortgages can be helpful but there are disadvantages and risks. For example, if a senior is already having trouble paying taxes and insurance, a reverse mortgage might be a bad idea. The mortgage company can foreclose if tax and insurance are not paid. Also, seniors should be very careful if the lender wants one of the homeowners taken off the deed. If only one person signs for the loan, the mortgage company can try to foreclose if that person dies.
Seniors should be careful about scams and should seek trusted advice in addition to counseling that is required
What we can do:
CLS will give advice and referrals about reverse mortgages and will sometimes represent people faced with foreclosures on reverse mortgages.
How to get help:
Community Legal Services
North Philadelphia Law Center
1410 West Erie Avenue
Philadelphia, PA 19140
Monday, Wednesday, Friday
9:00 am -12:00 pm
Save Your Home Philly Hotline
If you are in foreclosure or have received a foreclosure notice