Foreclosure Homes - Foreclosure of a reverse mortgage

Each of us desires to own a home and most do so by obtaining a mortgage.  However when the borrower defaults to make payments of the money at the appointed time, then a foreclosure occurs.  Foreclosure is therefore the process in which the homeowner is barred from redeeming a mortgaged estate.  In other words, a foreclosure causes the estate to become the absolute property of the lending institution.

Foreclosure Mortgages

Many seniors are struggling with rising living costs. These include the rising costs in fuel, food and medical bills. Unemployment, divorce and even death are other reasons that may lead to a failure in payments of the loan. (Sean Tennant)

With foreclosures rising, reverse mortgages are becoming the most excellent option out of this predicament, especially for seniors aged 62 and over. A reverse mortgage can prove to be a life-line that rescues the seniors in danger of losing their homes to foreclosure or struggling to meet payments on high-interest-rate loans to keep their homes.

Reverse Mortgage Fewer Requirements

A reverse mortgage requires no income or credit qualification and is applicable to anyone above the age of 62. What this means for the seniors is that even if the mortgage institution had filed a notice of default, they would still be able to apply for a reverse mortgage loan and thus never make another loan payment in their life.

This is because the bank makes payment to the home owner instead of the reverse. This strategy of using a reverse mortgage against a foreclosure is done by persuading the original mortgage institution to take the money generated by a reverse mortgage in lieu of foreclosure.

Kelly Green gives the following case study of Gloria Forts, a 62-year-old retired federal worker in Forest Park, Ga. in the Wall Street Journal.

"After refinancing her home in August 2006 with a $106,500 mortgage from Fremont Investment & Loan in Brea, Calif., Ms. Forts was facing monthly payments of $950.41. That consumed 70% of her monthly income from Social Security and a pension. Intending to start a new job, she found herself kept at home by diabetes complications and back surgery. In June, she sought help from the Atlanta Legal Aid Society.

There, she found William J. Brennan Jr., a veteran housing attorney.  After Ms. Forts received a foreclosure warning in October, Mr. Brennan connected her with Genie McGee, a reverse-mortgage specialist with Financial Freedom Senior Funding Corp., an Irvine, Calif., unit of Indy Mac Bancorp Inc. She determined that Ms. Forts would qualify for a reverse mortgage of about $61,000.

Mr. Brennan sent Fremont's loss-mitigation department a letter proposing that the company agree to take that sum and cancel its plans to foreclose on the house. On Dec. 3, the day before the foreclosure sale was supposed to take place; Fremont agreed to the deal and stopped the foreclosure."

It is important to note that for a reverse mortgage to stop a foreclosure, the value of the property must far exceed the remaining amount on the mortgage.

References

• Kelly Green, (2007). A way for Homeowners to back out of a bind. http://online.wsj.com/article_email/SB119862780200649751-lMyQjAxMDE3OTI4NjYyMjY3Wj.html
  
  
• Michael G. Branson (CEO All Reverse Mortgage Company) http://www.allrmc.com/articles/Stop_Foreclosure_with_a_Reverse_Mortgage.php
  
  
• URL. http://ezinearticles.com/?Stop-a-Foreclosure-With-a-Reverse-Mortgage&id=1357448
  
  
• Anthony Fields, CPA (2006). The Reverse Mortgage Residential Foreclosure Program. Dog Ear Publishing.