Help! My home has a reverse mortgage and the lender is demanding payment in full!
Often senior citizens will utilize a reverse mortgage to supplement their living expenses after they retire. When you take out a reverse mortgage, a lender gives you a lump sum of money and puts a lien on your property. No payments are due to the lender until a qualifying event occurs. Generally, the qualifying event is the death of the borrower. However, other events, such as failing to maintain property insurance or failing to pay property taxes can also be qualifying events. When one of these qualifying events occurs, the lender will demand payment in full of the note within a specified period of time (generally 30 days). Failure to pay the note in full will result in the lender proceeding with a foreclosure and selling the property.
Can bankruptcy help you keep your home? Yes a Chapter 13 bankruptcy could help you stop the foreclosure. If the note has not yet been accelerated, a Chapter 13 can you help you pay delinquent property taxes over the court of the three to five year plan.
If the note has been accelerated the Chapter 13 can allow you to pay the note over the life of the Chapter 13 Plan. In some cases, we may even be able to reduce the amount owed on the note.
Earlier this year a senior citizen came to my office with a pending foreclosure sale. Her husband had taken a reverse mortgage on the house and when he passed away the lender demanded payment in full of nearly $90,000! Not only were we able to stop the foreclosure but we had a certified appraiser inspect the property. In his opinion the property was only worth $12,000! Eventually we had a hearing with the Judge and he agreed with our valuation. We were able to cram down the mortgage to $12,000 and let the Debtor pay that balance off over 5 years! If she makes all the payments on time over the five year period she will receive her discharge and once again own the home free and clear. Talk about debt relief!
If your reverse mortgage company is threatening you with foreclosure, we may be able to help. I have offices in St. Louis and Barnhart or can speak with you on the phone about your situation. My bankruptcy consultations are always free and I look forward to hearing from you.