A reverse mortgage loan, also known as a Home Equity Conversion Mortgage
(HECM), is a type of loan which enables older homeowners (62 or older)
to withdraw some of the equity in their home. Unlike a traditional home
equity loan, HECM borrowers are not required to repay the loan; repayment
occurs when the home is sold, or is no longer the borrower's principal
Reverse mortgages require no monthly mortgage payments, but the homeowner
is still responsible for the payment of property taxes, homeowners insurance,
and for performing regular routine maintenance. When these obligations
are not met, the reverse mortgage lender can file for default of the loan.
Once this default is filed, the lender has every right to file for foreclosure
of your home — even if the home has already been paid off entirely
prior to taking out the reverse mortgage.
When a reverse mortgage lender claims the borrower has defaulted on the
loan, the mortgage company may begin ordering "drive-by" property
inspections, generally limited by law to once every 30 days.
Sadly, reverse mortgage lenders such as
Champion Mortgage and other lenders of these types of loans specifically take advantage
of homeowners who have experienced reverse mortgage default. These reverse
mortgage lenders charge for repeated, unnecessary, and unreasonable "drive-by"
property inspections lasting only a few seconds. These practices are not
done to inspect the property, as required, but rather are designed to
maximize the fees assessed on the borrowers' account —along
with the costs associated with the original default of the mortgage. The
New York State Department of Financial Services (NYDFS) has opened an
investigation into two reverse mortgage companies, including Champion
Mortgage, the nation's largest reverse mortgage lender. The CEO of
Nationstar, Champion's parent company, said that the investigation,
opened after multiple consumer complaints were lodged, said that this
was simply "business as usual." If the NYDFS finds any wrongdoing,
fines of up to $2,500 per day per violation can be imposed, as well as
the revocation of these lender's licenses to operate in the State
of New York.
While the thought of a "loan" against your home may sound like
a good idea, there are always things to take into consideration prior
to signing on the dotted line. At a time in their lives when elderly homeowners
are the most vulnerable, it is crucial to ensure that these homeowners
understand the ins and outs of the loan they are considering. Often times,
elderly homeowners are not fully informed of any potential risks of their
reverse mortgages and are even told that there is no risk of a reverse
mortgage default leading to foreclosure.
If you or someone you love has been a victim of unfair or deceptive reverse
mortgage lender practices, please contact Golomb & Honik P.C. today
at (215) 278-4449 or fill out our confidential contact form. The national
consumer protection lawyers at Golomb & Honik, P.C. have successfully
represented individuals in Pennsylvania, New Jersey, and throughout the