Recently, I had a client come in and ask me about reverse mortgages and how they were affected in Bankruptcy, says Bankruptcy Attorney Victorianne C. Maxwell of Maxwell Law Firm, PLLC and I decided to do some research on it.
WHAT IS A REVERSE MORTGAGE
A mortgage in which a homeowner, usually an elderly or retired person, borrows money in the form of annual payments which are charged against the equity of the home. This seen as an alternative to a home equity line.
To qualify for a reverse mortgage the borrower must meet these requirements:
- Be 62 years of age or older ;
- Own the property outright or have a small mortgage balance;
- Occupy the property as your principal residence;
- Not be delinquent on any federal debt AND;
- Participate in a consumer information session given by an approved HECM counselor.The requirements of the reverse mortgage a less stringent than a traditional mortgage. No income or employment qualifications are required of the borrower. No payment is not required as long as the property is your principal residence and the obligations of the mortgage are met and the closing costs may be financed in the mortgage.
CAN THE BANK FORECLOSE IN A REVERSE MORTGAGE
Borrowers can choose an adjustable interest rate or a fixed rate. So when the payments become due either because the borrower no longer use the home as a primary residence, defaults, or dies. FHA allows reverse mortgage lenders to go ahead and foreclose on properties that warrant it. Foreclosure can occur when the debtor fails to make the payments due or defaults in some other fashion such as a failure of pay taxes or maintain home owner’s insurance. If the Owner dies than the heirs owner must pay off the mortgage either by refinancing or assuming the mortgage debt in order to keep the home.
ARE THEIR ANY WAYS TO VOID THE REVERSE MORTGAGE
Immediately after closing you have an opportunity to void the reverse mortgage. However, once you have started receiving payments the mortgage can not be voided and you will have to pay off the balance of loan (payments made) to cancel the loan thereafter.
REVERSE MORTGAGE AND BANKRUPTCY
Your home is considered an asset and anything in access of exemption allowed for equity in your jurisdiction, can be used to satisfy some of your debts before you are granted a discharge in a Chapter 7 Bankruptcy. You should definitely speak to a Bankruptcy Attorney in your area if you are considering bankruptcy and you have a reverse mortgage to know what the implications of filing for bankruptcy will be.
Maxwell Law Firm represents clients in North Carolina with: bankruptcy court, filing for bankruptcy, chapter 7 bankruptcy, foreclosure defense, chapter 13 bankruptcy representation, and loan modifications. You may schedule your appointment by calling 704-780-1100 or save 25% off the fees and schedule online at http://maxwelllegal.com/consultations. The Law Offices of Chirnese L. Liverpool assist debtors in Los Angeles with filing for Bankruptcy in California they can be contacted at 818-714-2200.
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