Reversing Course: Stemming the Tide of Reverse Mortgage Foreclosures Through Effective Servicing and Loss Mitigation

33 Pages Posted: 23 Jan 2018 Last revised: 18 Feb 2018

See all articles by Sarah Mancini

Sarah Mancini

National Consumer Law Center

Odette Williamson

National Consumer Law Center

Date Written: January 16, 2018

Abstract

The government-backed reverse mortgage program provides a crucial safety net for older adults, allowing them to close the gap between their income and expenses by converting their home equity to cash. But in recent years, the program has been threatened by surging insurance claims, on the one hand, and a rising tide of defaults on the obligation to pay property taxes and insurance, on the other. HUD has responded to both of these crises by implementing new origination rules that limit access to the reverse mortgage product for low-income borrowers most in need of the financial relief that reverse mortgages can provide. Rather than curtailing the program for those that need it most, more focus on reverse mortgage servicing and on implementing robust loss mitigation could reduce property charge foreclosures while also preserving the core mission of the HECM program to allow vulnerable elders to tap into home equity while aging in place.

Keywords: reverse mortgage, foreclosure, elder law, mortgage servicing

JEL Classification: I31, I38, G18

Suggested Citation

Mancini, Sarah and Williamson, Odette, Reversing Course: Stemming the Tide of Reverse Mortgage Foreclosures Through Effective Servicing and Loss Mitigation (January 16, 2018). Elder Law Journal, Vol. 26, No. 2, 2018. Available at SSRN: https://ssrn.com/abstract=3102975 or http://dx.doi.org/10.2139/ssrn.3102975

Sarah Mancini (Contact Author)

National Consumer Law Center

7 Winthrop Square, 4th Floor
Boston, MA 02110
United States

Odette Williamson

National Consumer Law Center ( email )

77 Summer Street
Boston, MA 02110
United States

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