For senior citizens in New York who are struggling financially, getting a reverse mortgage on their home might seem like the answer to their financial challenges. However, what they may not know is that even with a reverse mortgage, their home could still be foreclosed upon. It is for this reason that lawmakers in the New York legislature introduced a bill to protect consumers in such situations.
Under the bill, homeowners with a reverse mortgage will be granted certain consumer protections that they currently do not have. For example, lenders will have to notify reverse mortgage borrowers at least 90 days before commencing a foreclosure action. They will also have to provide reverse mortgage borrowers with the contact information about no-cost resources that might be able to help reverse mortgage borrowers negotiate a resolution with their lenders in order to avoid foreclosure. Reverse mortgage borrowers would also be entitled, under the bill, to in-person foreclosure settlement conferences with the entities that are initiating the foreclosure.
This situation came to lawmakers’ attention after a number of news articles reported an increase in foreclosure actions regarding reverse mortgage borrowers. According to some, reverse mortgage lenders in the state were deceiving or exploiting seniors with regard to the reverse mortgages being offered.
While it is not anticipated that the New York legislature will reconvene before the end of 2016, proponents of the bill plan to keep pushing the issue in 2017. Until then, we will have to see how this bill progresses through the legislative process. If it passes, it could help seniors in the future who take out reverse mortgages, but, due to their financial circumstances, end up facing foreclosure.
Source: Reverse Mortgage Daily, “New York Pushes for Stronger Reverse Mortgage Foreclosure Protections,” Aug. 29, 2016
