Last year saw a 646 percent increase in foreclosures against seniors with federally-insured reverse mortgages as compared to the previous seven years, according to Department of Housing and Urban Development (HUD) data received by a Freedom of Information Act request made by the California Reinvestment Coalition and Jacksonville Area Legal Aid.
According to the organizations that obtained the HUD data, there were 32,976 foreclosures on federally-insured reverse mortgages between April 2016 to December 2016. In comparison, there were 41,237 total reverse mortgage foreclosures in the federal program between April 2009 and April 2016. When computed as a monthly average, foreclosure levels skyrocketed from 491 per month from April 2009 to April 2016, to 3,664 foreclosures per month from April 2016 to December 2016.
“This new data adds to our concerns that HUD is asleep at the wheel when it comes to protecting vulnerable seniors from foreclosures that shouldn’t happen,” said Kevin Stein, Deputy Director at the California Reinvestment Coalition. “Seniors are losing their homes at an alarming rate, and HUD appears to be doing little more than rubber-stamping foreclosure requests by servicers who should be making every reasonable effort to preserve senior homeownership whenever possible.”
“Each reverse mortgage I have reviewed contains a clause that requires the lender/servicer to ‘reinstate’ the mortgage as soon as the condition of default is cured, either before or after the foreclosure lawsuit is filed,” said Lynn Drysdale, Division Chief of the Consumer Advocacy and Litigation Unit at Jacksonville Area Legal Aid. “It is very difficult to understand why lenders and servicers continue to ignore this requirement and create arbitrary servicing hoops for seniors to jump through so, ostensibly, the servicer can foreclose. Seniors deserve protection from servicer mistakes, and HUD needs to dramatically step up its monitoring and enforcement of this industry before it’s too late.”
