Older adults can tap the equity built up in their homes by taking out a reverse mortgage. They get monthly payments made to them from a bank that holds the mortgage. The older adult(s) can use that money any way they like. When the mortgage holder dies, the house is sold to repay the loan. This was all fine and good while housing prices were rising.
But when housing values fell, homes that suddenly had to be sold were worth less than the value of the mortgage. So the surviving spouse suddenly owed more money than the house was worth. And if their name wasn't on the mortgage, the house would be taken away and sold.
AARP is bringing suit to right these wrongs. On March 9, 201, The New York Times ran an article about the suit, the details, facts behind it, and profiles of surviving spouses who are out the fees and possibly their homes.
If you are in a reverse mortgage or are considering taking one out, read this article first. Do your homework. Consult a good attorney.
The lawsuit argues that changes in late 2008 meant that surviving spouses not named on the mortgage must pay the full balance to keep the home, even if it is worth less.
Post a Comment