Foreclosure

questions & answers

Question: Can HUD or FHA garnish my Social Security and Honeywell Pension for expenses if my Reverse Mortgage defaults?

Answer:

A reverse mortgage is a specific type of mortgage for persons 62 and over that pays them from the equity accumulated in their homes.  Most reverse mortgages are "non-recourse" loans, the lender only has a security interest in the property.  This means that in the event of a default, the lender's only remedy is to foreclose on the property.  If a borrower were to default on a reverse mortgage that is classified like most as being "non-recourse", the lender could only institute a foreclosure process to collect the money owed.   In this scenario, the borrower would not be personally responsible for any amount of the reverse mortgage not paid by the foreclosure.  If a borrower is in danger of default he or she should determine if the borrowing agreements contain a "non-recourse" clause, additionally there are resources that may be able to help a borrower avoid default.  The Consumer Financial Protection Bureau has information on Default, and Counselling resources.  There is also useful information regarding reverse mortgages on the Federal Trade Commission's website.