Foreclosure Prevention With Reverse Mortgages

Reverse mortgages can serve as an effective way to protect a homeowner from foreclosure.

A reverse mortgage can pay off an
existing mortgage and prevent foreclosure.

Foreclosure

If a homeowner is at risk of foreclosure they should move quickly because a reverse mortgage will take extra time to close if the property is nearing foreclosure. The homeowner will most likely have to get a short pay agreement in which the lender reduces the balance owed on the existing mortgage. That agreement often takes several weeks to negotiate.

1. Select a reverse mortgage specialist
2. Contact the bank that holds the existing mortgage
1. Explain to the bank that a short pay is needed or the home will go into foreclosure
2. The reverse mortgage specialist can help with the negotiations
3. Apply for a reverse mortgage

The proceeds from the reverse mortgage can be used for any purpose, which in the case of foreclosure prevention may include paying collectors, judgments, and liens. The reverse mortgage fees are paid out of the proceeds so the homeowner typically has no out of pocket expenses other than the counseling and appraisal.

If approved for a reverse mortgage, the homeowner will be able to stay in your home with no mortgage payments.

Bankruptcy

A homeowner can still get a reverse mortgage if they have declared bankruptcy.

• If filed under Chapter 7, the homeowner must have discharge papers
• If filed under Chapter 13, the reverse mortgage must be approved by the court and the trustee