101 year old evicted in Reverse Mortgage T&I Default: Industry Leader Update

[vimeo id=”29168490″ width=”601″ height=”338″]

The behind the scenes of the eviction of a 101 year old Detroit woman due to tax & insurance default on reverse mortgage

Video grabs from WXYZ television in Detroit.
Original Story of eviction here.    Updated story of eviction here.

Reverse Mortgage Default

10 comments

CLIFF RIDDLE September 19, 2011 at 9:00 am

i agree with you the,,,, son was at default…….cliff

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Jeffrey Bochner September 19, 2011 at 10:39 am

Servicers should have human check-in when this occurs. It’s so silly to evict seniors for non-payment of taxes/insurance. Glad HUD used common sense to help the borrower…it shouldn’t hurt the industry. Let’s face it, after not payiing your taxes for awhile there will be a tax-lien sale anyway.

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James E. Veale, CPA, MBT September 19, 2011 at 1:26 pm

I view this from the total opposite end. When lenders start foreclosing, how bad will we look in comparison to HUD in this case. Everyone in default NOW has the right to feel HUD will bail them out.

The whole thing is a mess and poor Ms. Hollis will she ever get a good night’s sleep again? What about her things? Is HUD going to reimburse her for broken, lost, or stolen things? Did HUD put them back in the house?

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lancy sun September 19, 2011 at 10:55 am

Hud should have a regulation add on that the borrower should authorize the heirs or third contact that when borrower aged or sick some one will remind them pay the property tax and insurance. At least at the closing table know who shall contact to help, if at that time happens?

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Malcolm McLean September 19, 2011 at 11:06 am

Easy to blame the son – but if mom is 101 – the son must be in his late 70’s or maybe early 80’s.

My understanding (certainly in California) that a tax lien can be sold after five years – so it took five years of non payment to get to this point – a few years after she got the reverse.

I don’t know about you – but if I am late a month on my tax payments I start getting red letters from my friends at the tax department.

How much exactly was she delinquent? You never mention that.

If this is a home in South Detroit, and she has lived there for decades – the tax bill cannot be that much.

Can you find out and put this all into perspective?

A few thousand?

I think this whole issue is part and parcel of dealing with senior homeowners whose minds start to slow down as they get older.

Obviously someone was responsible to pay the utilities – so at some point there was a conscious decision not to pay the property tax.

There isn’t any immediate action if the property tax isn’t paid – so it gets ignored, and ignored.

Maybe having an option to may monthly rather than yearly or every 6 months might be one solution?

I know there are programs that cover the cost of tax and insurance – but if a borrower is looking for the maximum return in cash – then these programs are not going to be chosen as they require a much broader equity position in the home and returns less cash.

Perhaps someone at a lender/servicer could give us their point of view.

What about a response Security 1 – as you have such a close relationship with them.

What do they do when a client is late on insurance and property tax?

So Shannon – what do you think is the solution?

Anyone? Anyone?

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Shannon Hicks September 19, 2011 at 11:16 am

Malcom,

The media never alluded to the exact timeframe she was behind in property taxes but it was said notices were sent for at least one year and ignored. Once the loan was assigned to HUD they use their own private servicer who would have handled this issue.

The article did mention a ‘summer tax bill’ around $500. I am not familiar with Michigan’s property tax system when home values fall. That being said this whole story points to the need to assess a borrower’s ability to meet the ongoing obligations of the loan and also the need for servicers to verify in person if the senior is no longer mentally able to understand their situation or if a family member is being neglectful as in this instance.

I am unaware of Security One’s policy for T&I non payments. If we hear what it is I will be sure to post.

It appears this woman would have been questionable as to meeting the proposed guidelines for Financial Assessment. One solution for borderline borrowers would be a mandatory set aside… We too are asking for inputs on possible solutions. Thank you for participating in the discussion.

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James E. Veale, CPA, MBT September 19, 2011 at 2:16 pm

Shannon,

News on Saturday, Industry Update on Monday, and Food for Thought on Friday covers it all. Great job but tell Eric we miss him. I think he would have fun on this one!!

HUD has created a problem with future headline risk for lenders. How mean and evil will the industry appear when it forecloses but does not give the keys back?

HUD was put to the test and failed miserably. Imagine a 101 year old woman sitting in a wheelchair stewing in her own waste water. Would this have happened under Commissioner Montgomery? Who knows?

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Gary Packman September 19, 2011 at 3:47 pm

Shannon, one thing I feel should be done to help our reputation is to set people like Shari Olefson, the so-called RE expert used by Fox news to explain this foreclosure, straight. Although she has a lot of the facts correct to make a statement like “the bank takes your home” is an egregious error that will end up depriving senior citizens of this much-needed help. I’m sure by now that you are well aware of the interview that aired on Fox news on Sunday and will make every attempt to get an opportunity for a rebuttal. Good luck!

Thanks for your continued insight and support of one of the greatest financial instruments to ever come along for seniors.

Gary Packman
Reverse Mortgage Consultant
MetLife Bank

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mike September 20, 2011 at 3:38 pm

Anyone who sells reverse mortgages should
ALWAYS review a seniors cash flow when looking to do a reverse for them. If doing a reverse,will there be enough cash for them to pay taxes for the next 5-10 years. How do they pay there taxes now? The reverse mortgages can not be used as a bandaid. You are putting the senior in a worse position , if there is only enough money to cover one year of taxes. You have to think like a financial planner…is this a suitable program for the senior..financially and emotionally.

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Susan November 30, 2011 at 4:51 pm

Homeowner’s over 100 shouldn’t have to pay property taxes they should be given a homestead credit automatically! Most of the time seniors are paying more than their fair share just because they don’t know the laws. Did HUD contact the alternate contact? Did they try to call and let then know what was happening? Or just send letters. What a debacle. No reason to wonder why the RM program gets a bad rap HUD makes it for themselves.

Reply

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