The FHA reverse mortgage program is popular with seniors who want to convert the equity they have in their home for cash. As underwriting guidelines have changed over the last few years with regards to people doing cash-out refinances, the FHA reverse mortgage guidelines have remained somewhat unchanged.
As long as a senior meets the age requirements and has equity in their property, they are eligible.
One of the rules of the FHA reverse mortgage program is that the senior agrees to pay their property taxes and keep the home in good condition - but apparently many seniors have fallen behind their property taxes and FHA is planning on addressing the issue with some upcoming changes. And up until now, FHA has been somewhat hesitant to foreclose on seniors who have fallen delinquent on their property taxes.
FHA doesn't exactly want the negative headlines of throwing a senior out of their home for not paying their property taxes, but they are searching for solutions that may work to help seniors who fall behind on their property taxes get current.
According to the Washington Post:
Both Fannie and the FHA say they are working on solutions that will not only flag defaults on seniors' tax and insurance payments earlier but also create a mandatory, step-by-step system to contact borrowers who are delinquent, determine the causes of the default, and if necessary refer them to charitable groups who can assist them and prevent foreclosure.
Vicki Bott, FHA deputy assistant secretary for single-family housing, said the new guidance this summer will emphasize a "curative approach" that allows seniors to "develop a plan to repay past tax and insurance delinquencies." However, if the plan doesn't pan out -- and the borrowers simply lack the capacity to pay what they owe -- FHA will be forced to pull the plug and foreclose.
So if you are a senior who has a reverse mortgage and have fallen behind on your property taxes - it is probably about time that you start working with your lender to get caught up - or possibly risk foreclosure.