California Aims To Keep Reverse Mortgage Users On Track

New government research shows that more than 30,000 U.S. homeowners are in default on their reverse mortgages and are at risk of losing their homes. Homeowners cannot afford to pay their property taxes and insurance which is causing an overwhelming amount of homeowners to be at risk of losing their homes. To help with this potential foreclosure disaster, organizations have teamed up with the government to help reverse mortgage defaults from increasing.

Non-Profit Organizations Counsel California Reverse Mortgage Holders

From now until April, a non-profit housing counseling organization called CreditAbility is working with the government to provide free counseling to California reverse mortgage borrowers who are at risk of going into default. The Department of Housing and Urban Development is providing $3 million to fund this counseling initiative. Hopefully, this service will help the many California reverse mortgage borrowers who are struggling to pay for their taxes and insurance associated with the upkeep of reverse mortgages.

"We will review each homeowner's financial situation in detail, explaining the options that may be available to them to help save their home," Michelle Jones, Senior Vice President of Counseling for CredAbility.

The agencies not only aim to educate and guide seniors in saving their homes but also in the process of education, recommend other financial resources.

"For consumers who need help paying utilities, buying low-cost groceries, or meeting other essential needs, counselors can help consumers locate these resources through referrals to other human service agencies," said Jones.

California Passes Protective Measures for Reverse Mortgage User

In addition to providing counseling services, California has put in place a number of protective measures to help reverse mortgage borrowers. In 2009, the state passed the Reverse Mortgage Elder Protection Act that put the following provisions into place:

California reverse mortgage lenders are prohibited from referring a borrower to a counseling agency, or paying for counseling services without first informing the borrower in writing that they may be a conflict of interest.
California reverse mortgage lenders must also provide, in writing, any other payment arrangements or business affiliations between the lender and the counseling agency.
California reverse mortgage borrowers have the right to a list of all nonprofit counseling agencies in the state that have been approved for the Department of Housing and Urban Development for counseling.

The California government hopes this bill will establish a new financial trust between reverse mortgage sales people and consumers by making sure that California reverse mortgage users fully understand all of the requirements of this type of transaction.

Talk with a housing counselor today to help keep your California reverse mortgage on track!