An increasing trend of reverse mortgages saddling middle-age children with the mortgages of their parents has lawmakers worried.
Reverse mortgages allow borrowers age 62 and older to borrow against the future value of their home, and do not need to be paid back until the borrower moves or dies. Should the borrower die, heirs are entitled to 30 days to decide what they want to do with the property, and have up to six months to put financing in place.
For many elderly borrowers, reverse mortgages offer a way to stay in the homes they spent years working to afford. But a growing list of middle-age children are now discovering that what once appeared to be a saving grace has saddled them with unexpected debt.
In a letter sent on Wednesday to Shaun Donovan, the secretary of the Department of Housing and Urban Development, Senator Charles E. Schumer and Senator Barbara Boxer urged the agency to clarify the rules around reverse mortgages, a type of loan that has increasingly saddled middle-age children with the mortgages of their parents.
Many reverse mortgage lenders have complicated the issue by aggressively pushing to foreclose on a home unless the mortgages are paid in full, and homeowners are not always aware of their rights.
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