- By Kenneth R. Harney, Special to the Times |
“WASHINGTON — Jeanette Ogle, a 92-year-old widow with a reverse mortgage on her house, got a birthday surprise last week: She did not lose her home at a scheduled foreclosure auction that had drawn scrutiny from federal and state agencies and consumer advocates.
Because of obscure federal rules that critics say have snared unwitting elderly homeowners across the country, Ogle’s home in Lake Havasu City, Ariz., had been set for foreclosure on Feb. 27, her birthday. But after interventions on her behalf by the federal Consumer Financial Protection Bureau, AARP and the Arizona Attorney General’s Office, the auction was canceled.
According to government estimates, more than 9 percent of all federally insured reverse mortgages were in default in 2012. This is especially significant because so many reverse mortgage borrowers, like Ogle, are in their 80s and 90s, living on Social Security, and may be unaware of certain fine-print details about their loans.
Reverse mortgages work just as the name implies: Rather than the borrower paying the lender, the lender provides money to the homeowner, secured by a mortgage on their property. Borrowers under the most popular form of reverse loan, insured by the Federal Housing Administration, must be 62 or older to qualify. As a general rule, the principal and interest balances owed do not become due and payable until the borrower moves out, sells the house, dies or fails to pay property taxes or hazard insurance premiums.”