HARRISBURG, Pa., June 8, 2017 /PRNewswire-USNewswire/ -- The Department of Banking and Securities advises consumers who are considering, or who have already entered into, a reverse mortgage on their homes to continue to pay the property taxes, insurance premiums, and any applicable Home Owner's Association fees for which they are responsible under the terms of the reverse mortgage.
"Homeowners who have entered into a reverse mortgage and who do not continue to make payment on their taxes, insurance premiums, or other fees risk default on their loans and possible foreclosure," cautioned Secretary of Banking and Securities Robin L. Wiessmann. "Before deciding on a reverse mortgage, it is important for the homeowners and their families to fully consider and understand their responsibilities, as well as the possible consequences of not maintaining their end of the agreement."
A reverse mortgage is a product for homeowners age 62 or older that provides the homeowner with a monthly payment, lump sum, line of credit, or a combination of these payment methods. The loan is designed to be repaid once the homeowner moves out or passes away. While there are both pros and cons to consider when deciding if a reverse mortgage is the right option, the homeowner is responsible for maintaining the home and paying the property tax and insurance premium payments under a reverse mortgage.
Under the terms of a reverse mortgage, the homeowner must continue to occupy the home as his or her primary residence in addition to not falling behind on the taxes and insurance payments. Failing to meet these requirements can have serious consequences for homeowners, the most serious of which could be losing their home.
Last week, the federal Consumer Financial Protection Bureau's "Snapshot of Complaints made by older consumers" noted that "older consumers often mention foreclosures due to non-payment of property taxes or homeowners insurance." More information online: www.consumerfinance.gov/about-us/blog/snapshot-complaints-made-older-consumers.
Homeowners can find more information in the "Understanding Reverse Mortgages" brochure or by contacting the department's Consumer Services Office with any questions or concerns about their reverse mortgage at 1-800-PA-BANKS. Members of the public are also invited to connect to the department through Facebook and Twitter, or subscribing to the department's newsletter.
MEDIA CONTACT: Ed Novak, 717-783-4721
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SOURCE Pennsylvania Department of Banking and Securities