The anti-foreclosure bill propers by Philadelphia city councilwoman Cherelle Parker is causing concern among reverse mortgage lenders. HECM lenders are feeling pressured with the new law which they claim, isn't as simple as it may sound.
Last wee we posted a piece about the law which would "stop mortgage servicing companies from paying off borrowers’ back taxes in order to commence foreclosure proceedings," according to Reverse Mortgage Daily.
While in theory this could help some of the families of the individuals who may struggle with payments, reverse mortgage servicers say they may have no choice.
According to the report, servicers claim that because of the rules set in place by the Department of Housing and Urban Development, they really have no choice in pushing foreclosure.
"'Servicers are boxed in,' Leslie Flynne, senior vice president of loan servicing at Reverse Mortgage Solutions, told RMD," according to the report.
“We have to pay the past due taxes if the taxing authority reports them unpaid.”
Parker's proposed bill is looking to help families like Leonard Hitch who faced the reality of not meeting the requirements of a HECM.
"Hitch’s wife handled the couple’s finances, and when she died, he fell two years behind on his property taxes, according to Meadows and information from Community Legal Services (CLS) of Philadelphia," according to RMD.
"To remedy the situation, he entered into a low-income tax payment plan with the city, which allowed him to pay $54 per month."
Hitch had made just two payments when Champion Mortgage decided pay the balance of the property taxes. Hitch then enlisted the help of the Housing Retention Program to repay the mortgage company for the money they spent on the property taxes, further allowing him to continue his residence at the home.
To learn more about the bill and why servicers may have a hard time honoring it, click on the image above.