The Philadelphia City Council recently introduced a bill to help prevent reverse mortgage foreclosures when a homeowner is in a payment agreement for real estate taxes on their homes.
As a requirement for a reverse mortgage, borrowers must remain current on their real estate taxes. The amendment to the Philadelphia code now provides further clarification to lenders on a homeowner’s payment status.
The legislation, which was introduced by Councilwoman Cherelle Parker of the 9th District, states that a homeowner who is in a payment agreement for real estate taxes on their home shall be deemed not delinquent on his or her real estate taxes.
“I know all too well the scourge that reverse mortgages have been on certain neighborhoods in the city. Unfortunately, it has been quite common for reverse mortgage lenders to swoop in and pay off any remaining real estate tax balance of homeowners even if they are in a payment plan and not delinquent, and then use this as an impetus to foreclose on these homeowners,” Parker said in a statement.
This amendment comes at a time when reverse mortgage volumes have been on the rise across the country. Federal Housing Administration-approved reverse mortgage lenders logged in 6,313 endorsements in January 2018 according to recent data from Reverse Market Insight (RMI), Inc. For comparison’s sake, RMI reported 4,765 reverse mortgage endorsements in December 2017; 4,837 in June 2017; and 4,426 in February 2017.
A recent opinion in the Massachusetts Supreme Judicial Court also clarified a sticking point regarding a mortgagee’s right to foreclose, in spite of some unclear wording in the original mortgage paperwork. The case was brought against James B. Nutter Company by three reverse mortgage borrowers, all of whom had secured home equity conversion mortgages (reverse mortgages) in 2007 and 2008. Julie Moran, Esq., Senior Executive Counsel for the law firm Orlans PC, a Legal League 100 member, handled the case for the plaintiff.
Moran told DS News, “The Supreme Judicial Court reminded the parties that contractual language is deemed ambiguous and therefore construed against the drafter if it is susceptible of multiple meanings and the circumstances surrounding it don’t indicate its intended meaning. However, here the Court concluded that under Massachusetts foreclosure law there is no power of sale except the statutory power and no reasonable borrower would have expected a lender to enter into a reverse mortgage without retaining this right. We are very pleased with this outcome, which we believe will have applicability to other types of mortgages containing similar language.”