Reverse Mortgages and Bankruptcy

Reverse mortgages are designed to allow you live off of the equity in your home. This type of loan pays off your mortgage, lets you live in the home “mortgage payment free” for life or until you leave the home. Often, these loans require that you pay the property taxes and insurance. Should you fail to do that, you will find yourself in foreclosure. Bankruptcy allows you to “catch up” on your missed payments and stop a reverse mortgage foreclosure. You will need to show regular income and the ability to keep your obligations current. Reverse lenders can be very aggressive in foreclosure because often a weak real estate market means the longer the loan stays open, the more they lose.