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More Bank Foreclosure Homes to Come from Reverse Mortgages

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By : John Cutts    99 or more times read
The number of bank foreclosure homes coming from households that have reverse mortgages is expected to increase in Florida in the near future. The number of senior homeowners with reverse mortgages who are in technical default in the state has risen considerably, housing reports showed.

Reverse loan mortgages are not like typical mortgages, which are bound to majority of foreclosed homes in Fort Lauderdale, FL, and in the rest of the state. These are loans offered to older borrowers who use the equity of their residences to get cash or additional income. The problem, housing analysts have stated, is that even these senior homeowners are now in danger of getting dragged into the foreclosure crisis.

According to nonprofit CredAbility Group, almost 5,300 reverse loan mortgage owners in the state are said to be in default and are in danger of losing their properties to foreclosed homes in Florida. The state has the highest number of defaulting reverse loan holders in the whole U.S., accounting for 18% of the estimated nationwide total of over 30,000. According to housing experts, defaulters are in danger because they failed to pay insurance premiums on their properties or taxes levied on their homes.

State housing data showed that reverse mortgage defaults are increasing at almost the same pace as the rise in the number of bank foreclosure homes in the area. Around 8% of Florida's reverse mortgage borrowers are currently in default, a figure that is considerably higher than the national default rate of 5% for the mortgage type.

If these senior borrowers failed to make their payments current, the state is looking at further increases in its already massive supplies of foreclosure house listings. Housing market observers have reported that the number of defaulting reverse mortgage holders has almost doubled in the past couple of years. They stated that financial difficulties among households, mainly caused by unemployment, have led to more seniors defaulting on loans.

To assist troubled senior borrowers in avoiding losing their properties to bank foreclosure homes, government housing officials and counseling associations like CredAbility have reportedly started to intervene. Most of them are setting up initiatives meant to provide professional advice to these troubled homeowners.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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