February 12, 2013
In the course of our ongoing investigation into the machinations of the “banks” to devise various forms of “loans” designed to strip the equity from a homeowner, the reverse mortgage is one of the worst. Targeted at elderly borrowers (who have, over the years, paid down or paid off their mortgage), a reverse mortgage depletes the equity in one’s home and evicts the surviving spouse after the death of the “borrower” spouse through a foreclosure.
The case which has been brought to us reveals that the process was accomplished through trickery and fraud. The elderly husband borrower was listed as the only “borrower” on the Note, although both the husband and wife were listed on the Deed of Trust. When the wife asked why she was being told not to sign as a borrower, she was told “Don’t worry, that is just to get the loan approved. There will be a quit claim deed after the loan is approved so you are protected”.
Unbeknownst to the wife, quit-claim deeds have nothing to do with adding a spouse to a promissory note. What happened is that the husband passed away, triggering the acceleration of the “loan” and a foreclosure. The foreclosing party claims that the wife is not protected as she is not listed as a “borrower” although the foreclosing party (Reverse Mortgage Solutions Inc.) claimed a default and sought to void her interest in the property through foreclosure.
The husband was older than the wife. The entity originating the reverse mortgage obviously knew that by failing to make the wife a listed “borrower” that once the husband passed, it could declare a default (as the “borrower” is dead and cannot make any “payments”), and as the wife had no income, she could be readily foreclosed upon and evicted from her home which she and her husband built with no place to go after living in the house for over 35 years.
The former Senator/actor and a second actor who have advertised these reverse mortgages on television should be ashamed for promoting these outright equity-stripping vehicles which take advantage of elderly borrowers who have little or no mortgage debt. The former Senator especially, as he was chief minority counsel of the Senate Watergate Committee in 1973-74. For someone who had previously taken such an active role in seeking to protect citizens of our country from illegal actions to now endorse an outright equity-stripping vehicle which targets elderly homeowners in the midst of a foreclosure crisis defies comprehension.
The battle is shaping up to one which is going to pit contractual language against equity and fairness and contract principles of good faith and fair dealing in addition to fraud by omission. We have had inquiries into other reverse mortgage cases, and the AARP has filed a massive lawsuit involving claims that reverse mortgages violate Federal statutory protections for elderly borrowers as well.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com