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HECMs, housing shortages, and foreclosure loopholes.


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This week’s news roundup

  • Are reverse mortgages contributing to regional housing inventory shortages?reverse mortgage news
  • How the Michigan Tax Tribunal views HECM proceeds and property tax obligations
  • Philadelphia Councilwoman seeks to close foreclosure loophole
  • Harlan Accola publishes his latest book

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  1. One of the primary problem with the situation in Philadelphia is the filing of liens. When a senior agrees to the repayment plan with the city, the new lien goes directly to the first position in priority in case of foreclosure.

    In these cases the servicers must go to foreclosure since the there is a potential loss to the lender if the loan terminated. If HUD had not approved the city lien in advance, the lender could find that HUD is not responsible to reimburse the lender on that portion of a loss.

    If the city successfully enacts this bill, lenders could be going to court to protect their positions in the property and no longer able to loan in the area where the law would have jurisdiction.

    Once again good intentions could lead to the wrong results for seniors.

  2. It would be a very negative result if states could confiscate HECM proceeds at will. What would stop those states from doing the same with any line of credit where the home stood as collateral or even in cases where there is no collateral.

    The power to confiscate should be limited and only allowed in circumstances where the confiscatee is an individual known 1) to be involved in a criminal enterprise or 2) in trying to hide confiscatee owned assets from a legal collection process such as child support.

    To the extent that the available line of credit does not represent monies that have been used previously to pay down the balance due, that amount should be exempted from confiscation as that amount is not and never has been an asset of the borrower. The amount of those availabe proceeds are in fact contingent assets of the borrower that should not be eligible for confiscation by state government authorities, period.

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