Recently, New York State amended its foreclosure laws to provide mandatory protections for homeowners who have defaulted on a reverse mortgage. Homeowners are now entitled to additional notice protections and to a mandatory foreclosure settlement conference all of which are intended to increase the likelihood of a resolution. Typically, a default is triggered when the homeowner fails to pay the real estate taxes. Immediately reimbursing the bank for the back real estate taxes can permit the homeowner to reinstate the mortgage and result in the foreclosure case being discontinued. Some homeowners are unable to immediately reimburse the bank and may need to enter into a workout plan to repay the bank over a period of time. If, however, the homeowner does not have sufficient monthly income, he or she may not be granted a repayment plan which would permit the bank to continue with its foreclosure. It is still early to predict how the courts will address loss mitigation options with respect to reverse mortgages, and I will keep you all posted.
Arnold M. Bottalico is an experienced Long Island, NY foreclosure attorney with over 25 years of experience, and he welcomes your questions and comments.