Wednesday, December 18, 2019

HUD Homes: Reverse Mortgage Foreclosures Offer Buyers Opportunities

2009 + (78 - 62) = 2025

Prediction: We'll see a growing trend of HUD Home opportunities for Buyers over the next 5+ years that are the result of Reverse Mortgage foreclosure. Aging is a natural process that occurs independently of real estate market conditions. According to NRMLA: National Reverse Mortgage Lenders Association statistics, the height of Reverse Mortgage loan originations, since tracking began in 1990, was in 2009. With life expectancy in the US at 78.6 years, 2025 may be the mid-point of a 10-year trend already underway. But don't think this is all doom-and-gloom. Reverse Mortgage foreclosure can result from other factors such as the home no longer being used as the borrower's principal residence, failure to occupy the home for 12 consecutive months because of illness (think "going to a nursing home"), or not meeting mortgage obligations such as keeping property taxes paid current, maintaining homeowners insurance and continuing upkeep of the home.

Reverse Mortgages are officially known as HECM: Home Equity Conversion Mortgages and are generally available to persons aged 62+ who own their home free & clear or have a significant amount of equity. The vast majority are insured FHA Loans. When an FHA Loan is foreclosed, it becomes a HUD Home owned by the US Government and is listed for sale by a REALTOR® on the MLS: Multiple Listing Service.

During the past few months, I've twice crossed paths professionally with Reverse Mortgage situations. First, with a family trying to determine if it made sense to purchase the property themselves under the discounted provisions afforded only to heirs, and, most recently, representing a Buyer make an offer on a HUD Home that resulted from a Reverse Mortgage foreclosure. Looking forward to 2020 and beyond, Reverse Mortgage foreclosures will offer viable new home purchase opportunities for savvy homebuyers.

Kim Novak is an SFR: Short Sale & Foreclosure Resource and Registered HUD Broker NAID# NVKSLS0536. She has represented Buyers, Sellers, and VA & REO Bank-Owned Properties throughout her 24-year career.

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