By John Clark
In addition to a substantial foreclosure problem that has kept the housing market depressed across the nation, a certain demographic of homeowners is now encountering problems with what is known as a "technical foreclosure" on reverse mortgages.
Reverse mortgages allow seniors to withdraw equity from their homes through payments by the bank, according to A New Horizon Credit Counseling, a nonprofit credit counseling firm. Though they do not have to make payments on this loan, falling behind on property taxes and insurance premiums can cause them to face "technical foreclosure." More than 30,000 homeowners nationwide are now facing this form of foreclosure, a study by the credit counseling firm found.
While banks have yet to actually foreclose on the homes of seniors that have fallen behind on insurance and property tax payments, real estate market experts reportedly claim that they may start considering it. According to Money Magazine, the current penalties for failing to make insurance and tax payments is that seniors may be forced to repay the loan while they're still living in the house - if they cannot, they may have to sell it.