Reverse mortgages could help delinquent senior homeowners keep their homes

Reverse mortgage expert Paul E. Scheper says some homeowners 62 and older who are behind on payments may still qualify for a reverse mortgage if they have enough equity. The option could help pay off delinquent debt and replace monthly principal-and-interest payments before a foreclosure situation worsens.

Why it matters: - Senior homeowners are facing more pressure from inflation, higher borrowing costs and rising household expenses. - For some older homeowners with substantial equity, a reverse mortgage may offer a way to stay in the home even after missed mortgage payments. - The option could help replace an unaffordable monthly payment with a loan structure that does not require monthly principal-and-interest payments.

What happened: - Reverse mortgage expert Paul E. Scheper, CRMP, CSA, SRES, said some homeowners who are three, four or even six months delinquent on mortgage payments may still qualify for a reverse mortgage. - Scheper said the loan can potentially pay off a delinquent mortgage for a senior homeowner who has enough equity and meets program requirements. - Scheper urged homeowners to explore options early, before the situation moves closer to foreclosure.

The details: - A reverse mortgage does not transfer ownership of the home to the lender. The homeowner keeps title and ownership. - Borrowers do not make monthly principal-and-interest mortgage payments after the reverse mortgage is in place. - Homeowners still must pay property taxes, homeowners insurance, applicable property charges and maintain the home. - For an FHA-insured Home Equity Conversion Mortgage, borrowers generally must be at least 62 years old and use the home as a principal residence. - HUD-approved reverse mortgage counseling is required for HECM borrowers. - Available loan proceeds depend on the age of the youngest borrower or eligible non-borrowing spouse, current interest rates and the home’s value, subject to FHA lending limits. - Homeowners with an existing mortgage need enough proceeds to pay off that loan and other required obligations. - Scheper said a homeowner several months behind on payments may still potentially qualify if the reverse mortgage satisfies underwriting and program rules. - When eligible, the reverse mortgage may be used to pay off the delinquent loan and create a path forward before foreclosure.

Between the lines: - The message is that delinquency does not automatically end a senior homeowner’s financing options. - The pitch is aimed at equity-rich older borrowers who may need cash-flow relief more than a home sale. - Scheper framed the product as a planning tool for the right homeowner, not a universal fix. - The core tradeoff remains clear: the loan can help preserve housing stability, but it only works for borrowers with enough equity and qualifying circumstances.

What's next: - Scheper said homeowners who are 62 or older and have substantial equity should get the facts early. - Seniors facing unaffordable mortgage payments may need to compare reverse mortgage options with other ways to avoid foreclosure. - For some borrowers, the next step could be reverse mortgage counseling and a review of whether enough equity remains to satisfy the existing loan.

The bottom line: - A reverse mortgage may be a lifeline for some delinquent senior homeowners, but only if the borrower is old enough, equity-rich enough and able to qualify.