Despite having a lower than average unemployment rate, Connecticut has the fourth highest number of foreclosures in the nation. This high number of foreclosures includes a significant rise in reverse mortgage foreclosures. The U.S. Department of Housing and Urban Development (HUD) reports that almost 20 percent of all reverse mortgages issued end up in foreclosure. Of the 1,600 complaints received by the Connecticut Fair Housing Center this past year, nearly 600 were about foreclosure, a growing portion of which was on reverse mortgages.
Following years of deceptive advertising and predatory practices by some lenders, the incidence of foreclosure on reverse mortgages has increased. Oftentimes, reverse mortgage lenders advertise that such a mortgage means never having to make another payment again on one's home without clarifying that homeowners are still responsible for property taxes, homeowners' insurance, and condominium fees. Accordingly, many seniors and disabled applicants end up being foreclosed on for non-payment of these bills.
In an effort to better serve people facing foreclosure involving reverse mortgages, the Hartford Foundation for Public Giving has awarded the Connecticut Fair Housing Center a three-year, $235,000 grant to support the Reverse Mortgage Foreclosure Prevention Project. The Connecticut Fair Housing Center's Reverse Mortgage Foreclosure Prevention Project is designed to legally assist victims and to conduct additional legal research on the extent and nature of the reverse mortgage problem. Foundation funds would be used for a portion of staff, consultants, insurance, case and legal research, and indirect costs.
"Reverse mortgages can be helpful to people who are elderly if they understand the loan," said Erin Kemple, executive director of the Connecticut Fair Housing Center. "Too often the terms are not clear to the people getting the loan and they do not understand the mortgage company will not pay their real estate taxes or condominium fees. When a foreclosure results, too many people do not know what to do. This grant will allow the Connecticut Fair Housing Center to provide assistance seniors with assistance in foreclosure."
In addition to addressing this issue, the Connecticut Fair Housing Center will further assess the extent of the problem, whether other protected classes are affected, and which lenders tend to generate the most foreclosures.
"We are pleased to be able to support the efforts of the CT Fair Housing Center as they work with homeowners facing foreclosure as a result of not being adequately educated on their full obligations and responsibilities when they took on a reverse mortgage," said Pete Rosa, a senior community investments officer at the Hartford Foundation for Public Giving. "The Center's Reverse Home Mortgage Foreclosure Prevention Project will help people navigate the issues involved with taking on a reverse mortgage and allow them to either prevent foreclosure or more smoothly transition into a more affordable housing option."
The Hartford Foundation for Public Giving is the community foundation for Hartford and 28 surrounding communities. In 2015, the Foundation celebrated ninety years of grantmaking in the Greater Hartford region, made possible by the gifts of generous individuals, families and organizations. It has awarded grants of more than $680 million since its founding in 1925. For more information about the Hartford Foundation for Public Giving, visit www.hfpg.org or call 860-548-1888.