HALTOM CITY
Editor’s note: The Debt Trap is a collaborative project by the Star-Telegram, WFAA and the Austin American-Statesman aimed at shining a light on loans that either help the economically disadvantaged or devastate them, depending on whom you ask. This installment explores reverse mortgages. An upcoming installment will look at student loans.
Josalyn Cassatt lost her mother in 2014 after a long illness. Now, she’s about to lose her home.
Cassatt spent the last decade living at her mother’s Haltom City house, taking care of her ailing mother full-time. She thought she would simply inherit the house after her mother died, but she discovered paperwork showing her mother had taken out a reverse mortgage in 2006.
With a reverse mortgage, heirs can keep the property if they pay off the outstanding loan balance in full or if they buy the property for 95 percent of the appraised value. Cassatt couldn’t afford to pay off the loan or the required 95 percent of the current appraised value, $103,500, which she says had increased by about 25 percent in the nine years since the reverse mortgage.
Around December first or fourth, I get a letter saying the house is going on auction Jan. 6 — foreclosed on by the reverse mortgage because she is deceased,” Cassatt said.
Opponents of reverse mortgages dislike the many ways — more than a dozen — to default on one. On the other hand, Michael Jones, a branch manager and loan originator at Georgetown Mortgage in Dallas, and other proponents say the loans should be considered a retirement funding tool.
A client of his, 69-year-old David Alley of Dallas, figures he’s saving $1,000 a month with his reverse mortgage, which he considers “perfect” for his situation.
Cassatt suspects her ailing, elderly mother didn’t understand how the reverse mortgage worked.
“I really don’t think she understood what she was doing,” Cassatt said. “She always wanted to make sure I had a roof over my head.”
Read more http://www.star-telegram.com/news/local/article10777121.html
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