NEW YORK (MainStreet) — Karen Hunziker was just 60 years old when her husband, Charles, secured a reverse mortgage on their Pollock Pines, Calif. home. At the time, Hunziker was advised by the mortgage broker to remove her name from the title in order to qualify for the loan.
“We were both very concerned that I could be giving up my property rights, but the salesperson assured us I would be protected until 62 years old when I would be put on the title,” said Hunziker.
However when she turned 62, Hunziker and her husband were informed by an attorney that the only way she could be on the title would be to refinance into a new reverse mortgage. She was subsequently told the couple would need to contribute $60,000 in order to get a new loan.
“That was impossible because of the first reverse mortgage,” said Hunziker, who works as an artist craftswoman.
Although the couple had lived in the home for 19 years, Hunziker received a foreclosure warning letter from Financial Freedom some ten days after her husband passed away in May 2014.
The mortgage servicer reportedly told Hunziker that it plans to foreclose the marital property in May.
That’s because Hunziker is a non-borrowing spouse.
"Married couples were not informed that the consequence of taking the non-borrowing spouse off the loan could be that HUD [the Department of Housing and Urban Development] would allow the servicer to later foreclose on them," said Kevin Stein, associate director at the California Reinvestment Coalition. "We believe HUD allowing these foreclosures is both against the statute authorizing this program and contrary to how these loans are advertised as safe financial products to provide extra income while remaining in your home."