Reverse mortgages can be good, and can be bad. For some of my clients, taking out a reverse mortgage has allowed them to stay in their homes, when they would otherwise have lost them to foreclosure.

A reverse mortgage is a mortgage on a home that does not have to repaid until the homeowner moves out or dies. It allows the homeowner to access a portion of the home's equity. In most of my clients' situations, they already have a conventional mortgage that they are paying on, but they become delinquent and are facing foreclosure. If they are over 62, they can apply for a reverse mortgage, which pays off their current mortgage and allows them to stay in the house for life, or until they enter a nursing home, without paying any more mortgage payments.

But a person with a reverse mortgage must still pay the property taxes or ad valorem taxes, and homeowner's insurance, and otherwise maintain the property. If they don't, the reverse mortgage company can pay them, and then try to collect from the homeowner. If the homeowner can't or won't pay, the reverse mortgage company can post the property for foreclosure.

This is where chapter 13 can come in. To stop the foreclosure, a homeowner can file chapter 13, and propose in their plan to catch up the delinquent taxes and insurance payments through their plan over as long as 5 years. They would also have to pay the regular taxes on the property as it comes due in the future, as well as keeping homeowner's insurance in force on the property, and keep it maintained.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization