Reverse mortgage mess

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PHOENIX - Rosemary Mondshein's worries are written all over her face.  When 3 On Your Side visited with her at her home in Lake Havasu, the attractive blond mother and grandmother told us through tears, "I'm at the end of my rope... I don't have any options. I'm totally at the mercy of someone to help me and I never thought, my so-called golden years, would be like this."

In recent years, after her husband and father passed away, Rosemary's mother moved here to live with her.  It's a modest home on a busy street with all of the original fixtures and floors.

"I don't have a home in Monte Carlo and live here part time.  I don't have a house in Beverly Hills, " said Rosemary, "This is my home and I'm in the third decade of this being my home."

Because Rosemary's mom, Irene, had better credit, they put the house in her name in hopes of re-financing.  Several years ago, at age 89, they decided Irene would take out a reverse mortgage. You have to be at least 62 years old to qualify. 

Patrick Waugh a Housing and Financial Counselor who specializes in reverse mortgage counseling told us, "The older you are, the more willing they are to loan."  Why?  Because a person is getting closer to the end of life and, he said, "they don't have to wait to get the money back."

The bank agreed to lend Irene $185,000 against what was then the equity in her home.  Patrick Waugh says people take out reverse mortgages for all kinds of reasons, "Some people want to have access to money so they can travel; Some people want to fix up their home; Some people have bills to pay and credit card debt, medical bills."

Irene Novak used all but $8,000 to pay off another mortgage. According to Rosemary, they never realized her home would be put in jeopardy.  She thought upon her mother's passing -- because Rosemary is over the age of 62 -- that the reverse mortgage would roll over to her.  Turns out it doesn't work that way.  We asked Patrick Waugh if the estate or the family of deceased has the option to pay payments; to stay in the home.   He told us the loan has to be paid in full.

Irene Novak passed away in June of this year at the age 91.  The fact that the home was deeded to Rosemary means nothing; the bank is now looking for their money.  HUD rules state the home has to be put up for sale or face foreclosure up to one year after the reverse mortgage holder passes away. Making matters worse for Rosemary, the house in Lake Havasu that was once worth $260,000 is now worth only about $120,000. 

Rosemary says she can barely eat, barely sleep because she is so worried about being forced out of her home.  One of her daughters lives in another state, one lives in another country.  And she says while their family is close, no one has the money to be able to help her fix this dire situation.  With nowhere else to turn, Rosemary called 3 On Your Side. Her ultimate hope is that they would allow the reverse mortgage to rollover to her, even if it means she has to start making payments right now: At least she could stay in the home.

"That would be a dream come true," Rosemary told us -- again through tears. 

3 On Your Side is working to find out what options Rosemary Mondschein has.  We've been told that she can wait until the house goes up for auction and then try to buy it back.  But for a 67 year old on a fixed income, that option doesn't seem very feasible.  Still she's not ready or willing to pack her bags. 

For more information on Reverse Mortgages call 1-888-272-3472 or go to www.aarp.org/revmort The expert we spoke with said, if this product is understood, it can be very beneficial. Also check out this document on the mortgages.