Terms don't change when reverse mortgages are sold

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(Source: 3TV/CBS 5) (Source: 3TV/CBS 5)
GOODYEAR, AZ (3TV/CBS 5) -

A reverse mortgage is a good option for some older homeowners but one Goodyear man says he is now confused after his loan was sold to another lender.

With reverse mortgages, instead of making a monthly payment, you pay nothing or get paid each month and the bank gets its money back after you die and the house is sold. Just like a traditional mortgage, reverse mortgages can be sold between lenders but that change never affects your loan agreement.

"That paragraph really did scare me and I thought we would have to sell the house," Ron Mazzocco said.

The idea of never having to make a house payment again for life was very appealing to Ron Mazzocco, so he took out a reverse mortgage with Wells Fargo back in 2008.

"Last month, I received a letter from Wells Fargo that they were transferring my loan to Champion Mortgage," Mazzocco said.

Mazzocco then got a welcome letter from Champion, which stated nothing was changing with his loan. But there was something else on the letter he didn't like.

"At the bottom of the letter it said that Champion Mortgage is a debt collector and this is an attempt to collect a debt," Mazzocco said.

Mazzocco says he's never failed to pay any debt to Wells Fargo or Champion. So why would this disclaimer be on Champion's welcome letter? He called them in a panic looking for an explanation but says they never called him back.

"I thought that eventually, pretty soon, I'm going to get a letter calling the loan," Mazzocco said.

If the disclaimer doesn't apply to reverse mortgage customers like him, Mazzocco says Champion should remove it from future correspondence. But if it does apply, he wonders what's next for him and his wife after 17 years in their home.

"There's just no way I could pay that loan off, so we would have to sell the house and move out," Mazzocco said.

Champion confirmed for me that that the disclaimer does not apply to living reverse mortgage customers in good standing. Again, the terms of a reverse mortgage can't change when it's sold to another lender. The loan doesn't get repaid until after the homeowner, and possibly the surviving spouse, die.

Champion is in the debt collection business and says the disclaimer is on all its letterhead to comply with state and federal laws. I told them it was confusing and misleading to include that disclaimer on correspondence to someone who does not have an account in collections. Champion does not have plans to remove the disclaimer.

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Dave CherryCBS 5 Advocate Dave Cherry works to resolve your consumer problems and protect your money. If he can't help, he'll do his best to point you in the right direction.

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Dave Cherry
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Dave was born and raised in Philadelphia and considers himself one of the biggest Philly sports fans. At 6-feet, 5-inches, he's probably right! Dave started on a different career path before fulfilling his lifelong dream of reporting the news and helping consumers. Dave graduated from Philadelphia University with a Bachelor of Science degree in Accounting; he later earned an MBA degree in Finance from Temple University in Philadelphia. Dave also spent ten years as Vice President and Director of Sales and Marketing for two of America's leading real estate franchise companies. Dave started his 21-year news career at WHP in Harrisburg, Pennsylvania, as news anchor and reporter, then moved to KOLD in Tucson, as the morning news anchor. From Tucson, he went to KRON in San Francisco as a freelance news reporter before moving east to COMCAST in Philadelphia as a general assignment reporter. In the fall of 2003, Dave moved west and joined KPNX in Phoenix and spent nine years as the station Call for Action Consumer Reporter. Through his on-air advocacy work in 2011, Dave and his team were able to help consumers save more than $1 million. Dave joined CBS 5 News as our CBS 5 Advocate in December 2012. Dave is a vegan and likes to eat the amazing vegan food prepared by his lovely wife, Carmen. Dave's also a big Bruce Springsteen fan (he's seen more than 70 shows!), the man who inspired him to learn the guitar. Besides playing many of the boss' songs, Dave writes and sings his own songs and recorded a CD of original music.

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