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Free from Foreclosure

Facing foreclosure notices on a home in disrepair and suffering from chronic health problems, Anna called LCD’s general intake line looking for help.

As a senior living on a fixed income, Anna entered into a reverse mortgage to pay off outstanding home equity loans. Unfortunately her debilitating back pain left her almost bedridden and as a result she wasn’t able to properly maintain her property. Her home fell into disrepair.

Per her reverse mortgage agreement, Anna was required to make extensive repairs to her home in order to bring it up to code within a certain amount of time. If not, she would be found in violation of her contract and could face foreclosure.

According to federal law, the reverse mortgage lender must provide funds as part of the mortgage for any required repairs to be made.  In this instance, Anna’s lender allotted less than $2,000 for the supplies and labor necessary to do extensive structural and cosmetic work to the first and second floors of the house.  Furthermore, the lender directed her to use one specific approved contractor, who came to Anna’s home twice without completing any of the repairs, never to return.

Staff Attorney Ben Feldman took the case and first made a home visit to inspect the premises and collect all of the mortgage documents.  After learning that the bank had not provided sufficient funds for the repairs, Ben tried to contact the bank finding that it had been dissolved. A new lender had purchased Anna’s mortgage and claimed it had no knowledge of the initial terms of the reverse mortgage. Therefore, they claimed no wrongdoing.

Ben then contacted the Pennsylvania Department of Banking, as well as several other state and federal consumer protection agencies.  The Pennsylvania Department of Banking opened an investigation and asked the new lender to respond. But it was too late  the bank already initiated the foreclosure proceeding. Negotiating with the lender’s attorney, Ben was able to secure additional funds for the repairs to be made.

After finding a contractor willing to do the work without deposit or payment, the repairs were made. The house passed the lender’s and HUD’s inspections.  With the inspection approved the lender withdrew its foreclosure action.

Now, thanks to the free legal service provided by LCD, Anna is able to focus on her health and can safely age in place in the home she’s lived in for more than 15 years.

May 16th, 2017|Success Stories|0 Comments