A 103-year-old Texas woman is fighting to keep her home after she let her insurance lapse, a CBS affiliate in the Dallas/Fort Worth area reports. Myrtle Lewis told CBS she accidentally let her insurance expire and renewed it after noticing the mistake, but the gap in coverage apparently violated the loan agreement for her reverse mortgage. Now, OneWest Bank, which holds the loan, is attempting to foreclose on Lewis.
It’s unclear if it was mortgage or homeowner’s insurance, and when contacted by Credit.com, a public relations representative for OneWest said the bank declined to comment on Lewis’s case. One thing is clear: Lewis is worried about losing her home. In the interview with CBS, she said it “would break my heart.”
Lewis took out a reverse mortgage on the home in 2003, when she was 92. Reverse mortgages are a type of loan for homeowners ages 62 and older, allowing senior citizens to use the equity they’ve built in their properties without making monthly payments. Repayment is deferred until the borrower dies, moves or sells the home, but the homeowner is still responsible for paying taxes, insurance and any other fees associated with maintaining their home. A 2012 report from the Consumer Financial Protection Bureau said 10% of reverse mortgage borrowers face foreclosure because they fail to pay taxes or insurance.
Missing insurance payments may not seem like a huge deal, especially if you correct the mistake, but it is. It’s not unheard of for homeowners to face foreclosure because of something seemingly small, like unpaid homeowners’ association fees, but there are serious consequences for not upholding your end of a loan agreement. Foreclosure will also negatively affect your credit for years.
A focal point of the CFPB’s 2012 reverse mortgage report is that these loans need to be better explained to and understood by borrowers, and it found that many lenders were deceptively marketing reverse mortgages to senior citizens. Lewis’s case may be in the process of unfolding, but no matter what happens, her story is a good reminder to consumers that there’s often not room for error with large loans. It’s crucial to understand your responsibilities before putting your financial future and well-being on the line.
More on Mortgages & Homebuying:
- Why You Should Check Your Credit Before Buying a Home
- How to Find & Choose a Mortgage Lender
- How to Refinance Your Home Loan With Bad Credit