Yes, despite what they say in advertisements, it IS possible to lose your home if you take out a reverse mortgage. No, you don't have to make payments, but you do have to keep your home insured, maintained, and your property taxes must be current. That said, there is no reason that you should have to lose a home to foreclosure just because you have a reverse mortgage.

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Revers mortgage lenders have the right to foreclose when action (or inaction) on your part threatens to harm the home's value as collateral. For example, if you don't keep it insured and the homen is destroyed by fire, it probably can't be sold for enough to repay your reverse mortgage. If your property taxes go unpaid, the county can lien the home, and when it's sold the county gets paid first and the reverse mortgage lender only gets paid in full if there are enough proceeds left over. Finally, a home that is allowed to fall into disrepair also loses value and may not be worth enough to satisfy the note when you die or move. So one of the few responsibilities you have as a homeowner with a reverse mortgage is to protect the value of the home.

That said, the lender can't just move in and toss you out when you miss a property tax installment. HUD, which backs about 90% of all reverse mortgages in the US, has issued guidelines to lenders to help them protect their collateral while also keeping elderly borrowers in their homes.

First, the lender should be willing to advance funds to the county to pay your delinquent property taxes, using available equity in the home. For example, if your reverse mortgage is set up to pay you $1,000 a month for ten years (total $120,000), and your property taxes are $1,000, that amount can be paid and then deducted from the total that you'd be allowed to take. So you might get paid $1,000 a month for nine years and eleven months instead.

You may also be able to refinance your reverse mortgage and include the past due taxes and insurance in the new loan, or you may be offered a repayment plan that will slowly allow you to catch up on missed tax payments. Finally, your lender may contact a HUD-approved Housing Counseling Agency (HCA) to get you free assistance in finding some viable resolution to your delinquency, or identifying local resources available to provide funds or homestead exemption. For example, many local governments and community organizations offer no-interest loans to low income seniors for the maintenance of property and payment of taxes.

The bottom line is that no one with a reverse mortgage should lose his or her home -- there is plenty of help available if you know where to look.