A New York trial court holds that a mortgage company cannot foreclose on a reverse mortgage purchaser simply because she failed to pay one water bill. Metlife Home Loans v. Vereen (N.Y. Sup. Ct., Kings Cty., No. 28586/11, Feb. 11, 2014).
Lela Vereen purchased a reverse mortgage from a mortgage company. The mortgage required that Ms. Vereen pay all assessments, water rates, and other charges, along with keeping the property insured. Ms. Vereen failed to pay a water bill, and the mortgage company gave Ms. Vereen a notice of default that did not specify what the default was for.
When Ms. Vereen did not comply with the mortgage company’s demand for full payment of the mortgage, the company initiated foreclosure procedures against her. Federal law governing reverse mortgages provides that if a mortgagor fails to make payments, the mortgagee can make the payment for the mortgagor and charge the mortgagor's account.
The New York Supreme Court denies the foreclosure motion, holding that the mortgage company cannot default on Ms. Vereen for failing to pay the water bill. According to the court, the intent of the reverse mortgage program is to help seniors stay in their homes, and under federal law the mortgage company was obligated to pay the water bill and charge Ms. Vereen's account. The court also notes that "serving a senior citizen holding a reverse mortgage with a complaint that fails to specify what the default is can only be described as unconscionable."
For the full text of this decision, go to: https://www.courts.state.ny.us/Reporter/3dseries/2014/2014_24039.htm
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