Well into their senior years, Kenny and Fran Goodnow were struggling to pay their mortgage in 2007 when a salesman offered what seemed like a wonderful solution.
(Source: TampaBay.com) – A reverse mortgage would tap the equity in their St. Petersburg home to pay off their existing loan and give them extra cash for travel, a new car, a nest egg. Best of all, they could stay in their house.
The couple only had to take care of the property taxes and insurance, which totalled barely $100 a month back then.
“He told us you get paid every month instead of you paying the bank,” said Kenny, now 87.
Soon after, their insurance premium jumped so high they could not afford it. They fell behind on their bills. The reverse mortgage company demanded that they pay $217,000 or lose their home of 25 years.
The couple now wish they had better understood the seemingly simple reverse mortgage, a frequent lament of homeowners who turn to what is actually a complex financial product. And as increasing numbers of baby boomers become eligible for reverse mortgages, concern looms that many others could find themselves in the same predicament as the Goodnows.
Some will end up fighting to keep their homes.
That’s why Fran, 71, was in a Pinellas County courtroom Tuesday morning, her age-speckled hands clutching the lectern as she nervously faced a judge.
“Mrs. Goodnow, the mortgage company is filing for foreclosure,” the judge said. “Is there something you want to tell me?”
You’ve probably seen the TV ads: Actors including Henry Winkler, Robert Wagner and Fred Thompson touting reverse mortgages as “a safe, effective financial tool.”
“It allows you to eliminate monthly payments, pay some bills or simply enjoy your retirement,” Thompson, also a former U.S. senator and presidential candidate, says in his folksy drawl. “It allows seniors to stay in their homes.”