A loophole in reverse mortgage foreclosures in Philadelphia is the subject of a new bill introduced in the city council.
The bill, introduced by Councilwoman Cherelle Parker, seeks to prevent reverse mortgage foreclosures by closing a loophole used by some lenders when a homeowner is in a payment agreement.
Under the bill, homeowners will not be considered delinquent on their real estate taxes if they are in a payment agreement for the taxes on their home. Reverse mortgages require borrowers to remain current on their real estate taxes.
“I know all too well the scourge that reverse mortgages have been on certain neighborhoods in the city. Unfortunately, it has been quite common for reverse mortgage lenders to swoop in and pay off any remaining real estate tax balance of homeowners even if they are in a payment plan and not delinquent, and then use this as an impetus to foreclose on these homeowners,” Parker said.
The bill matches new regulations issued by the Philadelphia Department of Revenue. The legislation, which amends the Philadelphia Code, also provides further clarification to lenders on a homeowner’s payment status.
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