my uncle is 95 years old ,and has to leave his home for assisted living ,he took a reverse mortgage out years ago and now owes 340 thousand ,his house is only worth 240 thousand , can the bank or mortgage co. take his social security check to pay the difference ? please help me
I'm sorry to hear your uncle is going through a difficult situation. Your uncle may want to consider the option of filing for Bankruptcy, which can protect the assets he does have (such as his social security income) and potentially discharge his obligations, such as a mortgage.
Many bankruptcy attorneys offer free consultations, so I would suggest you start there. Please feel free to contact my office at 617-742-4491 for more information.
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No, section 207 of the Social Security Act (42 U.S.C. 407), bars the garnishment (i.e. "taking away") of social security benefits by ANY creditor other than the federal government.
Section 207 states: "The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law."
Very simply stated the Bank cannot touch your uncle's social security check, and so neither you nor he have anything to worry about.
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Elder Law Attorney
I'm assuming that your uncle took out the most common reverse mortgage, which is known as a Home Equity Conversion Mortgage (HECM) loan, and am answering the question accordingly.
A reverse mortgage is a "non-recourse" loan, which means that the most the lender can recover is whatever the house may sell for. When your uncle took out the loan, part of the fees went to pay for a government-backed insurance policy for the lender to hold to insure against just such a situation.
I strongly suggest you get a copy of the mortgage and note and have them reviewed by a real estate attorney to confirm what I'm saying. You can find more information about HECM loans here: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/rmtopten
E. Alexandra "Sasha" Golden is a Massachusetts lawyer. All answers are based on Massachusetts law. All answers are for educational purposes and no attorney-client relationship is formed by providing an answer to a question.
Wills and Living Wills Lawyer
Absolutely not. If the reverse mortgage is "under water," they get the full proceeds of sale; that's it. If you happen to be receiving threats or warnings of any kind to that effect from the mortgagor, tell them you want to retain an attorney, then notify the Commonwealth's Office of Consumer Affairs banking division (link below)
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I think all of the attorneys here have listed helpful answers, however while your fact pattern focuses on your uncle's social security check, that may not be the biggest issue here. If your uncle is behind on the reverse mortgage payments, the mortgage holder can begin Foreclosure proceedings against him. So, while your social security checks may be safe, his home may not.
I think your uncle should meet with an attorney who can gain a better overall understanding of your uncle's financial situation, what assets and debts he has, and what his options are in terms of protecting the house, or preventing a foreclosure.