Reverse Mortgages: Seniors Now Expected to Pay Taxes and Insurance

The FHA, which holds most of the reverse mortgages, saw a $798-million loss in the program in the last fiscal year. While most of that loss was caused by the decline in property values nationwide, another key factor was tax and insurance delinquencies that the FHA paid on the properties.

In the past, the FHA did not move to collect these delinquencies because they didn't want to toss seniors out on the street. But Fannie Mae has begun telling servicers of reverse mortgages to initiate foreclosure when taxes and insurance payments have not been paid on a home for an extended period.