{"id":41427,"date":"2026-06-16T00:06:00","date_gmt":"2026-06-16T04:06:00","guid":{"rendered":"https:\/\/propertyonion.com\/education\/?p=41427"},"modified":"2026-06-12T09:13:03","modified_gmt":"2026-06-12T13:13:03","slug":"hud-reverse-mortgage-foreclosure-new-hidden-risk-for-investors-2-of-2","status":"publish","type":"post","link":"https:\/\/propertyonion.com\/education\/hud-reverse-mortgage-foreclosure-new-hidden-risk-for-investors-2-of-2\/","title":{"rendered":"HUD Reverse Mortgage Foreclosure: New Hidden Risk for Investors 2 of 2"},"content":{"rendered":"\n

In part two of this series (View Part One<\/a>), Tony Stern picks up the conversation with attorney Jeff Harrington of Harrington Legal Alliance and goes straight into the legal heart of the HUD reverse mortgage foreclosure problem. Jeff explains merger doctrine in plain English, the principle that once a foreclosure is complete the mortgage ceases to exist and merges into the judgment, and walks through why that idea may apply even to HUD’s non-judicial foreclosures where there is no judge, no final judgment, and nothing recorded in the public record. The stakes come down to timing: if HUD foreclosed or took a deed in lieu before a later association auction, Jeff argues the mortgage was already extinguished and the investor should take title free and clear, but if it did not, that buyer can be stuck paying off a reverse mortgage whose real value only HUD knows. He lays out the pattern that troubles him most, where HUD sits on an unrecorded deed and quietly forecloses a second time after an investor has bought the property, and explains why the burden has flipped so that the investor, not the lender, must bring a federal lawsuit and use discovery just to learn whether a mortgage exists and what it is honestly worth. Jeff also breaks down how the Single Family Mortgage Foreclosure Act gives the federal government every advantage with none of the usual trade-offs, why he believes the issue is ultimately about due process and may climb all the way to the United States Supreme Court, and what a fairer system would require. He closes with practical advice for investors: treat any sign of a reverse mortgage as a major red flag and never bid without a full title report in hand. This is part two of a two-part discussion, so if you missed part one, start there for the background on how these cases arise.<\/p>\n\n\n\n

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