Pedro Garcia had been living in his California home for nearly 40 years when his mortgage lender foreclosed on the loan, according to the Wall Street Journal (WSJ). But Garcia is still living there today, and he is paying next to nothing to stay.
Garcia owed the bank approximately $490,000, according to the news source.
After his home was appraised, it was valued at about $150,000. Then Garcia's lender, Bank of America, decided to write down roughly $405,000 of the loan and issue a reverse mortgage of around $85,000 to make up for what remained.
The journal says that a reverse mortgage is a form of equity loan that only the elderly can have. Instead of giving Garcia the $85,000, the bank will take it and let him keep the house, where he can stay until he dies. When this happens, his home will belong to Bank of America and his family will have the option of buying it back for the value of the reverse mortgage plus interest and fees.
Others may not have to use the option the bank offered Garcia, as the number of California homes taken back by lenders in July, August and September was 37 percent smaller than in 2008, according to the LA Times.
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