Reverse Mortgage Options with Disabled Child

October 22, 2018

My parents have reverse mortgage. My dad died 5 years ago, my mom is in a nursing home, and I am a 53-year-old disabled woman living in the home. What do I do about living in my home? I have no place to go! – Sylvia

Hello Sylvia,

I am very sorry to hear of your circumstances. We have seen this play out many times, where family members are living with the owners of a property with a reverse mortgage but then when the loan becomes due and payable, there was no provision made for that event and the family members have no means to pay the loan off.

The loan is and never was meant to be a multi-generational vehicle to allow families an endless opportunity to live in a property payment-free.

The time for families to consider the effect that the loan will have on future generations is before the loan closes or while the loan is in place with the knowledge that one day it will be due and payable, not after you find yourself in a situation such as this.

I don’t know if your parents obtained their reverse mortgage before you moved in with them or after, if you were disabled at that time or if that came later, but we all know this day will come and borrowers with a reverse mortgage or a regular loan for that matter must plan accordingly.

If your parents had to take out regular loans to be able to live in the property and now you had large house payments, you would be in the same situation if you could not make the payments.

The reverse mortgage allowed mom and dad to live in the home, payment free for life (and apparently you as well for as long as they were also there) but unfortunately, it will not and cannot continue to do the same for generations to follow mom and dad leave the home.

Your options now are to pay off the loan with a new loan or with other funds available to you or to sell the home.

I do not know what your disability income is or what that would allow you to do, but those are the options with the loan your mom and dad had on their home.

As I stated, if they needed to keep a standard mortgage and a line of credit to continue to live there, you would also now be faced with that debt and those payments, so you would be in the same predicament.

If you feel that financing a new loan in your name is out of your reach based on your income, I would suggest that you first contact a real estate professional and determine the value or most probable selling price if you were to sell the home.

Compare that to the balance owed on your parent’s latest reverse mortgage statement and hopefully there is still adequate equity in the property so that a sale would net you enough money to set you up in a new location.

HUD also has services available for those needing assistance and you can check the websites for other services in your area. Please do not wait to hope that the circumstances will change because that would not benefit you.

I know this is a very difficult time, but you need to know what your options really are and the only way to find out is by contacting the proper professionals to see where you stand before you receive notice that the loan has been called due and payable.

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6 Comments on this Article

Misty W.
January 29th, 2023

I'm interested in trying to stay in my dads house after he passes. I'm 47 and disabled with very rare chronic illnesses. How would I go about doing so?
Reply to Misty
- Michael Branson
  January 31st, 2023
  
  Hello Misty,
  
  The loan becomes due and payable when the last original borrower on the loan is no longer living in the property. If dad is the only or last borrower on the loan, when he passes the loan will become due and payable. If you want to keep the house and continue living there, it is up to dad to make the arrangements so that the title to the property will pass to you via trust. The lender does not decide who owns the property after dad passes, dad should do that now. Even if he does do a will or set up a trust, it may still require that you go through a probate process depending on your state/local laws. Then there is the matter of the loan that is due.
  
  You would need to be able to pay off the existing loan as it cannot be assumed. That would require you to be able to get a new loan in your own name to pay off the outstanding balance owed or have sufficient assets to be able to repay the loan to remain in the home. Otherwise, you can sell the home and use the proceeds to relocate to another property or for whatever purpose you see fit if you are the sole heir. People often look to insurance options well in advance when they have family members that they know cannot work and will need to pay off a balance owed or look for other living arrangements at that time.
  My advice though is that if you know you are going to be required to move, is try to also have your plans in place in advance so that you can make your move while the equity in the home is at its highest if you are going to use the equity to buy another place or for future rental payments or wait as long as possible if there is no equity remaining and get as much use of the home as possible before you must move but just know that the move is imminent if you cannot pay off the existing reverse mortgage so be sure you are saving as much money as possible while you are there and making no mortgage payments.
  Reply to Michael
Kelly L.
May 29th, 2019

I'm disabled and in a house with reverse mortgage both parties died can I stay already in eviction process. I'll be homeless if I leave what can I do?
Reply to Kelly
- Michael Branson
  May 29th, 2019
  
  Hi Kelly,
  
  What do the heirs of the homeowners say? The loan will now be due and payable, but the heirs will decide the disposition of the home. The lender does not get to decide the fate of the home at this point, they don't own it.
  If no heirs come forward to claim the home, eventually the lender would have to foreclose on the property to protect their interest in the loan and at that time, the property would be sold at foreclosure auction to repay the debt. I would think that your best bet at this point would be to contact the family and see if you can work something out with them.
  Reply to Michael
Michael S.
May 1st, 2019

I am 59 years old I am disabled, and I live with my father who has a reverse mortgage on their home my mother passed away in 2015 I've been disabled since 2001 what should I do when my father passes it should be soon he's getting elderly.
Reply to Michael
- Michael Branson
  May 1st, 2019
  
  Hello Michael,
  
  If you are your father's sole heir, you would need to make certain that the home is in your name before you can do anything. That may or may not require a probate depending on the state and the way title is held. The first thing I would suggest is for you to contact an estate attorney and determine the steps you will need to complete. If your father is mentally competent currently and he can assist in the title matters now, it is much easier than waiting until after he passes.
  
  Then you need to decide what you wish to do with the home. Do you plan to remain, or do you wish to sell the property? Either way, I would suggest that you review your father's latest statement and determine the equity position in the home by comparing the amount owed to the most probable value of the property. If you are unable to determine a value, a local real estate professional can tell you what it would most likely sell for.
  Your decision will have to be made knowing that the reverse mortgage will be due and payable once dad is no longer living in the property. If you do not have the income to refinance the loan, you may be left with just the option of selling the property. If things stay as they are until you are 62 yourself, you could investigate a reverse mortgage of your own at that time, but you would still have to qualify based on the current guidelines.
  If you have siblings or if there are other family members who may have a claim to title, you may want to approach your dad and those individuals now to discuss and decide what the property disposition will be later, just so there are no misconceptions or hard feelings.
  The lender will work with the family if they are moving toward the repayment of the loan, but if the family is hopelessly deadlocked and there is no resolution in sight, sooner or later the lender would have to begin foreclosure proceedings to protect their interest and so it is always better to have a plan in place before the time comes that you must act.
  Reply to Michael

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