How to Get Out of a Reverse Mortgage: Your Options Explained

October 10, 2023

I have a reverse mortgage, and I’m having problems with it. Was it legal to get a reverse mortgage without my lawyer explaining the situation? I never knew the pros and cons of a reverse mortgage. I think it’s a legal way to swindle homeowners out of their homes. How can I get out of the reverse mortgage?

I’m sorry to hear you’re experiencing regrets. Rest assured, reverse mortgages are highly regulated, and getting one without a lawyer’s involvement is legal as long as you receive the required counseling from a HUD-approved counselor, which explains the pros and cons in detail.

You have several options if you want to get out of your reverse mortgage. You can:

Refinance into a traditional loan
Pay off the reverse mortgage with other funds
Sell your home to repay the loan

If you’re concerned about the loan balance rising, you can choose to make payments toward the interest each month, which will help protect your equity.

Remember, you’re in control and can take steps to address the situation.

Table of Contents

• Reverse Mortgages Are Highly Regulated and Offer Multiple Ways to Exit

• Ensuring Informed Decisions in Reverse Mortgages

• Were You Denied These Opportunities?

• Top FAQs

Reverse Mortgages Are Highly Regulated and Offer Multiple Ways to Exit

It’s important to clear up any misconceptions about reverse mortgages. These loans are well-regulated, and there are many opportunities to learn the pros and cons before committing. I’m curious why you felt you didn’t have access to your attorney or a chance to review the details thoroughly.

By law, lenders must allow you to choose a HUD-approved counselor. As part of the process, you’re required to attend a counseling session with a professional, typically lasting 45 minutes to an hour. Some borrowers have reported sessions lasting over 4 hours, depending on the number of questions they had.

The time spent on counseling depends entirely on you and the questions you ask. This step happens before the loan process even begins, ensuring you have the knowledge to make an informed decision. You cannot move forward without completing this counseling session.

After the counseling, the reverse mortgage application process typically takes 30 to 45 days. During this period, you are free to consult with anyone—whether it’s a lawyer, accountant, or family member—before finalizing any decisions.

I can’t speak to the actions of your loan officer, but we always recommend that borrowers seek advice from trusted individuals and professionals before proceeding.

When it comes time to sign your loan documents, you still have a 3-day right of rescission, giving you the option to cancel the reverse mortgage with no cost. This period doesn’t include the signing day, Sundays, or holidays, often giving you 4 or 5 days to reconsider.

Throughout the entire process, you have multiple chances to get out of a reverse mortgage or seek help from professionals you trust before the loan is finalized.

Ensuring Informed Decisions in Reverse Mortgages

Required HUD-Approved Counseling

Before moving forward with a reverse mortgage, every borrower must choose a HUD-approved counselor and complete a mandatory counseling session. These sessions are designed to be thorough, lasting at least 45 minutes, and can extend for several hours, depending on the borrower’s questions. This ensures you fully understand the process and your options before committing.

The Loan Application and Processing Period

Once you apply, the reverse mortgage processing period typically lasts 30 to 45 days. During this time, borrowers are encouraged to consult with family members, attorneys, or financial advisors. You can use your application documents to get professional advice before making final decisions.

Built-in Borrower Safeguards

Although experiences with loan originators may differ, the industry standard is to encourage borrowers to seek independent advice. Consulting with trusted professionals during the loan process is key to making an informed decision.

Right to Rescind the Loan

After you sign your reverse mortgage documents, you still have a 3-day right to rescind, allowing you to cancel the loan without penalty. This period excludes the signing day, Sundays, and holidays, often giving you 4 to 5 days to reconsider and seek further consultation if needed.

Additional Opportunities for Counsel

Before finalizing the loan, this rescission period offers a final opportunity to review all documentation and get additional advice. This safeguard ensures you have the time and resources to make the best decision for your situation.

Were You Denied These Opportunities?

Even if you didn’t consult an attorney or advisor during the process, a quick internet search for “pros and cons of a reverse mortgage” would provide a wealth of information. In fact, the phrase is so commonly searched that it auto-fills in search engines, offering access to hundreds of resources from attorneys, lenders, HUD, AARP, and more.

The last thing any reputable lender wants is to “swindle you out of your home.” You had ample time to seek legal advice or consult a financial advisor if you had any doubts. If you now feel you made the wrong decision, it’s understandable—many people experience buyer’s remorse at some point.

While some borrowers may encounter less-than-ideal loan originators or lenders, it’s important not to generalize the entire reverse mortgage process as one that lacks transparency or is aimed at taking advantage of homeowners.

Laws vary by state, but many have cooling-off periods to allow borrowers to reconsider their decision early in the loan process. For example, in California, lenders must wait 7 days after counseling before proceeding, giving borrowers even more time to evaluate the loan and consult with trusted legal or financial advisors.

The reverse mortgage process is thorough and designed to ensure you fully understand the terms before moving forward. Take the time to consult with professionals upfront and avoid any regrets later.

Top FAQs

How does someone get out of a reverse mortgage?

There are several ways to get out of a reverse mortgage. Since reverse mortgage loans never have prepayment penalties, you can pay off the loan anytime. The most common methods include refinancing the reverse mortgage into a traditional loan or selling the property to pay off the balance, especially if the homeowner wants to move to a new home.

Can I walk away from a reverse mortgage?

Yes, you can walk away from a reverse mortgage. The property is the only collateral since it’s a non-recourse loan. If you choose to walk away, the home may go into foreclosure, but you will never owe more than the property’s value at the time.

Can I negotiate a reverse mortgage payoff?

You cannot negotiate a reverse mortgage payoff. However, if you are an heir to a property with a reverse mortgage, you can repay 95% of the home’s appraised value at the time if the loan balance exceeds the property’s value and you wish to keep the home.

Why do people say reverse mortgages are bad?

People often say reverse mortgages are bad for two reasons: either the loan isn’t a good fit for their specific circumstances, or they have been misinformed. Reverse mortgages aren’t for everyone—for example, if you plan to relocate soon, a reverse mortgage may not be the right option. Additionally, some people still associate reverse mortgages with problematic loans from private banks before 1988, before the Home Equity Conversion Mortgage (HECM) program made these loans government-insured and more advantageous for homeowners.

Do you have the right to rescind a reverse mortgage?

Yes, you can rescind a reverse mortgage loan on your existing home. Federal law gives homeowners a 3-day right of rescission after signing the loan documents, during which you can cancel the loan with no penalties before it is finalized. However, this right does not apply to reverse mortgage purchase transactions, which do not include a rescission period.

ARLO recommends these helpful resources:

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Have a Question About Reverse Mortgages?

Look no further. Michael G. Branson, our CEO, brings a wealth of knowledge directly to you. With a robust 45-year tenure in mortgage banking and 20 years dedicated solely to reverse mortgages, he's the expert you want on your side.

Post your question in the comments below and anticipate a personalized response from Mr. Branson himself, typically within one business day. He's here to illuminate all angles of reverse mortgages, ensuring you're equipped with the knowledge to make informed decisions. Take this opportunity to gain insights from a seasoned professional.

37 Comments on this Article

Kim C.
September 9th, 2024

My mother just got a reverse mortgage on her house in July, and she passed away on September 3rd, only a month into the loan. Do we need to sell the home in order to get out of this reverse mortgage? Should I contact the lender to find out what is needed to move forward?
Reply to Kim
- Michael Branson
  September 9th, 2024
  
  Hello Kim,
  I am so sorry to hear about your loss. Unless your mother needed a full draw to pay off her existing liens, she would have been limited in the amount of money she could access at closing. Even if she did draw the full amount to repay other loans on the property, there should still be a significant amount of equity in the home.
  The reverse mortgage will need to be paid off, but you don't necessarily need to sell the property. Since the home likely still has equity, if your income and credit are sufficient, you could refinance the loan in your name. If you are 62 or older, you could explore getting your own reverse mortgage. Otherwise, the new loan would need to be a forward or traditional loan, as reverse mortgages are not assumable. You can keep the home by replacing the reverse mortgage, or you have the option to sell the home to pay off the loan.
  If obtaining your own loan is not possible due to income, credit, or other reasons, you may need to consider selling the home to protect your equity. If selling becomes your decision, it's best to start the process as soon as possible. You don't need to contact the lender right away; instead, if your mother didn't have a trust or will in place, you should reach out to an estate attorney to begin the probate process so that you can sell the house. At this point, you don't need anything from the lender, but you do need to settle the estate and transfer the title so you can legally sell the home. The estate attorney will guide you on what steps are required to settle the estate and transfer the title to the heirs, giving you the legal right to sell the property. Even if you plan to refinance, you'll need to clear the title, so contacting an estate attorney is your first step regardless of your decision.
  If there was no equity in the home or you do not wish to keep or sell it, and are considering letting the lender foreclose, this process may not be necessary. However, since there is equity in the home, I strongly recommend contacting an attorney to complete the title transfer as quickly as possible. You can also start the process of selling the home during this time. Your attorney and a senior real estate agent can advise you on the best times to list the property and notify the lender. The lender will likely be notified by external services about the passing of the borrower or when the title transfers, so eventually, they will reach out to you even if you don't contact them directly.
  What you will need to provide to the lender depends on your decision about the property and how far along you are in refinancing or selling it. The farther along you are in the process, the better prepared you will be to present a plan to the lender to repay the loan, putting you ahead of many others in similar situations. The amount needed to pay off the reverse mortgage is the lesser of the loan balance or 95% of the current appraised value. Given that this is early in the loan's term, the payoff amount will likely be the full balance. You don't need anything from the lender at this time to understand what steps to take next.
  Reply to Michael
Lara
July 26th, 2024

Hello,

My father has a reverse mortgage in his house but the house is in need of a lot of repairs. Can I negotiate with the reverse company on the pay off?
Reply to Lara
- Michael Branson
  July 29th, 2024
  
  Hi Lara,
  They will allow your father to continue to live in the home for the rest of his life without having to make a payment, even if the balance owed is more than the current value of the home. If your father must leave the home, as the heir, you can keep the home and pay off the loan at the lower of the amount owed or 95% of the current market value of the property (which takes into consideration the current condition of the home compared to other similar properties selling in the area). Your father still owns the home, so he can sell, pay off the loan, or refinance the loan at any time he wishes without penalty. While your father can pay off the loan at any time without penalty, there is no provision to negotiate a payoff lower than the amount owed while the borrower continues to reside in the home due to the property's perceived condition.
  The loan documents require borrowers to maintain the property, and I am afraid that might set a dangerous precedent. Borrowers could allow properties to deteriorate and then expect HUD to lower the payoffs due to their failure to maintain the home. After reaping the benefits of the lower payoff and HUD covering the losses, borrowers could then put funds into the home to repair what should have been maintained all along, bringing the property back up to market value while HUD absorbs the losses. Alternatively, borrowers could pick ups and downs in the marketplace to lock in losses for HUD by paying off loans during market slumps, requiring HUD to take losses when the value of the homes may rise again in subsequent years. HUD has already engineered the program so that borrowers can live in the home for life. I do not believe they would ever consider increasing their losses on the program in such a manner.
  Reply to Michael
- Cynthia
  September 2nd, 2024
  
  I took out a Reverse Mortgage in 2016 at a 0.03% interest rate, which caps at 9%, but I was never informed of that. It was sold to Carrington, a company that I believe is not reputable with HUD. I planned on living in my condo for the rest of my life, but I am now a disabled senior, and the condo maintenance fees have become astronomical! I can no longer afford to live here, but the payoff isn't giving me enough money to buy a house and have money left to live on.
  
  Carrington is holding $60,000 of my money and has used my line of credit to pay taxes and insurance, which I believe they are responsible for paying. What should I do? HUD and FHA are currently investigating them.
  
  Thank you.
  Reply to Cynthia
  - Michael Branson
    September 4th, 2024
    
    Hello Cynthia,
    Let's first clear up a few common misconceptions. Your original lender, your counseling, your disclosures, and loan documents should have all made it clear that taxes and insurance are always your responsibility. It's your property, and it's not the lender's obligation to cover your taxes or insurance. If they set aside funds or advanced money because you didn't pay these expenses when due, that would have been fully disclosed in the paperwork.
    Regarding your concern about not being informed of the interest rate, reverse mortgage rates and terms are typically disclosed multiple timesâ€”at the initial proposal, during counseling, at application, whenever there are changes (like after the appraisal is received), and at closing. If you signed these disclosures but didn't understand them, that's a different issue. However, if you were genuinely not informed and didn't sign those documents, the loan would not be valid.
    Your current servicer, Carrington, is required to follow the terms set by your original loan documents. Regardless of who services the loan now, they can't change the original terms, and they weren't involved in any misunderstandings that occurred when you first took out the loan. Therefore, you need to consider your options going forward.
    You still own your home, so you can refinance the loan and pay off the reverse mortgage. There are no prepayment penalties. Alternatively, you can sell the property and pay off the loan with the proceeds. When it comes to any unused funds in your line of credit that were set aside for taxes and insurance, those won't be included in your payoff amount. For example, if you had a $200,000 principal limit and only drew $100,000 (including loan costs), with $60,000 set aside for taxes and insurance but only $10,000 used, you'd only owe the $100,000 plus interest and mortgage insuranceâ€”not the full $200,000 or the entire $60,000.
    Remember, you don't accrue interest on funds you haven't drawn. So, you won't owe anything on the money that was never used.
    If moving is your preferred option, the payoff would only include what you borrowed, the accrued interest, and any remaining fees. Additionally, have you considered looking into local assistance programs? Some areas offer tax assistance or other resources that could help, especially given your new financial challenges.
    I understand rising condo fees are a concern, but while that may be unavoidable, there are options to generate extra income, like renting out a room, which is permitted under HUD's guidelines for reverse mortgages (as long as it's a month-to-month rental, not short-term). Many seniors are finding this helpful in today's economy.
    I hope this information helps clarify your situation. Let me know if you need further assistance.
    Reply to Michael
John S.
January 6th, 2024

If one takes out a reverse mortgage with a particular company.....and 2 or 3 years later that company sells ALL of its reverse mortgages to another company (company number 2).....and 4 or 5 years later company number 2 sells ALL of its reverse mortgages, this time to a "Collection Agency/Mortgage Company" (company number 3), what/where is the law that states that: "the pay-off on the balance of a reverse mortgage CANNOT be negotiated?" Especially considering the fact that it is highly UNLIKELY that in each of these transactions, all of the reverse mortgages were sold at FACE VALUE. i believe it to be highly likely that company number 1 sold its reverse mortgages for something well under face value.

I further believe that company number 3, being for the most part a "Collection Agency," paid more than pennies on the dollar! Please enlighten me, with emphasis on the whys and wherefores the balance on a reverse mortgage (or any part thereof, i.e., servicing fees, interest, etc.) cannot be negotiated....

Thank you in advance for your timely response!
Reply to John
- Michael Branson
  January 8th, 2024
  
  Hello John,
  When the loans are "sold", it's really the servicing rights that are being sold as the loans are government insured and placed into mortgage backed bonds (GNMA bonds) long before that ever happens. Reverse mortgages, just like forward mortgages, may be sold or transferred more than once during their lifetime as the loan is an asset and has value.
  Ultimately, reverse mortgages have a clause that when they reach a certain point, the loan must be assigned to HUD. At that time, regardless of who the lender is, the loan is assigned to HUD, and HUD's servicer (now Compulink) will service the loan for the remainder of its life.
  Any payoff less than the full amount owed, regardless of who owns the servicing rights, represents a loss to the investors who purchased the bonds, which HUD must pay. The mortgage insurance issued by HUD protects everyone: the borrower, the lender, and the investors who purchase the GNMA bonds, so any payoff less than the full amount owed would represent a loss to the investors would be a loss that HUD would need to pay a claim to make whole. Therefore, HUD would only authorize payment for less than the full amount owed if, during their loss mitigation efforts, they felt the payoff at less than the full balance represented a smaller loss than foreclosure and sale at current market value.
  Because when a loan is transferred from one company to another, it's the servicing rights that are being transferred, and HUD still insures the underlying balance and remains outstanding by way of government securities, there is no discounting of face value during these transactions that would open additional opportunities for reduced payoffs of the loans.
  Reply to Michael
Rosario L.
October 12th, 2023

Hi ARLO,

My father has a reverse mortgage and is selling the home to me. I received the current payoff amount from the lender and I am submitting the information to the servicing side and just waiting now. Can you please let me know if there is anything else I am missing during this process? Thank you, & God Bless!
Reply to Rosario
- Michael Branson
  October 12th, 2023
  
  Hello Rosario,
  Your dad can sell the home any time he wishes. Just be sure he is available to sign the Demand Request from the closing agent so that it is not delayed, but otherwise, the closing on the purchase for you will work the same as with any other transaction. Your closing agent (probably a title company, escrow company, or attorney) will send a Beneficiary's Demand request to the lender to determine the amount owed. Make sure they have sent payoff Demand requests to reverse mortgage lenders in the past and that they include the borrowers' signatures so that the lender knows that the borrower has authorized the release of the information. Then everything should be smooth sailing!
  Reply to Michael
Susan
September 24th, 2023

Hello Arlo,

In 2022, I walked away from my mom's reverse mortgage. We sent the death certificate to Novad, and there was a verbal agreement about foreclosure. However, a year has passed, and the deed is still in her name, delaying probate. Was I supposed to send any additional paperwork to Novad besides the death certificate? I don't have any written agreement and haven't signed any documents. Am I liable for anything during the foreclosure process? Thank you.
Reply to Susan
- Michael Branson
  September 24th, 2023
  
  Hello Susan,
  
  I don't know if there is anything with which you need to be concerned because I don't know the estate's status, etc. I don't know if there would ever be a time that you need to be concerned because you are not the owner in any event, but I can't tell you that for sure, and I don't know if there are other assets that could be at risk. This is where it pays off to spend a little time with a knowledgeable attorney. If you are concerned about other issues, you should contact an estate attorney to determine the effect of the unresolved probate, etc.
  My concern would be if mom's estate still had assets, and something happened to someone (i.e., they entered the property and were injured), is the property still insured, etc., but I honestly don't even know if that might be an issue. I am not an attorney and cannot advise you, so it would be wise to check. I know I would.
  Reply to Michael
  - Michael Branson
    September 24th, 2023
    
    Hello Susan,
    
    I don't know if there is anything with which you need to be concerned because I don't know the estate's status, etc. I don't know if there would ever be a time that you need to be concerned because you are not the owner in any event, but I can't tell you that for sure, and I don't know if there are other assets that could be at risk. This is where it pays off to spend a little time with a knowledgeable attorney. If you are concerned about other issues, you should contact an estate attorney to determine the effect of the unresolved probate, etc. My concern would be if mom's estate still had assets, and something happened to someone (i.e., they entered the property and were injured), is the property still insured, etc., but I honestly don't even know if that might be an issue. I am not an attorney and cannot advise you, so it would be wise to check. I know I would.
    Reply to Michael
Carolyn
May 9th, 2020

Can I sell my upside down reverse mortgage for 95% of appraised value? Can I sell it to family members? Thank you.
Reply to Carolyn
- Michael Branson
  May 11th, 2020
  
  Hello Carolyn,
  
  HUD promises that you or your family will never have to pay back more than the home is worth to repay the mortgage if you should pass or be required to move to assisted living etc. and the mortgage balance is higher than the property it worth.
  That does not include selling the home at your discretion if the home is upside down -on a bonafide third-party sale or to family members. The idea behind this is that the borrower will have a place to live for life without a payment and the borrower, their estate or their heirs will never be required to pay more than the property is worth at the end of the transaction.
  The intent is that if when the time comes that a borrower is forced by health or death to leave a home, the value of the home will not repay the obligation, the borrower, the estate and/or the heirs have no other recourse.
  And HUD decided to allow borrower's heirs to repay the loan at the amount owed or 95% of the current market value when borrowers pass because they realize that if they have to take the home and resell it, they will not recoup more than this amount after costs anyway so it is a good way to allow heirs to keep property in the family.
  
  It is not, and never was, intended for borrowers and their heirs to be able to terminate loans at their discretion though and lock in losses to HUD.
  Markets rise and fall and many of the properties that were below water on the values in 2012 have appreciated again since then and if HUD had allowed borrowers to sell to family members locking in losses rather than allowing the values to rise again, their losses during that time would have been even greater than they were and they were substantial.
  If you decide to sell your home voluntarily and it results in a loss on your HUD reverse mortgage, HUD would look at the sale closely and may not approve a short sale and I would doubt they approve any voluntary sale to a family member that represented a loss to the insurance fund.
  
  It is still a non-recourse loan and if you feel you can no longer live in the property, I encourage you to contact your servicer to discuss options with them.
  Any time a sale for less than the amount owed ("short-sale") is desired, it takes the approval from the lender anyway so you really need to speak with them to discuss your options in any event.
  Reply to Michael
Gaylon V.
November 27th, 2019

We have a reverse mortgage and can't afford next year's taxes and insurance (due feb 2020)also have contracted cancer and must move into an apartment with full maintenance. How do I walk away from my reverse mortgage?
Reply to Gaylon
- Michael Branson
  November 27th, 2019
  
  Hello Gaylon,
  
  Contact your servicer and tell them of your circumstances and that you wish to give them a Deed in Lieu of Foreclosure. Tell them that you must leave the property and they will walk you through everything you need to know. I wish you the best.
  Reply to Michael
Jennifer
October 12th, 2019

My mother has a Reverse Mortgage plus a lien. When she passes who is responsible to pay the lien? She has very little in real property, and the market value on the house is low. Since the amount owed on the reverse mortgage is about what the property is worth, we are looking at letting the bank take it back.
Reply to Jennifer
- Michael Branson
  October 12th, 2019
  
  Hello Jennifer,
  
  I'm sorry but I cannot answer this for you. You really need to contact an estate attorney in the area where the property is located. Different states have different laws regarding liens and creditor's and borrower's rights and this is a legal question, not one for the reverse mortgage lender. You should speak to the attorney to determine if the estate needs to do anything else to protect any other assets.
  Reply to Michael
Lisa
August 25th, 2019

If my parents' reverse mortgage is now in the red by $1,100, is there any way that we could put my name on the house, so that I could keep it after they have died? Would I pay off the negative amount and begin making payments? Would I need to qualify for a loan and pay a down payment, if my parents want my name on the house so that I can have it after they are gone? or need a down payment to take over possession?
Reply to Lisa
- Michael Branson
  August 25th, 2019
  
  Hello Lisa,
  You can do better than that! Your parents can add you to title at any time enabling you to retain the home when they pass. But you don't have to pay any negative, the program allows heirs to repay the loan after borrowers pass at the amount owed or 95% of the current value, whichever is less.
  If the balance is more than the value of the home, not only do you not have to pay the negative amount, but you don't even have to pay the full value of the home to pay off the loan, just 95%. You do have to refinance the loan or pay it off with other funds available to you but with the 95% payoff you may only need closing costs.
  You should check in advance with a forward lender to see what you will need when that time comes.
  Reply to Michael
Stephen G.
August 15th, 2019

I just got a notification that the house is being auction and it's a reverse mortgage and my mom and dad have died and I have been living there with my dad before he passed away and am still living there how long do I have to get out?
Reply to Stephen
- Michael Branson
  August 15th, 2019
  
  Hello Stephen,
  
  The notice will tell you the auction date and then the home will go to the highest bidder at the auction. That may or may not be the lender.
  When the home is sold at auction, the new owner will have to serve you notice based on the laws in the area in which you live to vacate the premises and I really can't give you any time frames but would encourage you to seek the counsel of a licensed attorney in your area for that information.
  Reply to Michael
Eric
August 12th, 2019

My parents have a reverse mortgage on their second-floor walk-up condo. Due to their ages, the stairs is becoming increasingly difficult for them to handle. They will be moving, perhaps permanently, from that condo to a single story house (i.e. no stairs involved) that I am in the process of purchasing for them (and will include them on the deed of the house - but not in the mortgage).

While the transition occurs, could they rent the property that has the reverse mortgage so that they can, at a minimum, recover the cost of owning that condo (ie condo fees, property insurance, and taxes) while they transition to the new property? If so, what would be the maximum rental period allowed? I appreciate your help, Thank you Eric
Reply to Eric
- Michael Branson
  August 12th, 2019
  
  Hello Eric,
  
  There is no maximum rental period. Once your parents rent the property, it is no longer their primary residence and the lender would call the loan due and payable as soon as they discovered the fact that it was rented followed by a foreclosure action.
  If they contact the lender and place the property on the market, the lender would work with them to get the property sold but by renting the home out, it is violating the terms of the loan and their intentions would be deemed to make the property an income producing, non-owner occupied property.
  You should read the loan documents as well; I believe there is an assignment of rents in the Deed which would allow HUD/Lender to have the rents assigned to them under such a default.
  Reply to Michael
Karen
July 29th, 2019

My mother was 83 she Got a loan six years account she received $35,000 the reverse loan company is telling me in a year that she owes $106,000 it's only worth $75,000 what can we do to pay off this loan without simply walking away from the home?
Reply to Karen
- Michael Branson
  July 29th, 2019
  
  Hello Karen,
  You may be reading the statement incorrectly. Have mom call the servicer with you there so she can authorize you to speak with them on her behalf. If the balance is as high as you think it is, you need to look at your mom's original paperwork, specifically the amortization schedule.
  The interest will not accrue that fast so I suspect mom may have had a loan with a balance that the reverse mortgage also paid off at closing. She may have only received $35,000, but there may have been other funds used to pay off existing loans.
  Finally, you can repay the loan at any time without penalty. But I'm also concerned about the balance in relation to the value you list. Since the loan starts at a fairly low loan to value, unless borrowers are taking a full draw (which HUD no longer allows unless the funds are to be used to purchase or pay off existing eligible liens), the loan would not use all the property's equity that quickly let alone the value plus another 33% over value unless there was a very large decrease in value.
  If this is the case, your mom would have realized a loan representing a very large percentage of the value of the home before the loss in value and has had the ability to live in the home without making payments. I would encourage you to review the closing statement, the actual value and verify what mom owes. The best thing for her may be just to continue living there payment free and let the loan take the loss later if all that is true.
  Reply to Michael
Linda V.
July 21st, 2019

I'm 71 and have a reverse mortgage. With the interest the loan is now at $235,000. Appraised at $350,000. I want to pay this off. How can I possibly do it now?
Reply to Linda
- Michael Branson
  July 21st, 2019
  
  Hello Linda,
  
  A reverse mortgage is no different than any other loan in this regard. You can pay it off the loan off in full at any time with funds available to you, by refinancing the loan with another loan or by selling the house and paying off the loan with the sale proceeds.
  Or you could choose to start making payments in any amount and pay it off over time. There is no prepayment penalty and while there are no payments due while you live in the home, you can choose to pay any amount at any time without penalty.
  Reply to Michael
Paul H.
July 15th, 2019

My father recently passed away leaving his home with a reverse mortgage on it. There's likely $10,000 of equity in the home. My question is: Do we have to pay off the reverse mortgage company and then try and sell the home? Or, can we sell the home and use the proceeds from the sale to pay off the reverse mortgage? Essentially, I'm asking about the timing of when the reverse mortgage company expects to receive their pay-off amount?
Reply to Paul
- Michael Branson
  July 15th, 2019
  
  Hi Paul,
  
  You can do it either way you choose. If you want to repay the obligation so that you have no time frames to worry about and then choose the best course of action for you and your family, that's entirely up to you. That would obviously require you to have the funds available to retire the loan though without a sale (either by cash available to you or by another loan).
  If you want to sell the property yourself and have the loan paid off through the closing, that's perfectly acceptable as well. The reverse mortgage servicer/lender will only want to know what your intentions/plans are and then will be monitoring to make sure that you are working toward achieving that goal within an acceptable time frame. They know it will take some time to clear title, market and sell the home if you plan to pay them off with sale proceeds so they will make sure that the efforts are genuine and reasonable.
  In other words if you wait many months before you even start to list and market the home, you would run the risk of the lender beginning a foreclosure action, They know that an uncontested, non-judicial foreclosure takes about 150 -180 days to complete from the date of filing so they will not wait too long if it appears that you are not making any progress toward retiring the debt before they start because it will take 6 months or more on average from the time they finally start.
  
  Communication is typically the best course of action. They do not want the home but will not wait forever to start a foreclosure action, especially if they are left in the dark. Show them that you are doing what is necessary to retire the debt (whether than means paying it off and keeping the home or selling the property) and they will work with you.
  Reply to Michael
Sandra
July 10th, 2019

Can we get a reverse mortgage in a home owned by 3 siblings and no mortgage? Also, how long after the death of last sibling living in the house, do the heirs have to purchase the house?
Reply to Sandra
- Michael Branson
  July 10th, 2019
  
  Hello Sandra,
  
  Yes, you can. Any of the siblings no living in the home or not eligible for the program would not be on the loan and would have to attend the counseling and also sign documents acknowledging that they are aware the loan will be due and payable when the last eligible borrower permanently leaves the home, but you can get the loan.
  You don't have to "buy the house back" when the last eligible borrower leaves, you already own it. But the loan would be due and payable at that time and you would have a limited time to either refinance the loan, pay it off with other funds available to you or sell the property if you were unable to get the necessary funds/financing to pay off the loan on your own.
  Typically, the lender will work with you for several months to determine what you are going to do and to allow you time to do it, but eventually, if they see no progress toward the loan repayment, they will begin foreclosure proceedings. A simple foreclosure typically takes about 150 -180 days if not contested and does not include the courts so if the lender waits several months and then begins the action, most borrowers end up having a year before the lender forecloses on the property, but this is not a guarantee.
  
  Neither the lender nor HUD want the property nor the responsibility to dispose of it. They will do whatever possible to allow you to refinance the loan or sell it, but they will want to see that progress is being made. Communication is key. Let them know if you are obtaining new financing the status and keep them informed of the progress.
  If you are selling, send them copies of the listing and any updates as they become available. If you are doing everything, they would have to do to market the property anyway and they believe your actions are genuine, they will be much more willing to grant extensions if needed later for a successful close of escrow.
  Reply to Michael
Dona
July 10th, 2019

How do I go about paying off the reverse mortgage loan while my parent is still alive?
Reply to Dona
- Michael Branson
  July 10th, 2019
  
  Hi Dona,
  
  Your parent can pay off the loan at any time and without penalty. Your mother/father can make a payment in any amount up to and including payment in full at any time. Your parent should request a Beneficiary's Demand in writing from the lender so that they know the exact amount to pay including any fees to close the loan (there are always some minor costs with any loan for reconveyance, recording, etc.) and then the best method would be to wire transfer the funds to the lender so that the funds are received the same day and are the same as cash. If you send a check or cashier's check, they will have to hold the payoff until they know the funds are good. Once the funds clear, they will record the reconveyance and the loan will be closed.
  Reply to Michael
Minnie Stewart
June 3rd, 2019

I am upside down on my reverse mortgage is there any way to get out of my reverse mortgage?
Reply to Minnie
- Michael Branson
  June 3rd, 2019
  
  Hi Minnie,
  I guess I would ask why would you want to? And not because I think that there is never a time when you might have to do so, but to be sure that this is the right time.
  The repercussions for leaving the home without paying off the loan or before you pass may not be a big deal to most borrowers but it could affect some aspects of your credit and it would mean that you may not be eligible for some HUD programs while there is a loss outstanding on this loan.
  If you never plan to buy another home (going to live with family or into assisted living), this may not be a concern at all. Even if your balance is higher than the property is worth, you can continue to live in the home for life without having to make a payment on the mortgage so just being upside-down is no concern.
  If you need to leave the home because you just can't maintain it anymore though, or you have medical issues that require you to leave, etc., all you need to do is contact your lender and let them know that you can no longer continue to live in the home and tell them you believe the home is worth less than the balance so you do cannot sell the home and wish to Deed the home to them.
  There is no recourse with a reverse mortgage so the only collateral the lender has is the home. There are some things they will have to do to insure the title is clear, etc., but will do everything they can to accommodate you rather than having to go through the time and expense of a foreclosure process if they can.
  If you have other liens, etc., they would not be able to accept a Deed from you because by so doing, they would also be accepting your other debts. But they will go through all the options with you when you contact them.
  Reply to Michael

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