America’s #1 Rated Reverse Lender

Hello Carla,

First, I'll answer this assuming the loan is a HUD HECM loan since you've mentioned HUD’s involvement. HUD typically doesn’t own the loan; rather, HUD runs the program, while independent lenders issue the loans. HUD insures the loan through the Federal Housing Administration (FHA), a division of HUD. Initially, a lender owns the loan or at least the servicing rights until the loan is paid off or until the loan-to-value ratio reaches a predetermined level, at which point the loan may be assigned to HUD. The loan can be sold from one lender to another during its lifetime, but any subsequent lenders must adhere to the original terms. They cannot change these terms after the loan closes.

When a loan is assigned to HUD due to reaching a certain loan-to-value threshold, HUD does not sell the loan to new lenders. Therefore, the servicer or lender who currently holds the loan must abide by the legal agreement (the Note, Deed of Trust, Mortgage, and other signed documents) set when the loan was closed. Since this is a non-recourse loan, the lender’s only security is the property itself.

The 95% rule is relevant for heirs who want to keep the home and pay off the loan after the borrowers have passed. I’m not sure of the specific circumstances in your case, but if you inherited a property from family members who have passed, and you are being told that this option is unavailable, you should consider reaching out to someone in a higher position within the lender's organization. The lender is eligible to receive a claim paid by FHA to cover their balance, so they should have no reason to deny you the reduced payoff option you are entitled to. Since FHA insures lenders against loss for these payoff options, it seems likely there may be a misunderstanding. Persist in contacting the lender's management until you receive the answer you deserve, and if necessary, involve HUD directly. Ultimately, if required, you might also consider consulting with an attorney.

Hello Carla,

The lender or the lender’s servicer will indeed order an appraisal from a HUD-approved appraiser to determine the payoff requirements. As the heir, you’ll have the option to pay off the loan at 95% of the appraised value if it is less than the amount owed.

Hello Adrian,

I cannot offer legal advice, and this situation presents many areas where I don’t have enough information. Your grandfather passed in 2017, which was seven years ago. Were you your grandfather’s legal heir at that time? There are several important questions to consider, such as: When did the lender become aware of your grandfather’s passing? Did they know in 2017, or did they find out later? It’s highly unusual for a reverse mortgage loan to remain in place for seven years after the borrower’s death without being called due and payable. Did the lender send any occupancy affidavits during that time that were returned, or were they aware of his passing but failed to act?

Lenders are supposed to notify the legal heirs of the borrower when they become aware of the borrower’s passing. They inform the heirs of their options regarding paying off the loan. You mentioned that your grandfather was the borrower, which leads me to ask if you were his legal heir, or if there were other family members who were the rightful heirs to the property. Did you inherit the home? Did you notify the lender that you had inherited it?

If you went through probate, did you complete the process so that the lender knew, or should have known, that you were the heir or title holder of the home? If you didn’t take the legal steps to transfer the title to your name, it’s possible the lender didn’t know you had a claim to the property. Under financial privacy laws, lenders can’t provide information about the loan unless you are the legal heir or title holder.

Unfortunately, it's difficult to give advice now on what should have been done. Ideally, I would have advised you back in 2017 to assert your rights as the heir, pay off the loan, and either keep or sell the property. At this point, after a foreclosure, it’s hard to know what legal rights you may still have. I strongly recommend you contact an attorney as soon as possible to review your case and determine whether the lender made any errors or if there are any remedies available. This is now a legal matter, and an attorney can provide the best guidance based on your specific situation.

Hello Kaye,

Many banks are hesitant to lend behind a reverse mortgage because the balance increases over time and there is no defined end date for the loan. However, there’s nothing preventing you from using your home for additional financing, which is essentially what you’d be doing in this case. Since the reverse mortgage holds the senior lien position, HUD is protected, and they wouldn’t have any issues with you signing such an agreement with your friend.

That said, I recommend consulting with a financial or legal professional to fully understand the implications of this arrangement, especially given your current financial situation and the potential impact on your reverse mortgage.

Hello Michael,

Unfortunately, that’s a legal question. While I can explain how the loan works, determining whether the lender acted in good faith in response to your actions—and what legal remedies you may be entitled to—is a legal matter.

The “suggestions” you’re looking for would fall under legal strategies that could allow you to retain occupancy or ownership of the property. I don’t have information in this area, and I’m prohibited by licensing laws from giving legal advice. However, I can tell you there’s nothing in the reverse mortgage documentation that provides for such a remedy. Any possibility would need to result from a court order, and I’m not the right source for that type of information. I recommend reaching out to an attorney for further guidance.

Let me know if you need any additional clarification!

Hello Kristina,

I’m sorry to hear about your situation. Unfortunately, I don’t track various assistance programs across the country, so I can’t help you find specific government grants or aid. Additionally, I don’t know the details of any special needs that might qualify you for assistance or the agencies in your area that provide those services. However, I can offer some information about the reverse mortgage and the process you’re likely facing.

You didn’t explicitly say it, but I assume your grandmother recently passed away. Based on what you’ve shared, it seems you may not be able to pay off the existing reverse mortgage loan with a new one, as you mentioned you’re not currently working. You also didn’t clarify, but since you’re her granddaughter, are you your grandmother’s heir?

What happens next will largely depend on whether you are her heir or if there are other family members who stand to inherit the property. If you are her heir, you could sell the property, and any remaining equity would be yours. If there’s no equity, you can still stay in the home until the lender completes the foreclosure process, which can take anywhere from 8 to 12 months (sometimes even longer). This gives you time to secure employment and save some money, as you won’t be paying any mortgage or rent during this period.

If you’re not your grandmother’s heir and the actual heirs do not want the property, you could potentially work with them to transfer the property to you, allowing you to sell it if there’s equity. If there’s no equity, you can stay in the home as previously mentioned. However, if another family member inherits the home and they wish to keep or sell it themselves, your options will depend on what you can negotiate with them.

I hope this information helps. The lender doesn’t control who inherits the home—that depends on your grandmother’s will or trust, or if there’s no will, it will be determined by the probate court. Your remaining time in the home will depend on who inherits the property and what they plan to do with it.

Hello Maricela,

I’m sorry to hear about your situation, but I don’t see a specific question about the reverse mortgage. Unfortunately, I can’t offer legal advice, and it sounds like you might need some at this point because it seems like you’re facing a lot of unexpected work and expenses. I don’t know the estate laws in Florida, but I strongly recommend speaking with an attorney who is familiar with these matters before spending any more of your own money. This will help ensure that you are protected and have a clear understanding of how to be reimbursed for your expenses.

It sounds like you’ve already spoken with an attorney, but I’m not sure if that attorney is working directly for you or if they were retained by the estate, which might mean they’re not fully looking out for your best interests. If you did hire the attorney, that’s great; just make sure to find out how you can be reimbursed for all your expenditures before any payments are made to creditors (since you were told that you would be paid first).

One thing I can advise is that you need to find out from the attorney what steps are required to clear the title and address any probate restrictions so that you can sell the home. Once you have that information, present it to the lender and request the necessary time to conduct the sale. Contact a senior real estate specialist as soon as possible to determine the value of the home, discuss their marketing plans, and get an estimate of how long it might take to sell. You’ll need this information to show the lender that you are actively taking steps to market and sell the home in order to pay off the outstanding loan.

Talk to the attorney about whether the home needs to go through probate or if there will be any other legal delays. Be sure to communicate this to the lender so they won’t expect the property to be sold before the probate process allows it. It’s crucial that everyone is on the same page regarding expectations for repaying the loan, so the lender does not initiate foreclosure proceedings before you have a chance to sell the home.

A foreclosure in 30 days may not be adequate time to complete the probate and sale of the home, but since your friend passed in January, it has already been almost eight months. Hopefully, you have had the opportunity to complete many of these steps already, and perhaps the property is on the market or even close to being sold. If that’s the case, share this information with the lender and request an extension based on the progress of the sale. If you are not close to a sale at this time, you need to inform the lender of the reasons for the eight-month delay and what your current expectations are for completing the payoff process. If the lender feels that you haven’t been diligent in trying to repay the loan, they may still choose to start the foreclosure process, as it will take at least another five to six months from the time the notice of default is filed, which also means additional fees. You should consult with your attorney to see if there are any legal grounds to stop the foreclosure filing, but they would need to advise you on that.

Hello Kristina,

I’m sorry, but I do not have specific information about grants for your situation. If you are your grandmother’s heir, you should consider refinancing the loan if you qualify for a new loan, or selling the property if there is equity to provide you with funds for a new place. If there are other living relatives who might be her heirs (such as your parents or their siblings), you should contact them to discuss their plans for the property and see if you can come to an arrangement with them.

If you are not your grandmother’s legal heir and will not become the new legal owner of the property when the estate is settled, you would not be able to keep the home without the legal owner’s permission. The reverse mortgage must be paid off now, and if you don’t own the home, the only way to remain in it would be for the legal owner to deed the property to you or rent it to you. Either way, the reverse mortgage will need to be paid off, or the lender will begin foreclosure on the loan.

Your actions regarding the house depend on whether you are the heir and now own the home or if the home belongs to another family member and you are trying to save it. If you do not have rights as an heir and are looking for a suitable place to live, I suggest checking all available support systems in your area, including family, church programs, and online resources.

The only comfort I can offer is that the foreclosure process is not fast (usually taking a minimum of 6-8 months after it starts, and it hasn't started yet), so you have many months to make your plans. Hopefully, you have been able to save some money while living with your grandmother. Now that you know what's ahead, you may have a year or more to save for your move without paying rent or a mortgage during that time. The fact that you are seeking options before the day of eviction is in your favor.

Hello Randall,

I need to start by saying that I cannot give you legal advice. I hate to begin with disclaimers, but if you are receiving 30-day notices to vacate, it sounds like the lender may have completed a foreclosure sale. If that’s the case, it changes the whole dynamic of the situation.

First, let’s talk about what I can tell you regarding reverse mortgages and some of the issues surrounding possible foreclosure or Deed in Lieu of Foreclosure. If the lender completes a foreclosure or has received sufficient documentation to complete a Deed in Lieu of Foreclosure, it would be against the original instrument (Deed of Trust or Mortgage) signed by your mother. Nothing that happens with this property will affect your credit because you didn’t sign any loan papers with the lender promising to pay that debt—your mother did. So, your credit cannot be adversely impacted by a foreclosure or Deed in Lieu for your mom's loan.

As I mentioned, I can’t comment on the 30-day notice to vacate or the legality of how it is delivered—you need to consult with a licensed attorney for that answer. My concern is that the servicer may have completed a foreclosure action. This typically involves posting notices and advertising the sale, but I am unsure of all the requirements in your area. This is another good reason to consult with a real estate attorney who practices in this field. If you cannot afford one, there are many free legal aid services available that can be found through an internet search.

Finally, did you complete the process to change the title to your name from your mother's? You said you completed probate, but did you file the paperwork with the county recorder to change the title to your name? If the property is still in your name (and the lender has not completed a foreclosure action), my suggestion would be to determine if there is any equity in the property and, if so, sell it before they can foreclose if you cannot pay off the loan to keep the house. I don’t know of anything that would require you to move out before you sell the home if you still have the legal right to sell it. If someone told you otherwise, I would be very skeptical and verify that information with your attorney. It might be a ploy to get you to vacate the home.

If the lender has already completed a foreclosure action, they may already own the home, and you may no longer have this option. You really need to discuss this with your attorney to determine if you have any rights to redeem, etc. If the amount owed is well over the property value, this might be a moot point, but your attorney will need to advise you on your rights under state foreclosure laws.

Hello Eric,

As your heirs, they will have the option to pay the loan off and keep the house or sell it or walk away and owe nothing if that is what they choose to do.  At any rate, regardless of what they choose to do, they will owe the lender nothing, even if the house will not sell for enough money to repay the amount owed on the loan when the lender sells the home through a foreclosure auction or later as real estate owned if no one outbids the lender at the foreclosure auction and the lender becomes the owner as a result of the sale.

I would encourage you to let them know that if they want to keep the home, they can pay the loan off when the time comes for the less of the amount owed on the loan or 95% of the current market value if the home is valued less than the amount owed at that time.  For example, if the home is worth $100,000 and the balance on the reverse mortgage is $120,000, your heirs will be able to repay the loan in full for 95% of the current value or $95,000 if they wish to keep the home. 

If not, they can walk away, and even though there is a shortfall of $20,000 between the current loan balance and the value of the home, they will owe nothing (and neither will your estate).  Of course, if it is the other way around and the balance is $100,000 and the home is worth $150,000, the $50,000 equity is still theirs, and they can keep the home or sell it and keep the equity.  That is the beauty of the non-recourse nature of the reverse mortgage.  

Hello Donna,

Reverse mortgages cannot be assumed, and there is no way to “take over” an existing loan. They are not multi-generational loans, and based on the numbers you’re giving me, you may need to bring in a substantial amount of money to refinance your mom’s loan with a new reverse mortgage in your name (which you can do, but based on your age, today’s rates, and program parameters).  

The first thing you should do is visit an online calculator like the one on our site to see exactly what you and the property qualify for to see if a reverse mortgage is possible for you in the current interest rate environment.  Because interest rates are one of the criteria determining the amount of money you will receive with a reverse mortgage, and rates are still higher now, people aren’t getting as much money as they did a couple of years ago.  

Once the probate of your mom’s house is done, her lender will look for you to complete the reverse mortgage repayment.  I’m not an expert on probate issues, and your attorney is a much better source to answer your question about the requirements for selling the property before the change of title and probate period. 

My limited understanding is that you can start the process with the supervision of the court, but you can’t finalize any sale until the probate is final (pretty much the reason for the probate - to ensure all assets and liabilities are properly settled).  I would talk to your attorney as they can advise you on how to begin the sale process as the heir even before the title passes to you individually.  

Hello Barney,

The reverse mortgage is a non-recourse loan, meaning neither your mom’s estate nor any heir can ever be made to pay anything on the loan.  I would certainly suggest that you check with the lender as her heir to determine the amount owed and a local real estate professional to determine the most likely sale price to make certain you are not letting any remaining equity go needlessly if it is worth more than the amount owed but you are not under any obligation to do anything.  When the time comes, you will want to be sure you remove any personal property you wish to keep, but otherwise, if you do not want to keep the property or sell it yourself, you are under no obligation to do or pay anything.  

As the heir, when your parents are no longer living in the home as their primary residence and the loan becomes due and payable, you will have the option to pay off the loan and keep the house for the amount owed or 95% of the current market value, whichever is less.  So, if you make significant improvements to the home, the answer to your question would depend on how much they owe compared to the current value at the time you seek to pay the loan in full.   

If the value of the home is equal to or less than the loan amount now, you might be better off waiting until after you pay off the current reverse mortgage loan before putting a lot of money into the property in the way of improvements.  On the other hand, if the value of the home is greater than the outstanding loan balance, then any improvements you make to the home (and theoretically any increase in value as a result) would not affect the payoff amount on the loan because the loan balance is already below the current value.  Any increase in value would only increase the equity you have in the home. 

If, however, the value is currently lower than the amount owed and the only reason the value would increase would be because of the cash you invest to improve the property, you could inadvertently see a higher loan payoff later due to a higher appraised value because of the improvements you made.  If the appraised value at the time of payoff is higher only because you put money into the property before you became the owner, that would not be to your benefit.  For that reason, I would recommend you consult with a real estate specialist in your area to determine a real value for the home before you make any decisions and compare that to the outstanding loan balance.  

If it is obvious that there is still a lot of equity or that the property is already not valued as high as the current amount owed, your decision should be easy to make.  If it is close or you think the loan balance might grow to greater than the property value by the time they no longer live in the home, then you will need to make an educated decision knowing what the results will be and how badly you want the improvements now.

Hello Laura,

I can provide information about the reverse mortgage, but transferring the title and navigating probate are legal matters for which you need to consult an estate attorney. I am not qualified to offer legal advice, and honestly, the specifics can vary significantly depending on the property's location, the current state laws, how the title is currently held, and the steps your father took to ensure title transfer after his death. At this juncture, without knowing these details and lacking legal expertise in estate matters in your state, it would be irresponsible for me to attempt to guide you.

Your attorney is the best resource to inform you about the quickest and most straightforward method to transfer the title into your name and to clarify if going through probate is necessary.

Many attorneys provide free or reduced-rate initial consultations, and this issue might be resolved in your first meeting—though I cannot guarantee this. From the perspective of managing the loan, you're taking the correct steps. Transferring the title to your name as soon as possible and then refinancing the loan into a new one in your name is crucial. The property becomes yours once you settle the existing reverse mortgage with a new loan under your name.

It's advisable to inform the reverse mortgage lender about your efforts to transfer the title and ask for extra time if probate is required. Determining this information early and understanding if additional time is needed is vital. Lenders and HUD are generally more accommodating to heirs who present a concrete plan for repaying the loan and can provide documentation of their ability to proceed, such as probate dates and loan approvals, rather than those who lack detailed plans.

Hello Richard, As you rightly surmised, I can’t advise you legally, so you would need to discuss the last part of your question with an attorney. I would not be able to advise you regarding what the timeline of sale of the servicing notifications should have been or what legal remedy you may or may not have if those notifications were not made in accordance with the law. Your attorney will need to let you know if any violations occurred and if so what effect they have on your circumstances. You may want to consider looking for free or reduced-cost services available in your area if the cost of legal representation is your concern. A quick Google search will usually reveal free legal services in your area. With regard to the loan itself, I can answer some of your questions.

Firstly, there is no 12-month timeframe promised before the lender begins foreclosure from when the loan is called due and payable. The loan becomes due and payable when the last borrower permanently leaves the property and no longer lives in the home as their primary residence. The lender has some latitude as to when they choose to begin the foreclosure process, and it often depends on the circumstances. If the property needs to go through probation, the heirs are working on obtaining a loan to refinance and repay the reverse mortgage or they are working on selling the property, HUD allows for the lender to give heirs extensions for up to 12 months to pay off the loan providing the heirs do have a plan in place to repay the loan and are making an honest effort to achieve that goal.

That may be the 12 months you’ve heard of. However, sometimes heirs are not forthcoming with information about the passing of reverse mortgage borrowers and in some cases have even forged occupancy certifications long after the passing of the borrowers. In those cases, lenders are under no obligation to wait before filing their notice of default after they ultimately become aware of the call event since foreclosure can still take many months after the initial notice has been filed. Once the notice of default is filed, the loan continues to accrue interest, but it also starts to accrue additional foreclosure fees as well. Any interest and additional fees are added to the loan balance. It does not become a new loan, the lender adds any foreclosure costs as well as any costs they need to advance if they are not paid by the borrower (taxes, insurance, etc.) to the loan balance owed just like any other loan. If the process goes all the way to foreclosure sale, all these amounts would be included in the amount of the opening bid at the foreclosure auction which is the amount owed to the lender.

If you have a strong equity position in the property, this is the last thing you want. Investors look for foreclosure auctions with large equity positions because the lender starts the bidding with the amount owed and then cannot bid again, so the investors can often come in and buy the home for a small amount over the lender’s opening bid if there are no other bidders bidding. The original owner or heirs only receive any amount bid over what’s owed to the lender plus fees. Is $99,000 excessive over 3 years? That would depend on several things. How much is the outstanding balance, and are you paying all the taxes insurance and other property charges? If the loan balance is $100,000 and you’ve been paying the property charges all along, yes, that’s extremely excessive! If the outstanding balance is $600,000, the lender has been advancing the taxes and hazard insurance for 3 years, I could see how in some parts of the country where taxes run over $15,000 per year, that number could be substantially higher!

You don't need to name any heirs to obtain a reverse mortgage, as having no heirs doesn't preclude someone from securing the loan.  During the reverse mortgage process, you are asked to provide an alternative contact, which could be a relative, neighbor, pastor, or anyone you choose.  This alternative contact is authorized by you for the lender to reach out to, in case they cannot contact you directly, to check if everything is okay or possibly to perform a welfare check.

Generally, heirs are individuals designated to inherit your property, typically your living relatives such as children, descendants, or other close relatives.  However, an heir can also be someone designated by you or by the court, even if there is no biological relation.  Most people specify who will inherit their possessions after their passing by naming them in a will or similar document.

If a person passes away without naming their heirs, the court will appoint heirs based on state laws and the deceased individual's relationship to them, usually through a probate hearing.  Since states vary in their inheritance laws, it's advisable to consult an estate attorney and draft a will if you have specific wishes about your estate's distribution, ensuring you can direct your affairs while you are able.

Hello Sue,

You are not obligated to do anything. You are not the borrower, you have no ownership interest in the property you are trying to protect, and you have already notified the lender of the borrower's passing. If you would like to send a letter to the lender and remind them that the borrower has passed and tell them that, furthermore, the property is now vacant so that no one will be maintaining the home or paying the taxes or insurance, they should appreciate your notification, but you are under no obligation to do so. If you want to copy the management office with your letter (I assume there is an HOA involved) so they are aware that the unit is vacant and can take any steps to be sure the property is secure and not an issue for other residents, I’m sure they would also appreciate the notification. But again, that responsibility is not yours. Otherwise, if it were me, I would be certain that all services are secure (gas, electricity, water) and then that the home is securely locked and include the keys with my letter to the lender.

Hello Donna,

I'm sorry, but it seems there was a misunderstanding regarding your ability to take over your mom's loan. If your attorney informed you that you could continue your mom's loan, unfortunately, that information was incorrect. The loan is now due and payable. Given your current age, you are eligible to apply for a reverse mortgage of your own; however, both you and the property must meet the qualifications under the current program parameters. It's important to understand that obtaining a reverse mortgage is not automatic and does not serve as a continuation of your mom's loan. Instead, it would be an entirely new loan in your name, based on today's HUD rules, your qualifications, and the property's current appraised value.

Reverse mortgages were never intended to be multi-generational loans. When the original borrowers either move out or pass away and heirs inherit the property, the loan becomes due. At this point, the heir has several options: they can refinance the existing reverse mortgage with a new loan (either traditional or reverse, depending on their eligibility), pay off the loan with other available funds, sell the property to cover the mortgage, or opt to walk away without owing anything. However, heirs cannot simply move in and assume the existing loan.

It's possible your attorney was trying to convey that you would need to qualify for a new loan when they mentioned the qualification process. If they meant that you could obtain a reverse mortgage of your own provided you meet the eligibility criteria, then that information is accurate. But this would not involve taking over your mom's loan; it would be a new loan under the current program requirements.

If you hold proper title, live in the property, and are at least 62, you can get a reverse mortgage on the home.  Check with an estate attorney to be sure everything is in order.  At the same time, Mom can still sign additional papers if needed (if she is at this point).  A Quit Claim Deed is not the best way to transfer title to another individual.  Part of the process for the loan would be a title search, and if there were any cloud on the title, the title company would not insure the title.  The lender would not grant the loan (and thus the reason why I said as long as you hold proper title).  You should take the steps now to be sure that you have no title issues later with an uninsured transfer via Quit Claim.

Hello Bonnie,

I can't offer legal advice, but if your dad intends to leave you the home, it would be wise to discuss with your estate attorney the possibility of adding you to the title now. Regarding the loan, your dad can add you to the title at any time without any issues, provided he remains on the title and continues living in the property. This step can simplify the process for you when the time comes to manage the property's disposition.

Additionally, I recommend having your dad provide the lender with written authorization allowing them to communicate with you directly. This authorization would enable you to contact them and receive all pertinent information regarding the loan on your behalf. Often, delays occur because lenders cannot share information with third parties who lack prior authorization. This situation persists until the heir produces a legal document confirming their status or a court grants them that status.

With prior authorization from your dad on file, the lender can communicate with you, the heir, allowing you to focus on resolving the loan—whether that means gathering information to sell the property, paying off the loan, etc.—instead of trying to establish the right to discuss the loan as the heir.

Hello Deborah,

If they were already aware of your mother’s passing, the event that triggered the ability of the lender to call the loan due and payable (their borrower no longer living in the property as their primary residence) had already occurred and the fact that they are already discussing deadlines (extensions) with you demonstrates that.  They are giving you an opportunity to clear probate and then either sell the property or obtain your own financing to pay off the reverse mortgage and keep the home, or they must eventually initiate foreclosure proceedings.

The lender has a lien on the property (the loan) and they are notified if any changes in title occur.  That’s how lenders know if a property on which they hold a lien is sold. Your taking title should not be an issue with the lender as long as you complete the process of paying off the reverse mortgage by sale or other financing by the April extension.  If you are getting close to the end of the extension and you are close, but it looks like you may not make it, contact the lender, show them what you’ve done to complete your financing or sale and request a little more time. The last thing you need is to incur foreclosure fees just because they start the process solely due to a lack of communication when you’re only a matter of days or weeks away from closure.

Hi Peggy,

Neither.  I’m unsure where the 5% figure fits in that you are quoting.  The program allows heirs to keep the house if they wish and repay the loan for the amount owed or 95% of the current appraised value of the home, whichever is less.  So, if the borrower owes an amount equal to or less than 95% of the home's value, the full amount of the loan must be repaid when the property is sold or refinanced by the heir.  If the amount owed is more than that, the lender or HUD will accept 95% of the home's current value, even if that is not equal to the amount owed as payment in full for the loan balance, and consider the loan paid in full.

The loan is a non-recourse loan, meaning that the lender or HUD will never seek repayment of the loan from any other asset of the borrower or any heir.  Heirs will not be required to pay for the loan if the balance is higher than the value of the property, and they can walk away if they do not wish to pay off the loan at 95% of the current value.  If there is still equity in the home, they can refinance and keep the home (along with that equity), or they can choose to sell the property and keep any equity after paying off the balance owed.  But no “5% provision” limits the payoff to 5% of the outstanding balance or the appraised value.

Hello Jack,

There are no punitive actions the lender will take if they delay notification by just a couple of months. Chances are it won’t make a huge difference, but they do run some risks, and keep in mind the longer they wait, the more interest they accrue on the loan (which affects the equity in the property).  Lenders have several ways to discover the passing of a borrower, including the filing of death certificates, etc., but let’s talk about what happens.

Firstly, the heirs know that the loan is due and payable at this time.  They know they are living in the home and making no payments while the interest continues to accrue on that loan.  We see this happen quite often when one heir lives in the home because, quite frankly,  many times, they don’t want to leave the rent free arrangement they have.  Are there other heirs who are being affected either by not receiving their portion of the inheritance or who may receive less as the interest continues to grow on the existing mortgage?  Are the family members occupying the home preparing the home for sale or just living in the home and not using this time to prepare and market the home so that it can be sold as soon as the probate is complete?

The problem can be that if the lender becomes aware of the passing of the borrower, they see that the home is occupied by the heirs, they may call the loan due and payable immediately since the heirs are not forthcoming (especially if they feel that there were any efforts to conceal the facts from them).  They may not discover the borrower’s passing until later. There is no way to know if they will discover that event which triggers the call provision in the loan right away or not.  But if the heirs in the property use this time wisely to get the property ready for sale and then put it on the market so that it can be sold as soon as probate ends (and they don’t drag out probate), then it may not be any problem at all.  If, however, they are using this as a tactic to stall so that they can remain living in the home for as long as possible, their actions can have negative ramifications.

We have seen siblings and stepsiblings quarrel over property on all too many occasions and if the lender does call the loan and it isn’t repaid, they have no choice but to foreclose.  My suggestion for all family members would be to sit down and discuss the details, plan to sell the home, or how the loan will be paid by whoever will keep the home, as soon as possible.  They may have a perfectly good plan in place, or they may like the current arrangement and want another 6 months of no rent or mortgage.  

Hopefully, you have a good enough relationship that you can all discuss it, and things don’t get contentious.  One person who contacted us a while back stated that the executor has a legal liability to other heirs, and he was considering legal action to seek compensation for the inheritance he didn’t receive because his brother or sister (I don’t remember now) remained in the family home.  I can’t even imagine things becoming this contentious in a family, and I think good communication is key.  

We’ve always advocated for families to have a plan in place even before the reverse mortgage borrower passes so that their wishes can be made known by all and followed when the time comes without delays. The last thing you need is additional stress at a time of loss.

Hello Elicia,

I just answered a question just like this the other day.  The reverse mortgage lender has no say in who owns the home or how the heirs choose to repay the loan, they just want to be repaid now that the loan is due and payable.  If your grandparents want to Deed the home to you so that you can refinance the loan to repay the reverse mortgage that is due, that is completely up to them. 

You just need to be sure that you have your financing in place before you start to make changes to the title because the existing reverse mortgage lender will start to get more aggressive on the demands for repayment as soon as they see a change in title. 

Otherwise, the family is free to do whatever is necessary to repay the loan.  One other suggestion.  If you plan to refinance with new financing from a traditional lender, you will need title insurance so be sure you have the title changed properly so that there are no delays when it comes time to close your new loan.  If you have any questions on that, check with a title attorney, an estate attorney, or a title company.

Hello Lori,

I cannot give you legal advice because I am not licensed to do so, and I do not know the laws for every state (or even in which state your property is located).  I can tell you a few of the issues from the lender's standpoint and that might help you decide what you want to do though.  To accept a Deed in Lieu of foreclosure, the lender/servicer must be certain that the home is clear of all personal property and is “broom clean”.  There can be no other liens on the property at the time or the lender would “inherit” those liens because of becoming the new owner by Deed.  If they foreclose, any junior lienholders will have the opportunity to protect their lien position and foreclose on their lien and pay the amounts due on the senior lien, otherwise, that lien would be removed in the foreclosure action.  

When you say that you are the party authorized for your aunt, I cannot comment on whether probation is required to execute a Deed in Lieu of Foreclosure or not.  That is a question for an attorney in the state.  Any Foreclosure action at this point though would name your aunt (or the Trust if that is how she held the title) and so if you have authority to sign on behalf of your aunt even after she passes with a valid Power of Attorney, etc., I honestly cannot say if the property will need to be probated if it is to be Deeded back to the creditor in lieu of Foreclosure before it is to be distributed to any heirs.  If you do not utilize the Deed in Lieu of Foreclosure, the lender will foreclose if no one steps up to pay off the amount that is now due and payable under the terms of the loan and that foreclosure names your aunt and no one else.  The loan is a non-recourse loan which means that your aunt’s estate cannot be levied for any money to repay the obligation and you, and no other heir, can be made to pay any money because of the loan.  The only security the lender has is the property.  This is specifically spelled out in the loan documents.

The bottom line is that it might be worth a consultation with an attorney to see if you have the legal right now with your circumstances to sign a Deed in Lieu of Foreclosure with the authorities given to you already by your aunt but if not, ask him/her what would happen if you just let the property go by way of foreclosure.  With no recourse and no liability to you or any other heir, you will need to make the decision if you want to incur the cost of probation just to let the lender take the home which a foreclosure would do anyway.  There may be other considerations of which I am not aware and that is why I always recommend you consult with an attorney so they can review your individual circumstances, but I think you will find that there is no reason to spend the extra money (especially if you don’t need to).  It might also save you a lot of frustration if you can just notify Compu-Link via certified mail as soon as all personal property is out of the home that you are not interested in keeping the home or selling it and you will either sign the Deed in Lieu of Foreclosure or they should begin a foreclosure action at their earliest opportunity because the property is officially vacant and no longer secure.  But that is something you should discuss with your attorney.

Hello Joe,

The only people who can take a draw from the reverse mortgage is one of the original borrowers on the loan.  A spouse who is not a borrower on the loan cannot even request a draw from the credit line, it must be a borrower on the loan.  The good news though is that since this money was never borrowed, it does not need to be repaid when the loan is paid off. 

Whether you refinance the loan and keep the house or sell the property, this $13,000 will not need to be repaid from the loan proceeds of the refinance or from the sale proceeds when you sell the house.

Hello Alex, 

I’m sorry but I can’t answer this for you.  We originate and close only reverse mortgage loans so I would not be the best to advise you on the type of loan to use to repay the reverse mortgage as an heir searching for forward mortgage options. 

The loan is due and payable now though so you do need to determine what the best solution will be.  I don’t know what the balance of the loan that needs to be repaid is but if your brother-in-law needs $150,000 in cash and a loan needs to be repaid, based on the income you describe, you may find qualification for any loan large enough to accomplish both of those goals may not be an easy task. 

You need to find out quickly if that is a feasible idea because if not, you will need to sell the home to protect your equity and prevent the lender from initiating a foreclosure action.   

Hello Mary,

I’m not sure of the reason for your question so I really don’t know what to advise you.  If NOVAD is going to foreclose and sell the home, they should not need a copy of any will.  They do not need to know any of your mom’s plans because they are going to foreclose to sell the home at foreclosure auction and they do not need a copy of her will to do that.

In all honesty, if they notified you that they were calling the loan due and payable because she is no longer occupying the property, they have already been notified of her death and I don’t know why you would need to send a copy of the death certificate either. 

If you want to try to sell the home, then you need to provide evidence that you are the heir and ultimately that you own the property to sell or finance it but if not, you shouldn’t have to send them anything but notification that you as the heir are not interested in trying to keep or sell the home yourself.

Hello Tina,

The lender will do the appraisal.  You can apply for a new reverse mortgage if you qualify under the current guidelines and that would mean you are 62 or older and can bring that loan down to the current loan to value required for your age and interest rates in effect (you said there was little equity and the reverse mortgage will require you to have a strong equity position for the new loan). 

I can’t express a position on any possible judgements or liens mom might have or that you might be able to avoid, that would be a question for an attorney who specializes in credit matters but the title would need to be clear of any other liens or mortgages to do a new reverse mortgage.

Hello Jeremiah,

The reverse mortgage is now due and payable.  You and any other heirs don’t have to “buy” the house, your mom or her estate still owns it.  The loan must now be paid back at an amount equal to the outstanding balance or 95% of the current appraised value, whichever is less. 

I don’t know if your mom had a will or if she has a family lawyer, but your first step is to find out and if so, contact that lawyer to determine what your mom’s wishes were.  How did she leave ownership of the home? 

Secondly, talk to the attorney to see what he/she says your options are.  The reverse mortgage lender only has a say in the fact that they have a loan against the property and will now want to be repaid.  They do not determine who gets the home or how you two work it out.  That if for the two of you and the courts if you can’t agree. 

The attorney will need to tell you what your rights and obligations are and what you need to do but I would not delay, it’s been 6 months since mom passed and the lender will soon start a foreclosure action (if they have not already).

Hello Kathy,

He can refinance that loan and pay it off at any time.  It sounds like the only thing that may stop him is his ability to qualify for a loan and possibly the grandson’s ability to pay rent.  If your son has good employment and income, perhaps he can add him to title now and when he refinances, both their incomes can be used to obtain a higher loan that the grandson will be paying as his rent to own payment and gives your father the cash he needs for his purposes? 

It is very hard to advise any specific course of action because all of it could come with possible risk if the son would be unable to make the payments and your father could not step back in to pay the mortgage himself (depending on how much of the equity he still had not received).  Family transactions are good in that you can often help one another out but can be risky and can cause strife in the family if issues arise because it is not just the son who is purchasing that could be hurt if something happened to his employment that cause a disruption in his income. 

But paying off the reverse mortgage is not a problem.  There is never a prepayment penalty and dad can pay the loan off any time he chooses.  He has a significant amount of equity in the home so perhaps you should contact a forward lender to determine what options are available for your son and father on financing and perhaps they can finance it together. 

That might give you a good idea of what they can do, what the monthly cost would be on that loan (and if your son can afford it) and how much money that would free up for dad. 

Hello Jennifer,

Yes, it is.  That loan became due and payable when the original owner died and she inherited the home.  Once the original owner passes, the heirs need to start working on moving the title into their name. 

There may be a number of reasons why the reverse mortgage loan was not paid in full and the title did not pass to the heir, your landlady, before now (the title may have needed to go through probate, etc.) and that would prevent her from being able to get a new loan in her name.  But once the title does pass to the heir(s), they can then apply for and receive a new loan in their name and pay off the reverse mortgage which is required since the borrower passed. 

When you say the house is still in her mother’s name, that sounds a bit odd.  If she just got the new loan, I would venture a guess that the documents have been received and recorded to change the title to her name but the county may be running behind and are not showing the change yet.  I would find it hard to believe that a lender would lend money to her using a house for collateral that she did not own. 

So far though, I don’t see anything “illegal”, but I am not an attorney or a law enforcement officer.  As a long time, lender, I think there is just a delay in the records showing her as the legal owner of the property and that would explain the circumstances.

Hello Wendy,

Yes, she can but I would say that she should certainly contact a senior real estate specialist first to see if she would benefit from a sale of the property.  If there is still any equity, it is hers and she should sell the property and keep the equity.  

Hello Randy,

When you say you “surrendered the home” what did you do to achieve this?  The only way to officially transfer title is to sign a Deed to the lender (usually a Deed in Lieu of Foreclosure). 

Or the lender needs to foreclose on their lien and then the title transfers to the lender or the successful bidder at the foreclosure auction by way of a special Warranty Deed or other instrument used in your area for foreclosure auctions.  But if you just mailed in the keys or told the lender that they can have the property, that doesn’t transfer the house to them.

However, this is not all bad news.  Firstly, the reverse mortgage is a non-recourse loan.  That means that any additional interest that has accrued or any other costs that have been incurred since then will be added to the foreclosure amount and the lender cannot look to any other places other than the property to repay them for the loan and their costs. 

They have the FHA-insurance against which they will file a claim for any losses.  And if the lender has not done anything to secure the title of the property to date, it does give you one last chance to determine if there is any equity remaining in the home. 

You can contact the lender to see what the total owing is at this time and compare that to the current value of the home based on what other homes are selling for in the area.  If the property has increased in value and there is equity in the home, you can sell it and keep the equity as long as you still retain title to the property. 

If there is no equity, you can just let the lender know that the home is still vacant, unsecured and ready for them to complete their foreclosure.  Keep all copies of all your correspondence.

Hello Linda,

You need to have the title to the home in your name and you need to qualify under the current loan parameters but if you do, then yes, you can get a reverse mortgage in your name.

Hello Aurelio,

HUD will allow heirs of a deceased borrower pay off the balance of a reverse mortgage loan at the lower of the amount owed or 95% of the current appraised value because they know that the loan is payable at that time and if they require full payment, heirs would simply walk away anyway. 

They do not allow borrowers to simply choose when to voluntarily pay off the loan at a portion of the amount owed. Properties rise and fall in value and HUD knows this and is willing to accept certain value risks with the program. 

They are not willing to allow borrowers to lock in losses to HUD during down markets but they also do not cut off lines of credit if the market dips or call the loans due and payable to mitigate their losses so borrowers are protected during those times. 

Hi Craig,

You’re asking the wrong source.  This is nothing to do with the reverse mortgage and so you should be speaking with your brother if he is the one making the decisions to see what his plans are and if the two of you cannot come to an agreement, you may need to talk to an attorney to see what your heirship rights are in your state. 

The loan will be due and payable now and so if you do not have the wherewithal to pay the loan off or refinance it with new financing, your best bet is to pay the loan off as quickly as possible through a sale of the property to preserve as much of the equity as possible but that is up to you and your brother to decide (or at least one of you if one has been appointed the executor of the estate) how best to achieve that goal.  Staying in the property until the bitter end may not be in the estate’s best interest or that of you or your brother if it just eats up the equity needlessly.

Hello Brianna,

The loan is now due and payable since your grandmother no longer lives in the home.  The lender will ultimately find out that she is not occupying the home.  If your mom is falsifying any paperwork and sending it to the lender and forging her mother’s signature, she is committing a crime.  When the lender or HUD determine that the loan is due, they will request payment in full or will start foreclosure proceedings if you do not pay the loan off at that time. 

If you wish to keep the home, you should be looking at refinancing the home with a new loan in your name(s) and moving the title at the same time (which may or may not require probate).  If you wait until the lender contacts you, your time will be limited.  If you start looking into available loans and what it would take to change the title to your mom’s name or your name, you don’t have to actually file anything until you are ready but at least you will know what needs to be done. 

And if you need to contact a probate attorney, you can find out everything that would be required of you to move the title from your grandmother’s estate to your mom if she is the heir or to you if mom wants to move to you so you can get a loan to finance the property.

Hello Rosemary,

Just like any other loan, the interest stops accruing when the loan is repaid.  This is why I often tell people that if they know for certain that a loved one will not return to a property or that they need to sell a home, there is no reason to leave it vacant for an extended period of time. 

The interest is accruing just as it would on any other outstanding loan and so once the determination is made that the home must be sold, it is better to contact an agent and get it done.

Hello Rebecca,

If the loan had payments due, it wasn’t even a reverse mortgage so it doesn’t fall into the type of loans we cover.  There are so many things that may affect her right to stay and your boyfriend’s heirship rights (if he is the lawful heir) that I would strongly suggest he consult with an attorney as soon as possible to determine what he can do or must do before the lender forecloses. 

Hello Christina,

I’m afraid I would need to refer you to an attorney to answer this question. I’m not certain which “rights” you are referring to and giving advice about legal rights constitutes something a licensed lender cannot do under the law anyway.

You need to contact an attorney so that he/she can evaluate your individual circumstances and advise you as it relates to whatever specific protection you are seeking. Besides, it may turn out that CARES Act does not do what you wish but something else does and the attorney can advise you accordingly. 

Hello Ellen,

The answer to this really depends on where things stand now and what you intend to do.  If the lender has not been notified as of this date and they have not called the loan due and payable yet and the house is still occupied and secure, you have more options.  If your son moves out and the house becomes vacant and the lender has already begun the process of calling the loan due and payable, your options are fewer and your time is much more limited.

If the house is secure and you contact the lender and let them know that you intend to sell the home, they will order a home inspection, an appraisal and will give you all your options for payment of the loan, etc.  If the home is vacant and the lender feels that the risk to the security is impaired as a result, they can enter the property and secure it (change locks, etc.). 

I think the first thing you should do is contact a senior real estate professional to determine the value of the home and compare that to the amount owed on the most recent statement.  If there is equity in the home, I would suggest that maybe it would be best that you make every effort to get to the home as fast as possible to remove any items you wish to keep, have the real estate professional help you conduct an estate sale with any items you do not wish to keep or cannot and then sell the home as quickly as possible.  That way when the lender does contact you, you will be able to present them with your plan to sell the home and show them your efforts and listing.  The lender should work with you to allow you the time you need to complete a sale.

If you decide that there is no equity in the property and you do not want to sell it, you can still conduct the estate sale after you have retrieved any personal property you wish to keep and then contact the lender and let them know you are not keeping the home and offer them a Deed in Lieu of Foreclosure or just tell them that they can foreclose if they are unable to accept the Deed in Lieu.  Remember the foreclosure is against the property and the only recourse the lender has is to take the home, they cannot seek payment from you or any other assets your mom or the estate may have had. 

A foreclosure process takes anywhere from 5 to 6 months at the quickest from the time it has been filed.  If the lender has already filed the foreclosure, that would shorten the time you have available to you to complete any tasks you would like to remove personal items from the home. That’s why it is important to not let the home sit vacant so that the lender needs to secure it to protect their security.

Hello William,

If you will be 62 in the near future, you can get a reverse mortgage of your own but if it is more than just a few months off before you turn 62, you might try working with the lender to see if you qualify for the loan now and see if they will work with you until the loan can close. 

You cannot close the loan until you are 62 but the counseling is good for 6 months and so if the lender will cooperate, you have the title in your name now and the numbers make sense, you may be able to pay off the existing loan with a new reverse mortgage.  Absent that, you can always get a new forward loan or sell the property and retain the equity. 

Hello Jack,

There are no provisions in the loan that stipulate when you can exercise any options available to you based on the last date you extracted funds from your credit line.  However, a Deed in Lieu of foreclosure is still a foreclosure and if you are doing it just to avoid the sale of the home, you may want to think about looking into selling the home for a couple of reasons. 

Firstly, you may be leaving equity on the table.  Property values have risen substantially in many areas of the country over the past few years and it never hurts to contact a local real estate professional to compare the most probable selling price to the amount you owe (or would owe if you maxed out the line) to see if you are leaving money on the table.  Secondly, you may hinder the ability to qualify for other government programs if you default on the HUD loan and the foreclosure could affect your ability to qualify for some other credit terms. 

For most reverse mortgage borrowers, by the time they leave their reverse mortgaged home, that is no longer an issue but if you willingly leave the home and default when you do not have to just to avoid selling the property, it might not be as advantageous as you wish. 

Hello Oliver,

The first thing I would recommend is to contact a real estate professional in the area and check to see if there is any equity in the home by comparing the estimate of value to the amount owed. 

So many areas have experienced tremendous value growth over the last few years that it may make sense for the family to sell the home rather than just wait for foreclosure and eviction and walk away with nothing.  If the home can be sold for an amount more than the existing loan, then the heirs can determine how the funds can be split up and very possibly there may be funds available that can be used to relocate your brother and his family?

If there is no equity remaining, your brother can remain in the home until the foreclosure is complete and the new owner completes an eviction, if that is their choice.  Remember, the lender may not be the one who winds up with the property if it goes to foreclosure sale.  Another investor can choose to buy the home at the foreclosure auction by outbidding the lender’s opening bid. 

This would only occur though typically if there is equity in the home and in that case, it would be best if the heirs sold the house before that time and retained the equity themselves.  Otherwise, once the foreclosure was completed the new owner could evict based on the laws in the area where the property is located or if they were buying to keep the home as a rental, the new owner may be willing to offer terms to your brother to remain in the property as a tenant.

I am not aware of any current Covid protections from HUD any longer if they are the ultimate owner of the home (I believe it ended in July of 2021) and you would need to speak with an attorney to determine if there were any such restrictions in the state where the property is located. 

If there has been no foreclosure action started yet, it usually takes at least 5 – 6 months to complete a foreclosure from the time the initial notice is filed until the final auction and then the eviction depends on the laws in the state where the property is located. 

There again, the owner must follow the applicable laws to complete the eviction even after they become the owner and you would need to consult with an attorney to tell you what that process entails and the likely timeframe in that area.

Hello Jason,

The loan is due and payable at this time.  That doesn’t require the property to go into foreclosure or the heirs to enter a bankruptcy action.  HUD will accept the amount owed or 95% of the current market value of the home, whichever is less for repayment in full of the reverse mortgage loan. 

I don’t know why your aunt has determined that the course of action they are pursuing is the best so I could not begin to agree or disagree with their decision nor am I an attorney so I would not give you legal advice. 

I can only tell you that there is no reason from the standpoint of the reverse mortgage loan that it had to go to foreclosure and there were always other options but with just 2 weeks left, you may not have the time to exercise them now unless you have the cash or a loan ready to close immediately to pay off the reverse mortgage at one of the two options above (amount owed or 95% of the current market value) AND the heir (presumably your aunt) agrees to grant the title to the home to you and not knowing why your aunt and her attorneys are doing what they are doing, I don’t know if that is possible based on any steps they have taken to date. 

I’m sorry, I can only tell you that there is nothing from the standpoint of the loan that would have stopped you had this been what you pursued initially and could have told you what it would have taken at that time but based on the actions taken to date and the remaining time available, I cannot answer your question now.

Hello Adonis,

I’m sorry but the loan is not stopping you, your brothers and any possible legal restrictions based on the terms of any wills, etc. are.  You need to speak to an attorney to determine what your rights are under the law based on the rights of heirs and what mom left behind in writing and the loan will not make any difference so I cannot be of assistance in this matter.

Hello Debbie,

I cannot answer your legal questions regarding the outcome of the property ownership but I can answer the question of what happens to the reverse mortgage.  If her boyfriend was not considered an eligible spouse, the loan is considered due and payable with the passing of the borrower. 

The lender may or may not be aware of that event yet, depending on when it took place, legal notices that have occurred and whether he has received or returned any notices from the lender wherein he falsely certified that the borrower was still living in the property. 

But once the lender does become aware that the home is no longer being occupied by a borrower on the loan or an eligible spouse, they will call the loan due and payable and then whoever the legal heir is will need to decide at that time if they wish to refinance the loan or pay it off with other funds available to them, sell the home or let the lender foreclose if they do not wish to keep or sell the property.

Hello Terry,

The owner(s) should certainly present the offer to their lender along with the sales in the area to support their request that the sale price be accepted as payment in full for the loan or they would be forced to allow the lender to foreclose.  Then it is simply up to the lender to get HUD’s approval for the short payoff and if the amount is beneficial for them as well, you probably have a good chance of acceptance.  However, you may need to be a little patient.  Sometimes these things do not move really swiftly – especially if they need to get another appraisal to verify value.

Hello Rebecca,

It would take all owners of the home to sign the loan documents agreeing to the terms of the loan for the loan to close using a property as security in the first place.  Because you cannot encumber a portion of property and then enforce the terms of the loan if needed if all owners did not agree to the terms of the loan, if there are three owners on title, each would need to sign the legal documents, or the loan could not close. 

In your case, with the three of you on title, all three would need to sign the legal documents for the loan and then the loan would be paid back by the surviving owners or through the sale of the property at the time it became due. 

But that is assuming he did not have the loan before he added you and his daughter to title.  If he held the property as his sole and separate property when he took the loan and then added you to title later, then the loan (if you are talking about a reverse mortgage, other loans may be different) becomes due and payable when the borrower no longer lives in the home as his primary residence whether that is due to his passing or because he moved for other reasons (i.e., to move to assisted living). 

In a case like that, it would be up to you and his daughter to determine how you wanted to proceed because the lender does not determine who pays the loan off or how.  You two could decide to keep the home and in that case, you would need to pay the loan off with funds available to you or by refinancing the loan with a new loan in your name(s).  You may decide to sell the home and keep the equity and how you split it would again be up to you. 

You may decide that there is not sufficient equity to even worry about and in that case, you do not have to do anything and can just let the lender take the property back through a foreclosure action and owe nothing on the loan.  A reverse mortgage is a non-recourse loan which means that the lender cannot seek repayment from any other assets of the borrower or his estate even if the sale of the home is not sufficient to repay the loan in full.

Hello Nehemiah,

Once you sell a home or Deed it back to the lender in lieu of foreclosure, you no longer have an interest in the property.  You are not entitled to any future profits nor are you at risk of any future losses if the values go down. 

If the lender or HUD kept the property in their portfolio for 2 years before they could sell it, they had considerable carrying costs for the time the interest on the loan kept accruing.  If they sold it to another buyer in that time and two years later it sold to a third party, the lender or HUD may not have even realized any of that additional value. 

Either way, they would not seek any money from heirs for additional expenses later nor would they be required to pay them any additional proceeds if the value does increase later. 

The heirs have the right to pay off the loan at 95% of the current market value or the outstanding balance of the loan amount, whichever is less.  This means that at worst, heirs can always keep the home by paying less than the current value of the property – even if more is owed on the loan. 

If they choose not to exercise this option, they do not have the option to come back later and request additional money if the value of the home subsequently rises. 

Hello Jeanne,

The first step I would suggest is to find the last reverse mortgage statement to see what is owed on the home.  Once he knows how much the balance is, he can either get a rough idea of the value by looking online or by contacting a local realtor and asking at what price they think a home like this one would ultimately sell. 

Zillow and other online services are not a bad place to start but they often give you an average for the area and if your home is nicer or in need of repair or not like the other homes that are most prevalent, you may not get a good idea of its actual value.  For example, we recently had a borrower contact us that Zillow said their home was worth $525,000 but just based on a few sales of larger lots and different amenities that our borrower also had, we believed the value was closer to $725,000. 

He almost did not seek the loan because he did not think he had enough equity but when the appraisal came in at $735,000, he had more than enough value to complete the transaction.  A knowledgeable real estate professional would probably be able to give him a very good idea of the actual value and most would give him a list of other properties very similar to his that have sold that would support their opinion of the most probable sales price/value.

When he compares that value to the amount owed, he will know how much equity is left in the home.  I have no way of knowing if mom borrowed all the money available to her and then accrued interest on the full amount for many years or if she only used the money sparingly and therefore left a lot of equity in the home. 

If there is a lot of equity in the home, he will need to contact an estate attorney to have the title transferred to him if he is her heir so that he can either refinance the loan to one in his name or sell the property and keep the equity.  He would also need to show that he is the owner/heir for the lender to be able to talk to him regarding the loan.  If there is no equity left in the home, he still has the right as the heir to repay the loan at 95% of the current market value or the amount owed, whichever is less. 

If he does not wish to do any of those things, he can just let the lender take the property back through a foreclosure action and then walk away and owe nothing and that would take the lender anywhere from 6 months to a year from the time the lender realizes mom has passed and start the process. 

But any way this works out, once the lender realizes that mom is no longer living in the home, they will call the loan due and payable, and the son needs to start making decisions as to what he would like to do and what he can do.  By knowing the equity position of the home, he can take the steps to secure any equity, so it is not lost in a foreclosure action.

Hello Anthony,

Your qualification as a first-time buyer would be a question for a lender that handles such loans.  Unfortunately for this scenario, we work only with reverse mortgages, and I could not advise you on this question as I have not worked with that type of loan in over 15 years and a lot has changed in that time.

I would suggest that you contact a lender and ask them what would be needed for such a transaction.  Because you are related to the seller, they may consider it a “non-arm’s length transaction” and there may be special considerations that must be made, and you will want to be sure you meet/follow all their requirements. 

I can tell you that there is no problem from the reverse mortgage side though – just timing issues of which you need to be aware.  For example, your grandmother owns the home and can sell to anyone she wants at any time she chooses but if she does, the loan becomes due and payable. 

You need to be sure you have your loan ready to go if she sells you the house because the reverse mortgage lender will call that loan due and payable and if you do not have your financing ready, you could be in a bind when that loan must be repaid in full or face foreclosure. 

If you determine that the purchase is going to be too difficult based on their requirements for non-arm’s length purchases, you may want to ask a lender how long you need to be on title to complete a refinance of the existing loan.  Your grandmother can add you to title at any time and if she remains on title with you and lives in the home paying all property charges when due (taxes, insurance, etc.), the reverse mortgage is still in effect and there is no breach of the terms. 

If your forward lender tells you that you can refinance the reverse mortgage with a standard forward loan after you are on title and living in the home for 12 months or more, then you would have the necessary seasoning 12 months after your grandmother added you to title.  But that is something you need to discuss with the lender in advance to be sure you have all their requirements met so there are no hang ups when the time comes to obtain your financing. 

Worst case with that as well is that you are already on title so that if anything happens, you can move more quickly to resolve the loan on the home or sell the house if needed if anything happens to your grandmother before you are able to get a new loan.

Hello Peggy,

The reverse mortgage is a loan.  Your mom still owns the home and if she is alive, she can sell it without going through any special steps just as she could if she had any other loan on the property. 

You can open an escrow with an escrow and title company (most title companies have divisions that will handle both as well) if you like to ease the process and then you would also have an insured transaction that would make it easier later when you sell the property, and the title will make sure there are no liens of which you may not be aware. 

If you do not want to use escrow and title, a real estate attorney can also handle the transaction for you and if you are in an attorney state, there may need to be some attorney work in the transaction anyway.  You may find that is more expensive in the long run to use an attorney though if you are not in an attorney state and are not required to use one. 

I would suggest you contact a local title company and tell them you have a for sale by owner property and would like them to handle the transaction and ask them how to proceed.

Hello Marnie,

It’s not a “right” or “wrong” scenario.  It all depends on your goals and based on what your desires are, the longer you keep paying a payment, the lower the balance will remain and the more equity your sons will inherit with the house. 

You have a strong equity position now and your sons will have an option to refinance the loan with a low loan to value if they want to keep the home at that time or they would be able to sell the house and use the proceeds for whatever purpose they deem best, but you have put them in a good position to succeed either way. 

Hello Trish,

I honestly cannot give you a straight answer to this question.  A foreclosure action is a legal process that can take anywhere from five and a half months from the time of the first notification to over a year depending on where the property is located and whether the foreclosure is a Trustee’s Deed upon sale or if it must go through a court foreclosure.  And even then, that’s assuming that everything happens without any delays whatsoever.  Let me explain.

In a state like California, the foreclosures are Trustee’s sales and are faster than states where the lender must go through a judicial or court foreclosure but there are definite procedures the lender must follow. 

They must file a notice of default that can only be filed 30 days or more after the lender has notified the owner of a breach and attempted to resolve the issues, followed by a 90 right of rescission period where the borrower has a right to cure the delinquency, followed by a 21-day advertising period where the lender must advertise the upcoming foreclosure auction at which time the property is auctioned by the Trustee and the beginning bid is the amount owed to the lender. 

As you can see, this totals about 5 months and that only begins after the date of the first contact and then the notice f default.  If the lender is not aware of your mother’s passing right away, they may not have even started that 5-month timeframe yet. 

And one of the things that lenders must do that they try to have completed in the initial 30 day period is they must have an appraisal completed on the property so that they can tell heirs what their options are to cure the default and pay off the loan.  On a reverse mortgage, heirs can repay the loan at the amount owed or 95% of the current market value, whichever is less, so the lender must know what that value is in order to be able to properly advise heirs on the payoff amounts.

And then if the property is in a state that requires judicial foreclosures, you have court times to consider.  I am not an attorney and cannot advise you legally.  If you are looking to delay the process, you should speak to an attorney as there may be ways in your state to delay the foreclosure process. 

If you are looking to speed the process up, you should contact your lender/servicer and discuss the possibility of a Deed in Lieu of Foreclosure whereby they allow you to Deed the title back to the lender and avoid the foreclosure process. 

For all these reasons, it is impossible for me to tell you how long it will take to foreclose on any property at this point with any degree of certainty. 

Hello Barbara,

I am afraid that you really need to speak with an estate attorney to get the answer to this question.  Funeral expenses can be paid in several ways and sometimes they are paid by the estate and sometimes through a probate case.  If you have an executor for a will or trust, they will administer the expense from the estate I would imagine but when you do not, I suggest that you discuss with your attorney what steps you should take in advance to prepare for such circumstances. 

The attorney may want to discuss burial insurance with you or perhaps provisions for the sale of the home and the use of the proceeds if you have no family but that is a discussion you would need to have with your attorney.  It is not something that pertains to the reverse mortgage itself as the loan becomes due and payable after the last borrower on the loan permanently leaves the home. 

If there are no heirs or others to whom you have left the property, the lender would foreclose on the loan to repay the amount owed and if there was a lot of equity remaining, the lender would most like likely be outbid at the foreclosure sale by a savvy investor who saw the sale advertised in the newspaper.  How much over the lender’s starting bid the ultimate sales price the property ultimately sells for depends on whether there is competition from others wishing to buy the property. 

The lender only starts the bidding at the amount owed and then cannot bid again in the auction.  Anything paid at auction for the home above and beyond the amount owed would be paid to the estate.  If there is just one bid higher than the lender’s bid or the lender wins the auction for the amount owed, there may be nothing left for the estate.  Therefore, estate planning is important in advance.

Hello Kim,

A reverse mortgage is a non-recourse loan.  That means that even if the lender forecloses and the sale price of the unit is not sufficient to repay the loan, the lender cannot look to the borrower or their estate to repay the obligation.  The property is their only security. 

If you owed more than the property was worth at the time, it might make more sense to either see if the lender would accept a Deed in Lieu of foreclosure (where you signed the title back over to the lender, so they did not have to go through the foreclosure process) or just walk away and let them foreclose on the loan.  If the home is worth more than what is owed, it is always better if you sell it yourself and keep the proceeds either for the care of the borrower or for the estate/heirs.

But the bank can’t just take over the home.  They must either receive the home by Deed from the current owner or from a foreclosure action because they don’t own the property, they just have a loan on it.  After such a long period, the back taxes, association dues and interest have probably taken a lot if not all the equity in the home – if there was any left at the time she left. 

Condominiums are not strong when it comes to holding their value.  I don’t know if getting the home back at this point is in your best interest, but it would certainly be a good idea to compare the costs and the outstanding balance to the value of the home to make that determination. 

If there is still equity, it might make sense to pay the back fees and taxes then sell the home but if not, you need to ask yourself if that is in your best interests.

Good Afternoon,

You are asking a legal question that really doesn’t pertain to the reverse mortgage.  This is a question about Texas heirship laws and therefore, should be directed to an attorney in Texas. 

If anyone asked me if they could pay off the loan and keep the home, the answer from a lender’s perspective, would be yes. Texas reverse mortgage lenders do not own the home, the borrower and the borrower’s estate (heirs) do and there is always the option to repay the loan and keep the house. 

However, Texas is a little bit of a different animal where heirship laws are concerned, and the real question then is who has those rights. 

So, I would have had to advise that you need to speak to your own estate attorney to determine the best way to establish the rights of all the heirs and surviving spouse.  Anyone who was not a licensed attorney but still advised you on heirship rights did you a disservice. 

I would still give you the same advice today as then.  You really need to contact an attorney who practices real estate and/or estate law in the state of Texas. 

Texas is so different than so many other states, the rules are much different than much of the nation and I would not trust a source that is not a specialist and licensed in that state.

Good Afternoon,

I am sorry but I can only answer the question about the payoff of the reverse mortgage.  Anyone with authorization to request a Beneficiary’s Demand for Payoff can make the request from the lender but since the borrower has passed, that authorization would need to come from you.  If you were going to pay the loan off yourself and not sell it or refinance the loan with another lender, you could send in a request on your own but this would typically come from your title company in conjunction with their handling of the new financing and recording of the new loan documents. 

About your transaction with your brother, I am afraid I cannot advise you there.  I do not understand why you have a real estate agent involved in a transaction between you and your brother in the first place.  I could understand it if you were selling the property toa third party but if you chose to keep it in the family and not sell it, I don’t understand why you didn’t just cancel the listing and come to some agreement with your brother.  The real estate agent does not work with the reverse mortgage lender on the payoff anyway. 

In that case, your attorney may be able to advise you on a title company with whom you can open a title order or if there is a company you have worked with in the past you can contact them.  If you are obtaining financing, your lender can set that up for you with a company with whom they have a relationship.  Most title companies can handle both the title and the escrow functions and there is no need to use a separate escrow company.

Hello Kim,

If there is still equity in the home, do not execute a Deed In Lieu of Foreclosure.  With that action, you are giving the home to the lender and there is no payment to the heirs regardless of any equity position. 

When there is still equity in the property and none of the heirs want to keep the home, contact a real estate specialist in the area and list the home for sale.  If there are personal effects also in the home that none of the heirs want, you can look to see if you can find a senior real estate specialist (they usually will advertise this way) and they will do everything from introduce you to an estate sale company if one operates in the area and coordinate an estate sale so that any remaining personal property can be sold. 

Estate sales usually require that the sale will raise enough to pay the sale operators and the heirs so they will do an assessment for you in advance and anything that does not sell can be donated at the end which will help for final tax purposes.  This often helps in a couple of different ways, most houses sell faster and for more money when they are properly cleaned out, possibly given a new coat of paint, and staged well. 

The estate sale can help raise the money to pay for these costs.  If you find the right real estate specialist, this can all be arranged and monitored from a distance with little direct involvement by the heirs. 

Hello Mel,

The lender can add interest accrued and fees which include attorney’s fees during the foreclosure, but those fees are regulated by state laws in most cases.  You are right, the borrowers could not accrue more than double the amount they borrowed in interest in 15 months. 

My guess, and it is only a guess, is that there may have been other draws made by the borrowers.  If the lender will not provide an accounting of all draws made by the borrowers and the heirs have no access to the monthly statements the borrowers received when they were alive and living in the property, it may be time to consult with an attorney.  I know you said that the free legal aid is backed up, but possibly a call to a real estate foreclosure attorney could get enough information on an initial call that further calls would not be necessary and the initial call may be worth the investment or possibly even free of charge to review the case.

Contrary to popular belief, lenders do not want to foreclose on a home.  I spent 3 years in loan servicing and foreclosure was the worst thing to do and there was not a single time we made money foreclosing on a property.  Lenders must advertise foreclosure sales and any home with equity is snatched up by real estate investors at the auctions leaving only those homes with no equity and typically in really bad condition as the ones going back to the lender.  At that point, they can tack on all the foreclosure fees they want but if the home is not worth the amount of the loan and the fees, they never receive the payment for the fees anyway. 

So, the real question is how did the lender arrive at the amount owed and that should not be a secret.  It would be nice if the borrowers kept their monthly statements and the heirs had access to them, but you may need to have the attorney tell you what legal rights you have to the schedules of draws.  An amortization schedule based on actual terms is not a general schedule.  It would show all advances made to the borrowers and then fees and interest added as well. 

The lender should be able to give them this documentation.  There are also laws regarding the requirement to provide appraisals during the process to acquire credit and I honestly do not know how that would be interpreted on an appraisal obtained by a lender for foreclosure.  The CFPB (Consumer Financial Protection Bureau) is charged with administering this rule and the heirs can contact them as well if they believe the lender has not been fair and forthcoming in their lending practices.

Hi Sharna,

The loan is now due and payable, and you can do anything you like if you are her heir.  The loan would need to be refinanced or paid off with paid off with other funds if you intend to keep the home or you can also sell the home if that is your decision. 

The lender does not decide who gets the home or what they can do with it, that would be up to your grandmother’s wishes and any trust or will she have left or if none, then a court order. 

There may or may not be a probate required so your first step may be to call an estate attorney (would be great if your grandmother had one already you could contact).

Hello Margie,

HUD does not service your loan and they are not the correct entity you need to contact.  If the loan is held by HUD at this time, their servicer is NOVAD. 

You should find the most recent statement that your mom has and call the number on the statement and open a dialogue with them. 

They may require you to show proof that you have the authorization to speak to them on behalf of your mom or her estate if you or your mom have not previously sent any authorization for the lender to talk to you on her behalf. 

Your attorney can also help you secure the title if that is what you need to do to speak to the lender since you will probably need to do something to sell the property anyway.

Hello Nathan,

The loan will now become due and payable.  Her grandparents have either set up their wishes for the final disposition of the home with a trust or will, or the property will need to go to a court to determine what that final disposition will be. 

Even with a will or trust, the home may still need to go through a probate action.  The courts will take into consideration any debtors, other heirs, etc.  The lender has no say in who will inherit the property or under what terms but in any case, the loan will now be required to be repaid. 

It can be sold and any equity in the home can be used for whatever purpose the owners wish, but the first step would be to determine who will be the owner of the home.  Are there any other heirs?  You said grandparents, are your wife’s parents still living?  Do they have any siblings? 

You should probably also look at the most recent statement and compare it to the most likely value of the home to determine what the home’s current equity is.  If you are not sure about the current value, you can always contact a local real estate professional and ask for a market analysis. 

I cannot tell you where this will all end up but I can tell you that the loan must be repaid at this time and that based on what you are telling me, paying off the loan and staying in the property is not an option for you. 

It could take the lender 6 months or up to a year or more to foreclose on the loan if none of the heirs step in to pay off the loan or sell the property, but I would warn you not to be too complacent if there are other heirs desirous of selling or using the home as a rental property who have a senior claim to your as could conceivably step in and shorten that timeframe considerably (people write us fairly often about the uncertainty of being kicked out of a property by another heir). 

My advice would be to talk to any other family members you know who more senior positions as heirs may have as soon as possible to determine their plans and then you can plan accordingly. 

Hello Kelly,

The reverse mortgage loan is a non-recourse loan and the only security the lender has is the property.  The lender and HUD cannot seek repayment from the heirs or from other assets the estate may have.

Hello Mel,

The heirs can sell the property at the amount owed on the loan or above and keep any additional amount above the amount needed to repay the outstanding loan amount. 

The heirs can also allow the lender to take the property on a foreclosure action and the foreclosure is recorded based on the original documents which are in the names of the original borrowers, not the heirs.  The lender is enforcing the terms of the contract with the borrowers, not the heirs. 

The heirs also have the right to repay the loan at the amount owed or 95% of the current appraised value, whichever is less.  This means that if the home is not worth as much as what is owed, the heirs may pay off the loan as 95% of the current appraised value and there would be no further payment required to repay the loan in full.

There is no provision however for the heirs to sell the home for any amount less than the amount owed and repay the loan for that amount. In other words, there is no provision for the heirs to sell the home to a third party for “the bast that they can get” and walk.   

There is a possibility that the lender, with HUD’s review and approval, would accept a short payoff the same as would be the case with a “short sale” transaction but that would be a case-by-case decision based on the terms being offered at the time.  The lender and HUD are under no obligation to accept any amount less than payment in full of any transaction involving a third party. 

So given the fact that we now know that the heirs can still walk away from the property and owe nothing due to the non-recourse nature of the debt, and that the heirs cannot simply sell the home to a third party for the best that they can get in any instance, the best I can suggest would be to make an offer to the lender to see if they and HUD will accept your offer. 

Chances are very good they have an appraisal on the property by now and have a good idea of at what price they can sell the home in its current condition and they may be willing to accept the offer.  One thing is for sure though, the worst they can do is say no.

Hello Amy,

I really cannot comment on your arrangements with your aunt.  You feel that she is being greedy, but she may feel that if you have been able to stay at your grandfather’s house for years with a beneficial living arrangement, and that you have been afforded a fantastic opportunity already. 

I would assume that paying the bills for the last year when your grandfather has not even lived there and with no mortgage has probably been much less expensive than renting somewhere else where you would also have those other bills as well as rent or a mortgage payment.  When you say you have been “paying the bills”, aren’t you the one benefitting from the services and use of the property? 

The time that you are there still occupying the property, you pay no payment on the loan so that loan is accruing interest all the while.  There may be no mortgage payment for you, but it is not free for the other heirs of your grandfather so what you deem as “greedy” on her part is her watching you living rent-free in her father’s home while eating up the equity in the property.  Just because you are paying for your own electricity, water, etc. now, that does not help her.

You said she wants to sell the home and you said you want to buy the home, so it sounds like there is a perfect opportunity for both of you.  If she must list the property and sell it using a realtor, she will need to pay real estate commissions and other costs as well.  You will also need to pay moving fees if you go someplace as well as usually deposits, etc.  if you do not buy this home.   

I would suggest that you go to your aunt and make her an offer on the home that may be lower than the current market by about 8% and explain to her that by the time she pays for all the closing costs, etc., this offer would make her just about the same amount of money. 

Hopefully, since you wanted to buy the home and since you have been living in the property at presumably less than current market rents (if any) for several years, you have some money saved up to use for the purchase you already said you wanted to complete anyway.  This would be a win-win for both of you.  You get to keep the house. 

Your aunt gets about the same amount she would get if she sold the property, and no one needs to go through the hassle of a sale or move.  And hopefully, both of you will gain a little appreciation for what the other is going through.

Hello Roseann,

The loan is a non-recourse loan which means that the heirs are never responsible for any amounts needed to repay the loan. 

I would suggest that you remove all their personal property and hopefully you already have either a power of attorney for mom or other authorization that allows you to contact the lender on her behalf? 

If so, contact them and let them once mom has left the home and all her belongings are out and give them the option of accepting a Deed in Lieu of Foreclosure or allow them to take the home back through a foreclosure action. 

If there are any other liens on the property, they will not be able to accept a Deed in Lieu, but they can begin the process as soon as you advise them that she no longer occupies the home and that the home will be vacant. 

Once the lender takes the title to the home, they will sell it or they may work with you if you want to try to sell it, but that is up to you and the lender to discuss.

Hi Margie,

I can answer anything you wish on the loan but when it comes to any possible liability on other third-party issues, I would suggest that you contact an attorney to make that determination. 

If you don’t own the home and you never signed any agreements to make any of those payments and the property is not in your name now, it would stand to reason that you have no liability on the property. 

What a lot of people don’t stop to consider though is that if they do transfer title to their name or there were assets from the owners that they previously received, that may leave them in a position of liability. 

For example, an heir contacted me several years ago that he let the insurance on a property lapse because he did not want to continue paying it but it was after the title to the property was passed to his name. 

The lender force-placed coverage that covered the dwelling only but not the contents and did not provide liability for accidents, etc.  Long story short, some kids started a fire on the vacant property, and one was injured. 

Nothing in the home was covered under the insurance policy and the family of the boy was suing the owner for damages but he had no insurance because the lender’s policy did not cover him for this type of claim. 

I do not know what became of the situation, but I do know that the individual who contacted us was concerned about mounting attorney’s fees that far exceeded anything he saved by not paying the insurance.

I can’t honestly tell you if you have any type of liability in your case or not.  I would encourage you to verify exactly what you may or may not be responsible for based on your circumstances before you make any decisions. 

As far as the loan goes, the lender cannot seek repayment from you for any expenses on a loan to your mom.  The loan is non-recourse and the only security the lender has is the property itself.

Hello Linda,

Your mom does have stipulations on the loan that she must continue to meet.  She must continue to pay the taxes and insurance when due. 

She must maintain the home in a reasonable manner (they are not overly tough on this but the home can’t be ready to be condemned or have really bad health and safety issues). 

Finally, she must continue to live in the home as her primary residence.  If she moves out of the home, they will call the loan due and payable at which time if she does not repay the loan, they could foreclose on the loan to force payment.  But at no time can HUD just “kick your mom out” of the home.  HUD does not own the home, your mom does. 

If she does not abide by the terms of the loan, they can accelerate the loan meaning, call the loan due and payable.  If that happens, they would begin a foreclosure action if mom did not pay off the loan and eventually, they will take the property through a foreclosure sale if mom was unable to pay off the loan or cure the default. 

Therefore, just be sure that she remains living in the property and paying the taxes and insurance on the place as they are due and all should be fine.

Hello Tristan,

If you are saying that you “make the payments” I must guess that it is a regular, forward mortgage and not a reverse mortgage because reverse mortgages have no payments due.  I can tell you that reverse mortgages are not assumable and you would not be able to just take over that loan but to determine if a forward loan can be assumed, you would need to contact the lender and see if this is possible. 

Most loans cannot be assumed, and you cannot add someone to the loan after the loan has been closed which would mean you would need to refinance the loan with a new loan in your name as soon as the title was transferred to you but I cannot say that for sure in this case and you would need to verify with the lender.

Hello Nick,

I cannot really advise you on what you should do, but have you verified the value of the home once repaired and compared that value to the unpaid balance on the loan? 

If there is equity in the home, I would advise you to move forward without delay on passing the title to the heirs so that you can complete the repair of the home with the insurance money, then either refinance the loan if you wish to keep the property or sell it if you do not want to keep it. 

If the home is not worth more than the loan balance, you may want to consider letting the lender take the property back. 

I do not know what would be more advantageous to the family but if the home is worth more when repaired than what is owed on the loan, I would advise you to tell the lender you want to complete the repairs with the insurance settlement and pay the loan off and ask them what they need from you to do that and to give you the time needed to complete the repairs.

Hello Terri,

I am afraid I cannot answer this for you because it entails legal advice, and I cannot give you legal advice.  I can tell you that the loan is a non-recourse loan, and that the lender has only the property for security for the loan and cannot seek repayment from any other assets.  I cannot answer what legal steps others may take to collect amounts owed.

The Federal Trade Commission (FTC) has a piece on the internet about the debts of deceased relatives and it might help you.  This is probably a very good start for your conversation with an estate attorney.  I cannot say for sure, but I don’t believe it would take more than just a quick, inexpensive call to an estate attorney to get all the information you need.

Hello Karen,

If you leave personal property in the home and the lender takes the property back through a foreclosure action, they will dispose of the personal property. 

The only time you really need to remove all personal property is if you want the lender to accept a Deed in Lieu of Foreclosure and, in that case, all personal property must be removed. 

However, I have a suggestion. I do not know where the home is located, what “junk” is remaining or how feasible this suggestion is, but I would suggest you contact a local senior real estate specialist in the area where the home is located for two reasons. 

Firstly, make sure there is no equity left in the home.  Even if there is just a couple thousand dollars, why shouldn’t the family get the equity if the home can be sold?  A real estate specialist will tell you if the home can be sold for more than what is owed on the mortgage. 

Secondly, the senior real estate specialists typically know of estate sale individuals who will go through the home and let you know if the personal items are sufficient to warrant an estate sale. 

If so, they come in and do all the work, set up and conduct the sale and then cart away everything that does not sell at the end. 

They will donate the remaining items that do not sell, and their fee is covered by a percentage of the sale proceeds.  They will not accept the sale unless they know the sale will be profitable for you and for them. 

You get a portion of the sale, a cleaned-out house and a receipt for donated items and it does not cost you a penny. 

Then if the house can be sold for any amount at all, that is just icing on the cake.  If there are any end-of-life expenses, it helps with those as well.

Hello Charmaine,

The heir can certainly pay off the old loan with a new reverse mortgage if he and the property qualify under the current HUD guidelines.  

The numbers look good, it will depend on the property still meeting HUD guidelines and the borrower qualifying under the financial assessment requirements but it is absolutely possible.  

Hello Peggy,

The loan is due and payable if she is not also on the loan, but the reverse mortgage does not allow or limit any actions as far as sale of the home.

She needs to speak with an estate attorney who can advise her regarding the heirship laws in Texas and what she can or can’t do as it relates to title matters and any other possible heirs.

Hello Brenda,

I am sorry but this has nothing to do with a reverse mortgage and may depend on the rights of heirship or any legal documents the owner’s heirs have (trust, will, etc.).  I honestly would not know what to tell you and it may also depend on the state laws where the property is located, especially if he passed without having a will or any form of instruction about his affairs.

I would suggest that you contact an estate attorney as you may be able to challenge the eviction in court pending her providing proof of the ability to evict, but I honestly do not know.  An attorney would probably be able to answer most of your questions with an initial consultation that might be very inexpensive or even free of charge so I would really encourage you to make the inquiry.

Hello Jeff,

I cannot give you tax or legal advice.  I can tell you that you should ask them about it. 

If it is merely to fulfill the requirements of the Soldiers’ and Sailors’ Relief Act, I can tell you that this is a standard procedure all companies must adhere to every time they foreclose on a property and it is part of an Act originally enacted in 1940 to protect active military personnel. 

It was enacted to protect servicemembers and the information is used to determine if you or any other heirs require any additional protection during a foreclosure or Deed in Lieu of Foreclosure under the terms of the Act.

You can find some information on this and how it relates to foreclosures (and more specifically non-judicial foreclosures) at: https://www.justice.gov/servicemembers/servicemembers-civil-relief-act-scra. 

I would encourage you to contact an attorney of your own if you still have concerns though about any legal implications beyond just the fulfillment of the lender’s legal obligations under the Act and any possible personal entanglement for you as a result. 

You and any other heirs never signed any promissory Note to repay any obligation and the loan is non-recourse, so you do not owe the lender anything. 

My understanding and assumption would be the information is needed strictly for identification purposes, but the attorney may have advice for you and may know of other ways to advise/identify. 

I honestly cannot advise and do not know what would be acceptable.

Hi Nancy,

The lender can still take the property as the security for the loan if you have no heirs that want the property. 

The broom clean requirement is if your heirs who know they do not want to keep the home or sell it and wish to Deed the property to the lender right away and not wait for a foreclosure to finalize the process.  If the lender takes the property through a foreclosure action, the lender is legally able to dispose of any personal effects left in the property after a sale. 

By the same token, all junior liens are subject to being removed at the foreclosure sale unless that creditor wishes to protect their interest by paying off the reverse mortgage lender and exercising their own foreclosure on their lien and if your heirs want to do a Deed in Lieu of Foreclosure there can be no other liens on title as well as the fact that the property must be broom clean. 

If the property has personal property or other liens and the lender accepts a Deed in Lieu of Foreclosure, they may become liable for that property or those liens.  And in your case, if you have no heirs to Deed the property to the lender, the only way they can take the property is through a foreclosure action anyway, so this does not even apply to you because there is no one available to Deed the home to the lender in the first place.

There is no worry for you after you have passed and if you have no heirs, you may want to investigate gifting your personal property to a charity.  I spoke with one borrower who had no family who loved cats and she had it set up so that when she passed, they were to enter her home and take all her personal property to sell to help in their efforts to maintain a non-profit home to care for stray cats. 

There are plenty of charities and I am not suggesting that one for cats is the only one you should consider, but that might be one way to ensure that your personal property goes to a good use when the time comes if you have no family to whom you can leave it.

Hello Viola,

I cannot give you an exact timeline.  It could be as early as 6 months before a foreclosure is completed from the time she passes to as long as 2 years in some instances. 

There are a lot of variables that must take place and most of the time it is several months before the lender learns of the passing of the borrower, they must conduct an appraisal to determine the value of the home, request the plans for disposition from the family members and then act. 

A foreclosure takes a minimum of 5 months to complete from the day the documents are filed with the country recorder and that seldom occurs immediately.  I know that many services (appraisers) are backed up now due to extreme demand and COVID-19 concerns so that will not make the process occur any faster but how much it will draw things out I really can’t say. 

If the son of the borrower stays in the property and does not voluntarily move prior to being served with a notice to vacate, it is impossible to give any guarantees on timeframes, but I think your 6 – 8 months would probably get you the time you need. 

Hello Brandi,

I cannot give you legal advice and your question pertains to a legal method of transferring title, not anything to do with the reverse mortgage.  The loan does not prohibit your mom from doing anything with the property. 

She can sell it, give it to you, let the lender have it back or whatever she wants at this point.  The loan is just a lien on title to secure the interest the lender has for lending money. 

Since it has been just a month since your grandfather passed, I do not believe sufficient time has gone by for the home to have gone through probate, if a probate is required in Pennsylvania in your mom’s case. 

If title to the property has passed to her though, she can do whatever she wants with the property, including gift it to you (sign it over to you with a Grant Deed). 

I can tell you from a practical standpoint that I think you would be mistaken to try to complete the transfer without any professional assistance and let me explain why.  

The reverse mortgage is now due and payable.  That means you need to pay that loan off with funds you have available to you or with another loan. 

If you transfer title with an “uninsured transaction” (one in which there was no title insurance company involved), you could have trouble insuring title later if anything is not done correctly and that could make getting a new loan difficult or impossible. 

Title insurance is given to insure that the title on the property has no hidden flaws.  If there are transactions that could create a defect in your title, you may not be able to get title insurance later. 

I do not know what the cost would be to have the title handled by a title company or title attorney in your area, but I would certainly counsel you to consider it.  Another thing your attorney can advise you on is taxation consequences. 

There may be adverse tax consequences if you do not properly complete the Deed and it could mean you pay higher taxes than necessary (and maybe not – I cannot say). 

Also, as I stated, the reverse mortgage is now due and payable, and that loan will need to be repaid so there will be title insurance required on any new loan you get anyway unless you were planning on paying the loan off with cash you have available to you. 

If that is your plan, you may still want to sell the home or finance it later and then the unbroken chain of insurance could become important. 

I know it may seem like a tempting idea to save a few dollars by cutting out the attorneys, but they just might save you a lot more in the long run.

Hello David,

The reverse mortgage is a non-recourse loan which means that the only security the lender has for repayment of the loan is the property. 

The lender cannot demand repayment from Mom’s estate or any heir for the loan.  If you plan to walk away, you can remove all the personal items and just have the home “broom clean” (which means just removed of all personal items and swept out of any debris  and that’s it) and then you can have whoever has the ability to grant title on the property sign a Deed in Lieu of Foreclosure and Deed the property back to the lender making the transition quicker and easier in most cases. 

However, I would encourage you to just contact a local real estate professional before you do anything. Give them the outstanding balance on the last reverse mortgage statement and verify that there really is no equity remaining in the home. 

I have seen people willing to walk from thousands of dollars of equity simply because they did not want the hassle and most real estate professionals can take care of the whole process of the sale for you so that you do not need to do much at all if you let them.  Cannot hurt to check it out.

Hello Jeff,

Liability for property charges is something for which you should contact an estate attorney in the state in which the property is located to advise you.  The reverse mortgage is a non-recourse loan. 

That means that the lender will never require you to pay anything on the loan.  Property charges or fees to third parties (i.e., insurance, HOA dues, etc.) may be a different issue.  I cannot advise you and I do not know what rights the other creditors have. 

I would be concerned though that they may have some recourse against your father’s estate and if any assets were passed to heirs of the estate without going through the proper probate, etc., creditors might have recourse to seek the payments that the estate would have owed them. 

I don’t know and would not try to tell you one way or the other but I don’t think it would be a bad idea to get some guidance from a licensed attorney rather than find out later if there are any outstanding liabilities.

Hello Jim,

The reverse mortgage is a non-recourse loan.  If you allow the lender to take the property, they can look to no other assets to repay the obligation and you are not liable and never have been for the loan.

Hello Linda,

As I understand it, the moratorium applies to borrowers and owners who have undergone a foreclosure during this time, not a renter or family member who is living in the home after the owner passes. 

Your friend has had the benefit of continuing to live in the home without paying a mortgage payment or rent for the past year knowing that the loan was now due and payable. 

It is my sincere hope that he/she has had ample time to prepare/save for the eventual need to move knowing this day would come and the decision was made (whether by choice or by necessity due to circumstances) that letting the lender take the home was preferable than a sale of the home or keeping the home. 

It is also my sincere hope that everyone who is a borrower or a family member of a borrower with a reverse mortgage realizes that the loan is not and never was meant to be a multi-generational loan.  When the last remaining borrower on the loan permanently leaves the property, the loan becomes due and payable. 

If the heirs are unable or unwilling to sell the home or refinance it, the bank will be forced to foreclose to protect its interest and to stop the losses on the HUD insured loan.  People with family members living in the home with them need to realize this in advance and plan for this eventuality. 

The day will come when the decision must be made to sell, refinance, or move and if family members start preparing for it early in the term of the reverse mortgage, they are much better equipped to make the decisions and take the actions they need when the time comes that such actions are necessary. 

Also See: Timeframe to Vacate Home After Reverse Mortgage

Hello Tim,

The lender will contact you as soon as they become aware of her passing and if she was receiving social security, that should not take long. 

There really is no downside per se, if you do not make any attempt to hide the fact or provide the lender with wrongful documentation to try to convince them that she is still living in the home, you really do not have any commitment to the lender to notify them in any certain timeframe. 

The one thing that could go against you is that if you need them to grant you additional extensions later to complete financing or a sale, they may not be as willing to work with you if they feel too much time has already passed or that you intentionally misled them, but that is not even for certain.

Hello AJ,

Any of the above!  Some servicers are easier than others.  Recently laws have been passed that make it easier for heirs to contact lenders, but some servicers are still harder to reach than others and I recommend you do whatever it takes! 

As a precautionary piece of advice though and it is a bit late for you, I recommend that all borrowers with reverse mortgages send in authorizations to their lenders now, before this becomes an issue, giving their executors or whoever they intend to work on settling their affairs authorization to speak to the lender on behalf of the borrower for all matters relating to the loan. 

That way the authorization will already be on file with the time comes that the heirs need to contact the lender and things will go so much more smoothly.

Hello Sherry,

The lender does not own the home and cannot enter into any agreement with you. 

Your best bet is to see if the daughter is the only heir and if so, if she will sell or give you the home if she has no interest in keeping or selling it on the open market. 

Regardless of what the daughter agrees to do, the loan is now due and payable, and you would need to find a way to pay the loan off (i.e., with a refinance loan in your names). 

You do if you want to deed the home back to the lender to shorten the process (except built in appliances, they are considered real property and part of the house).  If not, the lender will foreclose on the loan and after they take title, they will be able to remove any items left behind.

Remember though that the borrower or the borrower’s estate may continue to have liability for as long as the title remains with the borrower or their estate.  That may mean nothing to you if the estate has no assets but if there is anything you need to protect; it might benefit you to move the title to the lender as quickly as possible and they can only accept a deed from you for title if the home is empty of all personal items and is “broom clean”.  

Hello Deeya,

The ability to sell or not has nothing to do with the reverse mortgage.  If the home is owned by your dad, he would need some sort of power of attorney or other legal document to sell a home he does not own regardless of what loan is on the property. 

I will warn you though that the lender obviously does not know that dad is not living in the property and once they find out, they will call the loan due and payable.  If you dad or brother are not able to pay the loan off or sell the home, the lender will begin foreclosure and ultimately, it would go to foreclosure sale.

Hello Carmen,

Once the owner who was the borrower on the reverse mortgage passes, the loan becomes due and payable. 

If you are the borrower’s heir, it will be your decision to make what you want to do with the property, but the loan must be paid off at this time.  You can pay it off by refinancing the loan with a loan in your name, with other funds available to you or by selling the home. 

If you do not wish to do any of these, you can simply walk away from the property and owe nothing and the lender will foreclose on the loan and will sell the home through foreclosure sale. 

If you do decide to keep the home, you may rent it out or do anything with it that you choose as the owner of the property, but just know that the reverse mortgage will not remain on the property once the owner passes.

Hello Richard,

Whether you receive title from the original owners by way of a will, court order or you are the beneficiary of an established trust, you are still considered the borrower’s heir for purposes of the provision. 

And you are not “buying” the property, you already own it by the owner left the property to you through the trust. 

The difference is that the loan is now due and payable, and HUD will accept a payoff on the loan at 95% of the current market value or the amount owed on the loan, whichever is less. 

If you choose not to keep the property, you have the right to sell the home or let the lender take it through a foreclosure action if you do not wish to become involved in the property, but the choice is yours and the 95% option is also yours if the balance exceeds the value of the home. 

You just need to let the lender know your intentions, they will order an appraisal from a HUD-approved appraiser and you will need to be able to either refinance the property with a new loan at that time or pay off the old loan with other funds available to you.

Hello Angela,

If they have not done so already, the lender will soon contact you to let you know that the loan is due and payable. 

At that time, they will want to know your plans to pay the loan off. 

I understand you not wanting to change the title and expedite that process because a change of title will definitely trigger the lender if they have not contacted you yet, but you definitely need the title to be in your name in order to obtain any kind of financing. 

No lender will lend you money on a house you do not own (title is not in your name). 

My advice is that you contact an estate attorney and get all your ducks in a row to have the title changed. 

This may mean a probate, will take participation from your siblings and it could take a few months. 

Let the attorney tell you the best way to get everything accomplished and you work on your financing while that is in motion so that when the title is finally changed, you are ready to contact the lender and request the payoff information showing you now hold title to the property and that you are ready with your new loan closing. 

Also, if they contact you in the mean time before everything is done, you can show them that you have taken positive steps to secure title and are in the process of obtaining a permanent loan to replace the reverse mortgage. 

If you give them a plan and a date by which everything should be accomplished, you should also find the lender much more willing to work with you.

Hello Robert,

I really cannot advise you on your legal options for title. 

If you own 1/3 of a property, you can do anything the law allows with your ownership – the reverse mortgage does not dictate what owners can or cannot do. 

The loan is now due and payable, and the lender will be looking for a plan to either pay off the loan or take the property back so they can resell it to pay off the loan.  The lender will not accept a Deed for 1/3 of the ownership of the property though.

I would suggest you talk to the other heirs and see if anyone wants the home of if there is any equity remaining. 

If someone wants the home, they can keep in by paying off the lesser of the amount owed or 95% of the current value. 

All of you can all sell the property and split the proceeds if there is still equity in the home. 

If no one wants the property and there is no equity remaining, you may all be able to Deed the property back to the lender in Lieu of Foreclosure or let the lender know that you will not be doing anything do dispose of the property and they will institute foreclosure proceedings and take the property through a Trustee’s Foreclosure Sale.

Hello Miles,

There is nothing in the reverse mortgage that would prevent you from refinancing the loan and replacing it with new financing.  

Your ability to actually do this will depend on your parents’ estate and their legal steps for the passing of title after their death, your ability to secure the title (either because of that estate planning or your siblings) and then your ability to obtain the new financing from a lender who provides the type of financing you desire.  

If you work out all/any heirship issues with family members, take the steps to pass the title to yourself from the estate and qualify for the new financing, there is no reason you cannot get the new loan you seek.

Hello Ana,

This is not a question for us, you should contact an estate attorney to determine your rights and obligations there. 

I can tell you the process the lender will take but I can’t tell you what rights you have as one of many heirs when the owner died with no will and particularly since you have occupied the home with the owners as their caregiver for so many years and still occupy the home now.

The lender will be looking for the heirs to let them know what they intend to do – pay off the loan with another loan, sell the property and pay off the loan with sale proceeds or let the lender take the property back. 

The lender is not involved in who is living in the home in the meantime.  Unless and until the lender takes title to the property because of a Deed from the owner to the lender or a Trustee’s Deed upon Sale (foreclosure), the home still belongs to the estate of your parents. 

My suggestion is that you talk to your siblings and you all come to an agreement on a plan about the disposition of the property.  If there is equity in the home, it is best to sell it as soon as possible and not let the equity further erode due to accruing interest. 

If there is no equity, one or all of the heirs can still keep the property and the lender will accept the outstanding balance or 95% of the current value of the home, whichever is less, as payment in full for the loan. 

If no one intends to keep or sell the home and you are just going to let the lender take it back, that might help resolve the issues with the siblings as well since it would seem that there would be no need for them to want to see you move out on any set timeframe, the lender will enforce your move once the foreclosure has concluded.

I believe that even with no will, the property will go through probate and the court can appoint an executor so it would seem that it would be best to know all the options and to discuss them with your siblings. 

I would start by getting the last reverse mortgage statement and compare the balance owed to the most reasonable sales price of the home in its current condition.  A local real estate sales professional can help with the value if you are not comfortable looking at recent sales of similar properties online. 

If there is still equity in the home, you will know why your siblings all want to see the home sold before it goes into a foreclosure and the equity is lost.  If there is no equity, you can show that to your siblings as well and perhaps they will no longer push for you to vacate the home.

At any rate, the time will come that you will need to leave whether because the family is selling the home or the bank forecloses on the loan unless you can pay off the loan with funds available to you or with a new loan of your own. 

You need to begin planning for that eventuality now.  I encourage you to contact an attorney to determine your rights as the occupant of the property if you feel your siblings are not being reasonable but as a person with siblings myself, I would really encourage you to communicate with your siblings and do what’s best for all (but that is just my family advice and has nothing to do with the loan or any legal options – the attorney will need to guide you there).

Hello Karen Sue,

I am sorry, but this is a question for a title attorney. 

The reverse mortgage does not determine rights of the heirs and therefore, this is a legal question that must be addressed by the proper entity which would be an attorney practicing law in the state (in this case South Carolina). 

We are forbidden by licensing law to give accounting or legal advice and in all honesty, I would not know the correct answer to give you in this case anyway. 

An attorney can usually answer questions such as these in a single session and it is money well-spent.

Hello Kim,

People often have issues with uninsured transactions later when they try to get a new loan and the title is not insurable. 

The problem with just transferring the title as it was done is that since it never went through probate and through other channels, there is no way to determine if there are other claims on the title or potential liens. 

No title company is willing to accept the liability to a lender for clear title under those circumstances. 

I would suggest you contact an attorney who handles such matters and it may take a court action or probate but the attorney will tell you what you need to do at this time to ensure you have clear title. 

Hello Heidi,

There is not a straightforward answer to that question. 

Mom owns the home, the bank does not.  If there is still equity in the property at this time, mom’s heirs would want to sell the home or keep the home and pay off the loan. 

It would be up to the family to determine what would happen to your brother unless mom made him the sole heir and then he would need to decide if he wanted to keep the home or sell it. 

The lender will work with the heir for quite a while (usually up to 12 months) if they are actively working toward a sale and can show the lender evidence of listing and progress during that time. 

If no one in the family wants the home and does not plan to sell it (i.e. there is no equity and no one wants to keep it and repay the obligation with a refinance loan at 95% of the current value or the amount owed, whichever is less), then the lender would ultimately begin the foreclosure process to take the property. 

Under the fastest of circumstances, the foreclosure cannot be completed for at least 150 – 180 days once it has begun. 

Before filing the initial foreclosure paperwork, the lender must be notified of the borrower’s passing, then they must complete an appraisal of the property. 

Considering how delayed appraisals are at this time, I would doubt the lender would be able to send paperwork requiring your brother to leave the home due to the completion of the foreclosure and them now owning the property for at least 8 or 9 months and possibly longer in some instances. 

However, it never pays to wait until the last minute, especially if there is still equity in the home now. 

I would strongly suggest you contact a senior real estate professional in your area and determine the most probable sale price of the home in its current condition. 

Remember, interest continues to accrue on the loan for as long as the loan remains unpaid so the sooner you can sell and repay the loan, the more equity you will retain. 

The more prepared you are, the more money that can be retained for end of life expenses or for mom’s estate/heirs.

Hello Lisa,

Once the loan goes through the foreclosure process and the property is sold at foreclosure sale, the new owner of the property, whether that is the lender, HUD or another bidder would then determine the status of the occupants. 

Most likely they would receive a notice to vacate so that the new owner could do any needed repairs to move into the home themselves or in the case of HUD or the lender, resell the property. 

If the home was purchased by a private investor at foreclosure sale, that individual may of may not wish to rent the home and in that case, the occupants might all have the option to remain as tenants of the new owner. 

That would be completely up to the owner of the property at that time.

Hello Monica,

The lender will contact everyone the borrower gave them for contact purposes to try to settle the loan. 

Eventually, if they are unable to reach anyone and no heir reaches out to the lender, they would initiate a foreclosure action. 

If that proceeded thorough to the end, anyone remaining in the home would be evicted by law enforcement but there would be numerous notices before that took place.

Hello Anna,

If you do not wish to keep of sell the home, the lender will notify you of your options and will then need to do a series of tasks to meet the HUD requirements that includes an appraisal on the home. 

Between all the HUD requirements, legal notifications, and foreclosure processes, it is not uncommon for it to take a year from the time they become aware of her passing before they are at a point to require eviction. 

The soonest everything can happen even if they are completely on top of everything and are aware of her passing immediately would be about 6 months, but we often hear from family members of the process taking up to 2 years. 

Unfortunately, a lot of the time it depends on how quickly they learn of your mom’s passing, what you say to them and how quickly they can line up the needed services in your area.

The toughest thing is that most family members who occupy the deceased borrower’s home do not put plans in place for a relocation until they are at the very end of their time in the home and then everything is rushed. 

Knowing that eventually you will need to move, you are smart to start thinking and planning now.  Make sure you have a “moving fund” established so that you are ready to move when the time comes. 

It’s easier to start saving a little now each month than to try to come up with everything all at once later.  Start thinking about how you will move and what you want to take with you when you do. 

Perhaps you will not want to take everything, and an estate sale would help.  You can start looking into that now to see if there is a company near you who can set it up and run it for you when the time comes. 

Start collecting all the things you would not want to sell or part with and make sure you have identified them so that when the time comes, they are separate from the rest (either physically or with a label or other identification) so that a sale company can see what they would be working with and let you know if an estate sale is feasible. 

If you wait until the last minute and things are left in the home, the lender will simply dispose of them and that helps no one.

It’s too early to find a new location to move to (unless you are considering moving in with other family), but it’s not too early to get an idea of the areas available and the costs to see what you will be looking at when the time comes. 

Remember, you will be dealing with the loss of a loved one at that time and the last thing you need to worry about is to only start looking for a new place to live then as well. 

It’s not a fun talk to have with people and a topic we all would like to avoid, but the better prepared you are in advance, the easier the transition will be.

Hello Max,

The process is very easy.  It is just a matter of executing and recording a Deed to add the person(s) to title. 

However, I recommend that you contact a title company or a property attorney to help you with the transaction.  In some areas, if you are not careful, you will trigger a reassessment of your taxes and you do not want to do that. 

Title officers and attorneys who specialize in this type of transaction can be certain that the correct paperwork is filed so that the taxation authority does not consider it a transfer or title that would subject you to a lifetime of higher taxes.

Good Morning,

I would not want to speculate for your specific circumstances, but there are times it is required by title. 

For example, if you have two individuals on title and one passes and the other wishes to obtain a reverse mortgage now on their own, the title company would need the Death Certificate in order to ensure that the title was accurate and that it wasn’t just a case of one spouse not wanting to get the loan and the other attempting to close the loan without their consent.

Hello Brena,

You really need to seek the advice of a licensed attorney.  A Power of Attorney (POA) does not need to be completed in or with the participation of a court.  There are also different types of POA’s, and the power granted or the time during which it is valid is stated in the POA.  

Another thing the attorney may want to explore is whether your father was of sound mind at the time the POA was granted since it was so close to the time of his passing.  If your father lacked mental capacity or you feel he was under duress at the time he signed the POA, the attorney will want to know.

I could not begin to tell you what the final outcome is likely to be or the costs to dispute the POA (or if there are even grounds to do so) but You should probably be able to find an attorney who would do an initial consultation at a very reasonable charge and let you know your rights and expectations.  

It also could be that your father knew that his time was near and so he took steps to get his affairs in order and discussed them with your brother then gave him the POA to carry them out.  Have you talked to your brother?  You might be able to save time, money, and heartache if you have a conversation with your brother before you do anything but that’s your call.

I have also heard this, but I know that if you sell the property and they receive a Demand request from escrow, the do not do an appraisal and will just return the Beneficiary’s Demand for Payoff. 

The idea behind the appraisal is to protect the borrower or their estate if the property is not worth as much as what is owed but I question the need if you are sure the value is worth more and you just want to pay off the existing amount. 

I don’t know if it would help, but I would suggest you send in a Request for Beneficiary’s Demand, be sure it is signed, and let them know that pursuant to federal laws, you expect a timely response.  I would send that via registered mail so you have a receipt of when the lender received it.

Federal law gives servicers 7 days to respond in most instances with some exceptions but I am not an attorney so I cannot tell you if this is one of the exceptions to that required timeframe. 

Another step you can take now is to make a payment so that the balance is at or approaches a zero balance. 

There is never a prepayment penalty on a reverse mortgage so even if you must wait for the process to complete the final payoff, you can pay the balance down to nothing or a very small amount at any time to keep the interest from accruing. 

So if the servicer refuses to give you a Demand for Payoff, you can check with a local attorney to determine if they have violated state or federal laws by doing so after receiving your properly executed Demand Request but you can also pay the balance down in the meantime so that there is no interest accruing or a very minimal amount. 

Your loan may not be “paid off” at that point, but you would stop or severely limit the interest accrual until the lender had completed whatever steps necessary to close the loan.

Hello Rosa,

You are entitled to receive a copy of the appraisal for first liens and certain high cost mortgages free of charge before a loan closes. 

It’s not quite so cut and dried on the issue if the appraisal is done after the loan closes and you are not charged for the appraisal so I would not want to give you the wrong information, especially if it is different state by state in the state laws. 

It’s easy to answer on the appraisals done to close your loan, the Consumer Financial Protection Bureau (CFPB) states that on all first lien mortgages and certain high cost loans that the lender must give you a copy of the appraisal and other written valuations promptly after the report is completed but in no case later than 3 days before the loan closes. 

It does not give guidance though for loans already closed and so I would refer you to an attorney in your area to determine what state or other federal statutes, if any, say about any valuations done after a loan closes for which you were not charged. 

If you were charged for the report though, the lender should certainly give you a copy of the appraisal for which you paid. 

You can find the CFPB information at their site here: https://www.consumerfinance.gov/ask-cfpb/do-i-have-the-right-to-receive-a-copy-of-my-home-appraisal-en-192/

Hello Lindee,

The appraisal is required according to HUD guidelines and they must use an independent appraiser who has a HUD approval.  I’m not really sure why they absolutely need the appraisal if you have already agreed to repay the total amount owed unless they need to be sure that the amount to be required is verified by appraisal in every instance, even if the balance owed is well below the current value.

There is an option for heirs to pay the lesser of the balance owed or 95% of the current value and if there is any question which is less, they need the appraisal to know how much to request for payoff.  I can only assume that the servicer would need this documentation if a dispute ever arose regarding the payoff amount later. 

Hello Enrique,

I am sorry but your question is not one with which I can be of assistance.  It really has nothing to do with the loan itself. 

I honestly do not know what your arrangement is with your brother, how much is owed on the home or the value of the property, but you and your brother must determine how you are going to pay off the loan now that the loan is due and payable and who is going to do what with the property. 

If you wish to keep the home, that would mean a new loan to repay the current loan if you do not have the funds at your disposal to pay the loan off without the use of a refinance loan.

I cannot advise you on programs or possible grants available to you because that is not our area of expertise and I honestly do not know what may be available and have not heard of such a program to recommend to you. 

I do know that your time is limited though so you need to discuss the situation with your brother and come up with a game plan before the lender begins any further actions such as a foreclosure to protect their interest in the property. 

If a sale is ultimately the course of action you decide on, you do not want to wait too long to begin because a sale will not happen overnight and your time to act is not without limits.

Hello Toni,

The loan does have a stipulation for heirs that want to keep the property that they can repay the obligation at the amount owed or 95% of the current appraised value, whichever is less. 

So if you are the heir of a person or persons who had a reverse mortgage and the balance is higher than the property is worth, you do have the option to pay off the loan at a lower amount but there is no such option for non-heirs. 

And the lender is not “selling the house”.  The house is owned by the borrowers’ estate or their heirs once they change the title, not the lender.  You would not be buying the house from the lender but rather, paying off the loan as it would be due and payable at that time. 

You could pay that loan off with funds available to you (i.e. money in the bank, 401K funds, etc.) or you could refinance the loan with another loan in your name as the new property owner.

Hello Derrick,

The lender has the option to allow you to repay the loan at the amount owed or 95% of the current market value under HUD rules. 

If an appraisal was done (and you indicated that it was done in accordance with HUD requirements), the lender can only use that value in determining the discount they will give you off of the amount owed. 

The appraised value already takes into consideration the condition of the property and any needed repairs so at 95% of the current value, HUD feels that if they need to take the property back, they will come out about even by giving you the discount or selling the home on the open market. 

I am afraid you will need to decide if you feel that 95% of the appraiser’s opinion of value is a fair deal and make your decision based on that amount.  Having said that though, you can always offer a lower amount and see how they answer, the worst they can do is say no. 

If you do not accept their value and offer of reduced payoff, you will need to act quickly if you then decide later that you do still want the property because if the lender starts further action that can incur additional costs with any foreclosure fees added.

Hello Jonathan,

You have the option of keeping the home or selling the property, the loan becomes due and payable but your dad or his estate (heirs) still own the property when he passes.  If you are not his heir or there are other heirs as well, how long you stay depends on the group, I guess. 

If you do not intend to repay the loan and keep the home and you make no effort to sell the property, the lender would eventually foreclose on the loan to protect their interest and that process can take more than a year to complete but could be done in as little as 5 - 6 months if they become aware of your father’s passing right away and all services (title, appraisal, etc.) are easily obtained. 

I can’t tell you for certain because it depends on where the property is located,  Also, during these strange times of the pandemic and heavy lending volume, everything is somewhat slowed so that will also have an effect on the timeframe.

Hello Mila,

Are you saying that the home has already gone through foreclosure sale?

Because the lender cannot remove anyone from the home unless they own it and they do not own the home unless they have repeatedly notified the owner of the default in the loan terms (non-occupancy of the borrower). 

Even then, they must follow the foreclosure laws of the state in which the property is located.  Did the lender ever notify your grandmother of the breach of terms?  Those notices would normally have gone to the home unless the cousin had Power of Attorney that he/she provided to the lender and notified the lender of your grandmother’s new address. 

There is something missing and I cannot tell you what.  To complete a foreclosure, most states have very specific notice requirements including many times posting on the property.  Did you ever see any notices anywhere? 

I would suggest that you contact an attorney immediately to determine your rights.  I honestly cannot tell you what status the home is in now and this does not sound right to me so I would suggest you move swiftly to check things out.

Hello Paul,

The lenders have several ways of knowing.  If the borrower receives social security, they have services that are notified when the recipient passes.  They also send an annual certification that must be signed and returned by the borrower and they can conduct random occupancy inspections. 

If a family member or someone else falsifies the annual certification,  that would be fraud against the lender and a government agency (HUD) and I am not sure what legal steps the lender or HUD will have available to take in those instances, but they have both civil and criminal options. 

I know there has been some discussions about this topic because in the past, HUD only required the lender to complete the foreclosure once they determined the borrower was no longer living in the property and they did not pursue any additional penalties. 

However, studies have shown that HUD has lost quite a bit of money due to people falsifying documents to delay calling the loans due so they have indicated that they now need to determine how aggressive they need to make their enforcement efforts in the future. 

This could be anything from civil suits to charges of theft and fraud from those falsifying documents to remain in properties longer than allowed.

Hello Lisa,

This is a legal question for an attorney to consider.  HOA liens are often junior to First Mortgage Deed of Trust or Mortgage liens (loans) even though the HOA was present before the mortgage lien. 

If your grandmother had outstanding HOA fees owing or even other liens from other creditors, those liens may not have been settled if the property reverts to the lender in a foreclosure action and would then still be due. 

Again, I am not an attorney and can give you no legal advice but it seems to me that only the estate of the individual who actually owned the property or had the debt could be expected to pay any outstanding debts.  This has typically been the reason for probate. 

It is a process whereby the will of the deceased individual is proven; claims are settled and property of the deceased is distributed.  It has been explained to me that any debtors have this last opportunity to make claim against the estate before the final distribution by the probate court but please verify this with your attorney.

I do not know how anyone can sue heirs for a debt owed by someone who died if they are not listed as a co-signer on the debt.  If the heirs never signed a promise to repay an obligation, I do not know how they can be sued to repay it. 

If you are talking about a debt your grandmother owed that the creditor is seeking repayment from funds in the estate that ultimately affects heirs because they don’t receive as much money, I cannot advise you on that.  Again, I suggest that you contact an estate attorney. 

About the HOA charges themselves, I can tell you that for the time your grandmother owned the home, the lender would not be responsible for her HOA dues any more than they would her utility bills. 

Your grandmother also signed documents stating that she would pay her property charges in a timely manner and that includes taxes, insurance and HOA dues. 

If the HOA is suing both the lender and her estate, I honestly do not know they are including both entities for the time each owned the property, if they just want to include all parties in the hopes of better chance of collecting form someone or what. 

Here again though, your attorney will be much more useful at shedding light on this issue.

Hi Leah,

I am afraid you will need to contact an attorney to determine your rights as a tenant. 

The loan does not determine or negate any of your rights.  The lender will not contact the heirs and they will decide if they want to keep the home, sell it, or let it go back to the lender because the loan in now due and payable.  I would imagine that your options would depend on the heirs’ decisions. 

These would all be questions for your attorney.  I do not know what term your rental agreement/lease covers or what a change of ownership due to death would do to any existing leases/rental agreements in the state in which the property is located.  These would be questions for your attorney to address for you.

Hello Elizabeth,

The lender will not require any proof of source of the funds for the payoff so if you receive adequate funds from this action to pay the loan in full, that will not affect the lender at all. 

Once you receive the funds from any source, a new loan, an insurance payment, judgement, etc., those funds are yours to do with as you please.

However, having said this, how long is it before you anticipate a payout?  The lender will not wait for a lawsuit to end for a possible payment if there is no guaranteed payment date. 

Lawsuits can drag on for years and there is no guarantee of winning so unless it is already settled and you are just waiting for the payment, I would suspect that the lender would be looking for something more concrete in the way of an anticipated plan to pay off the loan to keep them from beginning a foreclosure action.

Hello Sherry,

I cannot give you legal or estate planning advice, that would be up to the licensed experts in those fields.  I would strongly suggest that you do contact a licensed estate attorney to discuss the situation with them to determine what would be the best plan of action based on the family needs. 

The one thing I can suggest regarding the loan though is that your in-laws write a letter of authorization now to the lender authorizing them to speak to you and you to them on all matters relating to the loan. 

Many times this is never done and then after the borrowers pass, family members are frustrated when the lender is unable to speak with them about the loan due to the fact that that the lender has no authorization and by law, cannot discuss a borrower’s loan with anyone but the borrower or someone authorized by the borrower. 

This creates delays until the heirs have either gotten title to the property or have some sort of court order allowing them to work on behalf of the estate.

Hello Edward,

The loan becomes due and payable when the last borrower on the loan is no longer living in the home as their primary residence. 

My advice to you is to work with mom and an estate attorney now so that you have the title resolved and can sell or refinance the home if you want to sell or stay in the property and also send the lender an authorization signed my mom now that authorizes them to speak to you and you to them on all matters relating to the loan. 

This way, they will be able to discuss the loan with you when the time comes that you must communicate with them about what needs to be done with selling or refinancing the loan.

Hello Eneida,

I am not sure what effect your neighbor’s loan will have on your living situation unless the property you live in is a part of her home?  If the home you live in is part of her property on which the reverse mortgage is recorded, when she passes, the loan will become due and payable. 

If she has her son on title as well, he will still own the home but will need to refinance the loan or sell the property at that time.  I cannot say what her son will do.  As the owner of the property at that time, it will be completely up to him as to whether he will refinance the loan and keep it, sell the property or choose to let the bank take the home and not try to keep the property or sell it. 

Hello Mike,

Let us start with the first question.  If mom passes, you cannot stay in the home under the terms of her reverse mortgage.  The loan is not a multigenerational instrument and when the last borrower on the original loan is no longer living in the property as their primary residence, the loan becomes due and payable. 

But with regard to the question you asked about being able to “buy the home”, you don’t need to buy the home, you would already own it if you are on title.  The only thing you need to remember is that you have a loan of your mom’s that would be coming due and payable. 

So, at that time, if you wish to keep the property, you will need to pay off the loan either with funds available to you or by refinancing the loan with a new loan.  If you choose not to do either of those options, you would also be able to sell the property and the amount you would retain would be the difference between the amount owed and the amount for which you could sell the home (minus any costs of course). 

If the property has increased in value, that could be more than mom’s original down payment, or it could be less if the loan is accruing interest, but the property is not increasing in value.

Now is a great time to be considering all of this and not waiting until later after mom passes.  You still have all your options available to you at this point.  For instance, there is never a payment due on a reverse mortgage and mom has been able to live in the property without making a payment on the loan for as long as she has owned the home but that also means that the balance owed has been increasing. 

You can continue in this fashion, but you can also choose to make any payment in any amount at any time without penalty.  If you are also living in the home (which I gather by your usage of the term “stay” in the home) you can continue to live payment free and save accordingly for the time when you will need to refinance or you may choose to set up a provision with mom whereby you make monthly or other payments on the loan to keep the balance from rising so that when the time comes, the refinance will be much easier. 

I do not know your income or credit situation and you may not be concerned about obtaining financing at that time but knowing what lies ahead and what your options will be will help you plan for the event.

The loan will come due when mom is no longer living in the home.  The more you plan for that event and the better you are prepared to either refinance the loan or sell the home and replace it at that time, the better you will be able to make a smooth transition into the next phase of your life. 

Hello Vanessa,

I am sorry, but I cannot advise you on legal matters.  But I am not certain the question is can they make you do it as much as should you do it. 

I would strongly suggest that you obtain legal counsel so that the attorney can review the papers you are being asked to sign and help you determine if it is in your best interest to do so.  It could be that there is no equity in the home, and they are just trying to Deed the home back to the lender in lieu of foreclosure. 

But I can’t know what their goal is at this time and if you are not sure, I would strongly suggest you get someone to assist you who can advise you about the effect of any actions and your rights.

Hello Lisa,

Lenders are required to counsel anyone on title at the time of application.  You can either have your sibling counseled as well or you can also wait to start until after your sibling signs the property over to you and then he/she would not need to also attend the counseling. 

You do need to be living in the property and have title to it to begin the loan.  Except for a purchase transaction where you are buying a new home, you must own and occupy the property at time of application.

Hi Don,

The house belongs to the homeowner or his/her heirs until such time as the home is sold or the lender receives the title either through foreclosure or a Deed in Lieu of Foreclosure.  I cannot give you legal advice because I am not licensed to do so and in all honesty, I do not know what liability there could possibly be from lack of insurance coverage if anyone is hurt on the property in the meantime, etc. 

I would recommend that you contact an attorney for that information.  If the insurance lapses, the lender would force-place coverage but that would cover only the dwelling, no contents, and no liability.  I cannot comment on any possible liability if anyone would go onto the property and become injured. 

And if the property is still in the name of the deceased (the title was never transferred after the death), and there are no assets of the estate for which to be concerned, I don’t know if that makes any difference anyway.

I would encourage you to speak with an estate attorney to determine the best answers.  I can tell you that property taxes run with the property and so the 

Hello Polly,

There is no prohibition or restriction about which real estate agents can work with reverse mortgage transactions except that the agent may not be on the HUD LDP lists. 

The LDP list or HUD Limited Denial of Participation list is a list of entities with whom HUD has had dealings and has determined that they will no longer allow them to be involved in transactions in which HUD has participation due to a number of reasons.  You can read about the HUD LDP list on their website here https://www.hud.gov/program_offices/enforcement/theecmemo2. 

I have to assume if you are asking about the costs being deducted from the amount due to the lender, the sale is a short sale or in some way the proceeds would not cover the costs of the sale and the full amount owed to the lender, correct? 

Otherwise, there would probably be no reason for the question as reverse mortgages are just like any other loan in that the lender issues a demand request and that demand does not allow for the costs of the sale to be deducted from the amount due on the loan. 

The only way I can answer this is that you would need to contact the servicer/lender to obtain any approvals for a payoff less than the amount owed and they in turn would need to get HUD’s permission since this amount would be included in any claim that HUD would need to pay at the completion of the transaction. 

It would probably require a review of the entire transaction, the parties, and an appraisal of the property for the lender to get an answer for HUD and in turn answer the borrower’s request.

Hello Lynn,

I am sorry to hear about your mom, is she still living in the home now?  You mentioned that she is ill but is she still residing in the home? 

If not, I would highly suggest that you move toward clearing out the house, especially of all dirt and debris now.  There are services you can call that specialize in this type of removal and haul away and I would encourage you to contact one to have the home cleaned. 

When it becomes clear that mom is not going to return, you can contact a senior specialist real estate professional who typically also work with people who perform estate sales to see that up. 

You and any siblings you have can take any items from the home that you want to keep and then the estate sale folks will catalog everything, perform the sale and donate anything that is not sold at the end of the sale in your families name. 

At that time, the home is ready for any repairs, cleaning or upgrades you may want to make to improve your chances of sale or to shoot for a higher price. 

Also, I would suggest that you contact her attorney that prepared her trust and put the steps into motion to do whatever trust certifications, etc. so that when the time comes, you have no delays with the transfer of title.  You cannot sell the house until you own it. 

The longer it takes to complete these steps the more people typically lose in carrying costs on the home (interest on the loan that continues to accrue, taxes, insurance, etc.). 

If mom is still legally capable and able to sign documents now even though she is ill, I would suggest that you have her sign a letter to the lender now authorizing you to speak with them and them to you on all matters relating to her loan. 

This way, when it comes time to sell the home, you will already be in a position to communicate with the lender and then obtain a demand by sending them a copy of the trust certification after your mom has passed and you become the owner of the property. 

The lender should already have a copy of the trust but be sure they do.  Remember, they cannot speak to you about the loan until they have received authorization from mom to do so or mom has passed and they have a copy of the legal paperwork to show that you are now the owner of the property.

Hello Mike,

If the owner must vacate the property for medical reasons, all you need to do is notify the lender and they will take care of the rest.  The information on how to get in touch with them is printed on every monthly statement the borrower receives. 

They will advise you of everything that must be done.  If the owner has dementia, he probably cannot sign a Deed to the lender at this point because he may lack capacity to legally transfer title at this point and if so, the lender would need to proceed with a foreclosure if there is not another individual with power to sign on behalf of the owner. 

Hopefully the borrower has a family member or trusted counselor (friend, attorney, etc.) he can rely on to help him through this process but before he just walks away, I would encourage someone to check to see if there is any equity remaining in the home. 

If so, it would be so much better for him if he could sell the property and put the funds in the bank so that he had them to assist his needs further. 

All you need to do to get a preliminary idea is to compare the balance owed on his latest statement to the value of the home.  A senior specialist real estate agent in the area can tell you a most probable selling price of the home and you can compare that to the amount owed. 

If there is still equity, the senior specialist can usually also help you arrange for an estate sale with people they know who handle such sales and removal of all personal property that the owner cannot take with him and that family members do not want to keep if there is no family to clean the house out, then sell the home (and the owner may wind up with a little more cash from the sale as well). 

The owner may wind up with some much needed cash from the sale of the home rather than just letting the lender take it and it usually can all be handled by knowledgeable professionals without the participation of the owner if he is unable. 

It would require that someone have the ability to sign the listing agreements and the sales agreement if the owner is not capable, but an estate attorney can help you with that as well if you determine there is equity in the property.

Also See: 

Steps for Heirs – How to Repay Reverse Mortgage

Hello Shelly, 

Your dad can add you to title which would probably not affect the taxes but I would encourage you to check with the local assessor or title company to be sure.  However, you cannot add anyone to the existing loan. 

What that means is that there is no problem adding you to title and it would make things easier when the time comes for you to take over the property, but the loan would still become due and payable when dad passes. 

The only way to prevent the lender from calling the loan due and payable at that time would be to refinance the loan in all your names with all of you on title but the loan amount would be determined by the age of the youngest borrower or spouse (presumably you) which might not give you enough money to pay off the existing loan, depending on the circumstances. 

You would need to check on the eligible loan amounts based on all of your ages to see what you might expect to receive to determine if there is enough of a benefit to doing a new reverse mortgage at this time. 

If not, it might be in your best interest to get a new loan now and pay the mortgage down and let the property appreciate for a while until you are a bit older then look into a reverse mortgage at that time.

Hello Bianca,

The reverse mortgage has no effect on how the title will pass to heirs.  Just like any other loan, the reverse mortgage is a lien on title and has no bearing on the rights of heirs after the owner has passed. 

Anyone who may have claim to heirship would have to do the same thing they would if there was no mortgage on the property. 

I am not an attorney and do not know from which state you are writing so I would not try to guess the proper procedure in your state, but it probably includes a probate action wherein you must petition the court that is handling the distribution of the deceased person/couple’s assets and repayment of outstanding liabilities from those assets with your claim. 

If no one came forward to make heirship claim on the property the property with the court and work toward repayment of the debt with the lender, just as would be the case with any loan, the lender would be forced to foreclose on the loan and the property would be sold at Trustee’s Sale or foreclosure auction. 

If no one bid against the lender (who can only start the bidding with the outstanding balance owed on the loan, interest accrued, funds advanced for taxes, etc., plus any fees incurred to foreclose), the property would be awarded to the lender at the sale and the lender would place the property up for sale through more normal sales channels.

Once the lender owns the property, it can sell the property for any amount it desires, it is not bound by foreclosure laws after the foreclosure is completed.

Hello Nick,

The lender cannot charge you anything.  The loan is non-recourse and the only thing the lender can look to for repayment is the property.  I would encourage you to contact your tax specialist or attorney to determine if there is any tax or legal liability to the estate that could affect you.  I don’t know this in your case and could not advise on these matters even if I thought I did have all this information since I am not licensed to give tax or legal advice.

Hello Nicole,

The loan is due and payable when the last borrower permanently leaves the home.  I don’t know how much time passed between your mom’s passing and your notifications to the lender that you were going to pay the loan in full and keep the property.  By the time lenders can obtain the reports they need (including appraisal), notify family and begin a foreclosure process, usually many months have passed.  Once a foreclosure is filed, the fees begin and start to accumulate as the process progresses.

If the lender felt that they had to start the foreclosure either because no one was communicating with them, they did not see adequate progress to feel the payoff was imminent or what, they can do so in accordance with the terms of the loan (or any loan) and the fees are added to the amount to repay or reinstate the loan.  If they followed the terms of the loan documents and the laws of the state in which the property is located, the fees would be added to the amount to pay off the loan.  

The only other questions are if the lender had adequate information, if the lender moved too quickly to begin foreclosure or if there was a breakdown in communication and the time dragged on.  I’m sorry though, not having been part of that action, I could not comment on the lender’s time frame to start the foreclosure, their reasons or your attorney’s actions to keep them from doing so.  

Hello Renea,

I’m sorry, I cannot advise you on this matter.  The reverse mortgage does not have a provision in the loan documents to pay for the relocation of anyone in the property if the lender must foreclose on the loan so the answers would lie in the current policies of HUD, your mother’s lender and the law in effect at the time. 

I can’t speak for other lenders, but HUD does have a “cash for keys” program that they sometimes authorize lenders to use when heirs are willing to give the lender a Deed in Lieu of Foreclosure to mitigate costs. 

Under that circumstance, the lender can sell the home sooner saving HUD money on the claim and so it is often worth it to them to offer some sort of monetary compensation for people willing to accelerate the process.  I have not heard of them offering a monetary payment though if the occupant/heir allowed the process to go all the way to foreclosure sale as they own the property at that point. 

You can check with an attorney to determine what legal rights you may have as a resident in the home.  I cannot advise you there.  And you can always contact the lender and ask if they would be willing to give you a moving allowance for your vacating the property in a short time to see what they say.  The worst they could do is say no to your request.

Hello Erica,

Respectfully, I think you have your wires crossed a little.  The house is not the lenders to sell.  It belongs to your mom or rather her estate now and you are the estate’s executor. 

You really need to seek the assistance of an estate attorney.  The home may need to go through probation but whatever steps need to be done to clear title now, the attorney can guide you through that process. 

The lender will not work with you on the loan unless they have written authorization from the borrower(s) to do so or a court order that you are now the legal owner of the property or entitled to act on behalf of the property but it sounds like it might be in a trust and may go much quicker (the attorney can let you know what would need to happen based on how mom had the legal title and things set up). 

At any rate, while you are working on this, you must remember that the loan is now due and payable.  If there is still equity in the property, you just need to be able to pay off the loan balance (whether by funds currently available to you or with a refinance of the loan which would also require you to be the legal title holder). 

If the loan balance on the reverse mortgage is higher than the current value of the property, then you would need to contact the lender and let them know that you want to pay off the loan balance at 95% of the current market value. 

Again though, you need mom’s prior approval or to be able to satisfactorily demonstrate to the lender that you now have title or authorization to act on behalf of the estate.  The lender would then contact an appraiser to conduct an appraisal to determine what amount would be required to pay the debt in full. 

But in any case, you aren’t “buying” the house and the lender can’t sell it to you because they don’t own it.  Only your mom of someone with the authority to act on behalf of the estate can do that after she passes up until the time the lender forecloses on the Deed at which time the lender would become the owner and then the lender or HUD would sell the home at open market.

HimSteve,

Ultimately HUD will pay a claim for any losses on this loan.  The lender would have to get approval from HUD, but they may believe it is in their best interest depending on the timeframe to foreclose and get the property title cleared to resell versus any work they need to do to complete the process if they have to clear the unit based on the laws where the property is located.

The short answer is that you can always ask them to see what they are willing to do for what level of participation.  The worst they can do is say no.

Hello Judy,

It certainly is legal for your mom to Deed her property to you and then not only can you pay the loan off, but you would be required to at that point because the loan would become due and payable. 

The only suggestion that I would make is to use a title company to make the title change.  Use of a title company to change and insure the title would make certain that there are no clouds on title later if there is anything of which you are unaware, and would ensure that title companies would not later refuse to insure the title. 

There have been instances where title companies would not insure title to a property because a transfer in title was made that could not be authenticated and there was concern that others may have a claim on title.  If you use a title company and have an insured title, you will prevent this from happening in the future.

Hello Patricia,

This is often one of the most difficult things when working with relatives.  I would suggest that you show your sister the value of the home, the cost to sell the property and show her that if the loan goes into foreclosure, she gets absolutely nothing.

Maybe you can offer her some small token just for her time to sign the papers and have them notarized to transfer the title to you?  Otherwise, she loses too and that is never a good thing.

Hello Jullette,

I am sorry, this is a legal issue and you really need to speak with an estate attorney in the area where the property is located.  I don’t know if this property can be exempted and if so, what steps you would have to take. 

In addition, I am forbidden by licensing law to give legal or accounting advice.  An attorney should be able to answer all your questions in this area.

Hello John,

Great question and one that I cannot answer for you.  Usually it’s a matter of how you both took title and the vehicle you put in place for assets upon death in advance. 

Most states allow people who are not married to take title as individuals with and without right of survivorship which means that with right of survivorship, the surviving person on title would take the ownership of the entire property should one of the two passes first. 

Without right of survivorship would mean that the interest in the property would pass to the individual’s heirs and not the other person on title.  Some states have specific and strong laws with respect to heirship.  And it might all depend on what, if any, trusts, wills, etc. you both had in place before the passing of the second individual. 

You really need to contact an attorney to have your title examined and compare to local and state laws to see in which circumstance you will find yourself if you did not specifically spell that all out in advance and to be sure that the state doesn’t have restrictions on your planned division.

Hello Herb,

I’m sorry, I can’t possibly answer this for you.  The right of any heirs really has nothing to do with the mortgage on the home but rather the laws of the state and the intention of the owners based on whatever they put in place (wills, trusts, etc.).  I really must refer you to an estate attorney in your area for the answer to this and any other estate type questions as we are forbidden by licensing law from giving legal or accounting advice.

Hello Darrell,

Dealing with family can be so difficult at times.  The home will go through foreclosure and he will lose his free haven regardless of what happens so if it is better for all concerned, you can explain to him that you need to do the sale and his staying won’t be permanent anyway. 

If that doesn’t work and he won’t listen to reason, who is the executor of the estate or the title holder now?  That individual can probably have him evicted and you should speak with an attorney to determine the best and fastest method in your area to achieve that.

Hello Brenda,

If the heating system you are referring to is a free-standing, plug in heater, that is considered personal property and you can, and should take all your father’s personal property from the home.

If you are referring to a built-in system, that is part of the real property and is a part of the home.  Any parts of the home that you remove (plumbing, built in appliances, wiring, etc.) would be an act of theft and you could be prosecuted by the lender or HUD.

If you are on title, live in the home and are on the original loan, you can remain in the home for life without making a payment.  You are still bound by the same terms.

You must make the payments of taxes and insurance on time and maintain the home in a satisfactory manner, but other than that, you have the same options as any owner/borrower to also sell the property or walk away and let the bank take it if you are not interested in staying.

Hello Kathleen,

If you choose to walk away from the property, it will not “pay off” the loan but the only recourse the lender has is the property.  It would mean that you would not have the eligibility to get another HUD insured loan while there was an outstanding loss on this one, but that is all.

The lender and HUD cannot go after any other assets of yours or your estate.  As far as your children are concerned, HUD cannot ever look to any other family member for repayment of the loan.

If you keep the home for now and you still own it when you pass and your children decide they do not want it, they have the same option. 

They can allow HUD to take the home and HUD still cannot look to any other assets of yours or your estate to repay the obligation at that time (and they never could try to force your children to pay).

Once a house has been sold, the bank and HUD can sell the property for anything they agree upon.  There is no obligation to sell to a former owner for 95% of the current market value, but you can put an offer in for any amount you want at that point and you may be surprised, they might even take less. 

At that point it is just a sale between a seller and a buyer, subject only to what the buyer is willing to pay and the seller willing to accept.

Hello Carlos,

The reverse mortgage is a loan.  The loan is now due and payable if your dad is not an eligible non-borrowing spouse.  Your dad has the same rights as he would with any other loan with regard to the property after mom’s passing, but he needs to take swift action because the loan is now due if he is not an eligible non-borrowing spouse. 

Dad or the family would still have to do whatever steps are required of you within the state if dad is not currently on title still (probate, etc.) and so I would encourage you all to contact an estate attorney right away to determine what steps you need to complete to transfer the title. 

You cannot apply to new financing to pay off the reverse mortgage or sell the property or anything until you have the title and an attorney can walk you through the necessary steps so that it happens in the shortest amount of time.

Hello Janet,

There are no changes to the terms of the loan after it is assigned to HUD.  There is a mandatory assignment to HUD when the loan reaches certain limits but that does not affect the homeowner. 

You can remain in the property and you will continue to receive any benefits/payments under the terms of the mortgage after assignment as you did before the loan is assigned to HUD.

Hello Tommy,

A reverse mortgage most likely will not give you enough money to pay off two different siblings (roughly 67%).  And even if you were old enough to get the amount necessary to pay off both, unless there were liens on the property, the loan would not be available to you all at one time. 

I am afraid I cannot give you legal advice and we do not keep a list of attorneys nationwide and it would be best if you contacted an attorney who specialized in estate law in your location.

Hello Lita,

I am afraid I cannot be a whole lot of help to you on this except to say “maybe”.  Your realtor cannot request a copy of any appraisal the lender does, but I believe you can if you are now on title to the property.  If you think this would help, contact the servicer and ask for it. 

The question about extending the deadline for the sale is another one I cannot say with any degree of certainty.  You see, there may be several reasons the lender would or would not approve it. 

The bottom line though is that if the lender and HUD believe the offer is a bona fide, market value offer, they have no reason not to try to allow the sale to proceed. 

They don’t want to take the property and would much rather see it sell now than to complete the foreclosure just to turn around and sell it themselves later for a similar price. 

If, however, they believe the offer is well-below market and by accepting the offer they would take too large a loss,  they may not be as inclined to allow the short sale to commence knowing they are accepting less than what is owed from the start. 

In that case, they may feel as though they must continue the foreclosure and sell the home themselves to mitigate any further losses. 

And about the additional delay, that may very well depend on the delay itself.  If they look at this as a delay tactic with additional risks, they may be inclined to deny it.  I just have no way to know what all the circumstances are or how they will be perceived by the lender/HUD.

Hello Connie,

The loan is exactly that…a loan against the property.  If you inherited the property, then you now own it and can do with it as you please.  You can sell it or live it in or rent it out but whatever you choose to do, you have to remember that the loan is now due and payable so you need to plan for paying the loan back if you plan to keep the property (if you sell it, the title company will pay off any liens of record at closing). 

Remember to do this you will need to hold title to the property so if you have not already done so, you need to take the appropriate steps to secure title (you should speak to an estate attorney in your area, it could require a probate action or possibly just a certification of trust – the attorney will tell you what steps you need to take). 

You cannot sell the home or take out new financing to pay off the reverse mortgage until you have title in your name so that would be your first concern.  Then if you want to sell the home, you can certainly do so. 

Hello Samara,

I’m sorry, I don’t understand why he must come up with the funds.  Is he behind on his taxes?  Borrowers with reverse mortgages do not have to make any payments for as long as they live in the home, but they do have to keep their taxes and their homeowner’s insurance current. 

Do you know if he has done this?  If he has, you need to help him find out why he must come up with any money at all.

Secondly, if it is the taxes on which he is delinquent, you should check with the county in which the property is located to find out if there are any tax programs for which he might qualify. 

Many locations have tax assistance and even tax abatement programs for which he might qualify, especially if the home has historic significance.  Just remember though, it cannot be a tax deferral, it must be a program where the taxes are not due but paid in full at a lower rate or waived due to his qualifications.

And finally, perhaps the family can all get together and set up a program to assist him as well?  I don’t know if you have siblings or other family members who can also help but again, if the issue is unpaid taxes as I suspect, this has taken a while to build that high a balance, so he is a way behind. 

You need to investigate any possible opportunities available as quickly as possible and that will include possible county/local programs as well as any family support.

Hello Gregorio,

I can only guess what the agent means by the comment.  Perhaps the agent is saying that the home is currently in the process of foreclosure.  In that case, it would still be owned by the borrower or the heirs and they can still sell it. 

You may have to be able to complete the sale quickly though if it is in the final stages of foreclosure.  It could be that the home has already completed the foreclosure process and is owned by the lender.  If that’s the case, the lender would be looking to sell the home and you just need to negotiate with them. 

I really don’t know what the agent is telling you but you should ask him/her to elaborate and also ask if there are any opportunities to work with the owners or the lender if this is the case and you really want the house.

You should do what works best for your circumstances.  You know that you will have to sell the home by the sound of your question and if by taking funds now it will make it easier to sell (and quite possibly bring a higher sale price as well), that might be a good strategy for your family.  

You won’t accrue that much interest in less than a year, just realize that the sale must take place and you can’t keep delaying once dad is no longer living in the home.  I would hate to see you lose equity because people became complacent when they had some cash in the bank and didn’t feel any urgency to complete the sale to repay the loan.  

That would only cause you to leave cash on the table if the lender ultimately foreclosed because the house was not sold in a timely manner.  One other thing, have dad add you to title now as well as sign authorization with the lender for you to contact them on behalf of the loan so they have that on file while he still can.

Yes.  He should contact the servicer, let them know of his situation and ask what he needs to do to Deed the property so he can leave.  They will require the home to be completely empty of all personal property and be “broom clean”.  But then he can leave the home and the lender should be able to accept the Deed in Lieu of Foreclosure.  

Hello James,

I would suggest that you seek the advice of an attorney if you believe the loan was improperly closed.  The entire loan would have stated the names of the borrower(s) and hopefully you have documentation as you what the agreed upon parameters were to be. 

The lender cannot do a loan to someone not on title and if you did not live in the property, you would not have been eligible under the terms of the reverse mortgage.  They can add you to title in the course of the loan, but just adding you to title would not add you to the loan or stop the loan from being called due and payable when mom passed. 

Were you also 62 at the time and living in the home as your primary residence?  If so, it would have made the proceeds lower with your age being much less than mom’s but otherwise, there would have been no reason you could not have been on the loan as long as mom was willing to add you to title.  So much that the attorney will have to know in order to advise you. 

I am confused though.  You said your mom did not apply for the loan.  If she did not apply, how did the lender get her information for the loan application package and why did she sign the application package and later the loan documents? 

And when signing either one of those, if you were supposed to also be the borrower on the loan with her or on the loan instead of her, why did she sign them at all or sign them alone?  There is so much the attorney will have to know if he is to help you.

Hello Curt,

The lender will take the property back and you and the other heirs will owe nothing on the loan.  Taxes and other assessments may create other issues including taxable issues on which I cannot advise you.  I would strongly suggest that you contact an estate attorney or tax specialist to determine the effect taxes or other unpaid assessments will have on the estate.

Hello Cheryl,

If you remain in constant contact with the servicer giving them the updates and showing them that you are taking all steps necessary to complete the payoff of the loan at the end of the probate, I believe they will work with you to finish the transaction - providing that delay is not indefinite. 

The lender and HUD do not want the home and if they must foreclose, they know the costs of the foreclosure and the resale will be no better than selling to you for 95% of the current market value anyway. 

However, if it starts to appear that the payoff is not a certain event, that is, the probate or your approval is just dragging on and they cannot verify that your intentions will result in an actual loan and payoff, eventually they will have to take steps to protect their interest and that would include beginning the foreclosure process.

When all borrowers on the loan have permanently left the home or the home is sold.  That can be by leaving the property due to moving to another location, assisted living or by death.  The loan can be called due and payable before a natural maturity if borrowers do not meet their obligations more specifically pay taxes insurance and reasonably maintain the home.  

Good Morning,

If there is no will or trust to which you can refer, you would have to go through probate at which time you would present your claim for heirship as would any other potential heirs. 

The court would award the property as they deem appropriate in accordance with the law if there are no written instructions from the owners to instruct differently (and I understand that they can sometimes change based on challenges but that is a legal matter on which I am not fully prepared to discuss). 

I would say that you would want to go through the probate process and obtain the title to the property before you pay off the loan to be sure you will be the owner before you expend the cash.

Hello Susan,

HUD made changes to the program in 2014 and again in 2017 that fix both issues for you.  Firstly, your husband and you will now get the reverse mortgage together and you will be considered the “eligible non-borrowing spouse”.  You will not be on the loan as a borrower but will be eligible to remain in the home for life as well. 

This was the change from 2014.  HUD issued their Final Rule which became effective in September of 2017 which now allows (among other things) other individuals on title to remain on title and no longer must Deed off their interest to the property, even if they are not eligible for the reverse mortgage loan.  There are some things they must do to acknowledge the loan and that they are aware of all the terms, but your son can remain on title now. 

The biggest thing of which your son must be aware is that he must be able to repay the loan when you both permanently leave the property and the loan is due and payable or would have to sell the property.  The loan will be due at that time and failure to repay the loan would result in the lender initiating a foreclosure action.

Good Morning,

If you have other family members on title with you or if there are heirship issues, I certainly cannot give you legal advice on what you can or cannot do to remove them from title.  I do not know if there is any legal precedent for the removal of a family member from title and I do know that some states such as Texas, have very strong Heirship laws. 

I would strongly suggest that you do contact an attorney though because I don’t know who purchased the home, who paid for the home or why your heirs are withholding consent.  The attorney can certainly tell you if you have any other recourse and if the courts can force the sons to comply or if you can have them removed.

Hello Larae,

I am sorry but I really must refer you to an attorney to answer this question.  This does not pertain to a reverse mortgage and is legal in nature and therefore, is one we cannot answer. Aside from the fact that different states have different laws regarding ownership and heirship rights that we could not possibly follow as a lender, we are forbidden by licensing laws to give legal and accounting advice. 

If you feel that you cannot afford an attorney, I would suggest you do an internet search to see if there are any free legal or paralegal services in your area that you might be able to use.

Hello James,

The reverse mortgage does not affect or change the circumstances that you would need to fulfill in order to purchase mom’s home.  The issues that may become an impediment which could keep you from achieving your goal are not related to the loan and so I may not have any insight for you. 

I am not personally aware of any programs offering the children of elderly parents’ free cash to purchase their homes.  I do know that FHA has programs with as little as 3.5% down for purchasing residential property and I also know that even if mom has no equity in the home,  heirs have the right to repay the loan and keep the house for the lesser of the amount owed or 95% of the current market value. 

So, the real issue that may keep you from being able to purchase the home would be the in ability to qualify for a loan due to credit problems or other qualification criteria (i.e. income, employment history, etc.).  FHA does not require borrowers to have perfect credit, but they are looking for borrowers that are generally sound credit risks. 

Since we do not originate forward or traditional loans, I would advise you to contact a conventional or forward loan officer to discuss your income and credit profile to determine if with documentation and adequate explanation you would qualify. 

Other than that, I am afraid I have no magic solution for trying to overcome the difficulties of purchasing a home if you do not have the necessary qualifications.

Hello Nate,

This seems to be a very popular question.  There are a couple of issues here.  One of title and one of the loans that becomes due and payable.  The first thing that any heirs who wanted to keep the property would have to do would be to obtain the title of the home.  This might already be directed by the family member who passed, or it might be contained in a trust, but it would probably need to go through a probate action.  If you are looking to have the title transferred to yourself or other family members, I would strongly recommend you contact an estate attorney.

The reverse mortgage is another issue though.  If your question was can they move into the house and live there under the terms of the existing loan while making no payments, the answer is definitely not.  The loan becomes due and payable once the last original borrower on the loan is no longer living in the property as their primary residence. 

Regardless of whether you transfer the title or not, the loan will be due and payable when none of the original borrowers are living in the property.  If you are going to keep the property rather than sell it, this would mean you would either need to have the funds available to pay off the existing reverse mortgage or would have to refinance that loan with a new loan in your name.  And you obviously would need to have the title transferred in order to be able to obtain the new loan. 

So, the technical answer to your question is yes, family members can live in the home because the house still belongs to the borrower or their estate.  But the caveat is that the loan becomes due and payable.   If you do intend to remain in the home, you need to be sure you have plans in place to pay off the reverse mortgage, whether that is with funds you have available or with a new loan. 

Good Morning,

You probably would not be able to pay off the existing loan with a HUD HECM reverse mortgage, but may be able to with one of the new proprietary, jumbo reverse mortgages depending on the actual value and the state in which the property is located,  I would suggest that you visit our Jumbo calculator at  to see if the jumbo programs will work for your circumstances.

Hello Stacy,

Ordinarily, I would say that a reverse mortgage is a non-recourse loan and that a borrower’s heirs can never be made to pay for any shortfall that the sale of the property will not cover, and that verbiage is in the loan documents.  But the way your question is phrased gives me reason to pause and I think I should possibly make a couple of qualifying remarks. 

Firstly, the borrowers on the loan were the ones who signed all the loan agreements and were the ones who agreed to repay the obligation or pledge the property for security, not the borrower’s heirs.  Therefore, the borrower’s heirs have never agreed to accept any liability for the repayment of the loan. 

Likewise, the family cannot be held responsible for the way the borrower(s) maintained the home.  However, having said this, I am aware of instances in which family members either ransacked homes, vandalized them and stripped them of anything of value (including copper piping, wiring, air conditioning parts, built-in appliances, etc) when a family member passed.  In all honesty though, these instances were not on reverse mortgages and occurred several years back.  In these cases, when the lender foreclosed on the home, the property was worth many thousands of dollars less due to the damages inflicted on the property by the heirs. 

The family members causing the damages were found responsible for the condition and were sued for damages to the property.  So when you ask if the heirs responsible I guess I would have to temper my response with the caveat about assuming that the condition is not something that is totally substandard as a direct result of something attributable directly to the heirs. 

Even then, I am not sure what the foreclosure laws in each state would allow a lender to seek in damages so I would just say that heirs would have no concerns about liability as long as they are not the result of property issues but would caution them against directly contributing to anything that lowered the condition of the property to a point below the amount owed on the loan if you were planning on allowing the lender to foreclose.

Hello Elliott,

I cannot give you an accurate answer.  Florida changed their foreclosure laws in 2018 and now all foreclosures are judicial.  Depending on court calendars, a foreclosure can be completed in about 180 – 200 days in most instances but that does not necessarily mean they will.  You should contact an attorney about foreclosure laws, what the HOA can and cannot do since there are rules and borrower rights that I cannot advise about because I cannot give legal advice. 

Not only am I not licensed to give legal advice, I am not fully cognizant of all current legal conditions in Florida and you should consult with someone who is.  If you feel that an attorney is not within your budget, there are often free legal aid services available and perhaps there is one local to you that would be a better source of information.

Hello Carla,

The loan will now be due and payable and there is no monthly payment option for heirs.  If you do want to keep it and wish to finance the loan though, you can refinance it with a conventional loan.  If mom left no will, you should contact an estate attorney to have the property probated. 

If you have access to her home and her paperwork, there is a monthly statement she has been receiving that she should have or will be receiving every month that you can review to see what she owes on the property and can compare against the current value to determine the current equity position. 

If you want to keep the home, you always have the right to pay off the loan at the amount owed or 95% of the current value, whichever is less.  If you think that the value might be a determining factor as to whether you want to keep it or not, you may want to look at her statements and verify the value of the home before spending money on an attorney to go through the probate process.

Good morning,

The lender will accept a payoff equal to 95% of the current value or the loan amount owed, whichever is less.  If the amount she owes is more than the value of the condo, they will allow you to pay off the loan in full for 95% of the current market value of the property.

Hello Kahari,

If the lender must foreclose since the heirs are unable to come to an agreement among themselves, the foreclosure references the original Deed or Mortgage which secured the property, not the current owners on title.  In other words, the foreclosure would be against your mother and even then, since she has passed, lenders do not report the foreclosure to credit companies as there is no reason to do so.

However, I really think the other heirs should try to talk to the hold-out heir.  If the property will be lost at foreclosure sale anyway and he is taking no action to repay the obligation, why would he be unwilling to sign the Deed?  Is he thinking that the others are bluffing, and someone will step in and pay off the loan even though he is still on title? 

The other heirs cannot get a new loan to do this without his involvement since he is also on title and unless someone has the cash to repay the loan, he is ensuring a total loss for all family members.  If there is equity in the home, perhaps someone can buy out his portion of the equity (minus normal selling costs) in advance to get him to sign?

Hello Myra,

I am afraid I cannot answer this for you because it is a legal question concerning the rights of heirs and not a question concerning the loan itself.  I would encourage you to talk to the rest of your siblings though and find out if there is any interest by the others.  You may find that with the loan that now must be repaid, none of the others are even interested in the probate process and keeping the home as you are and might be willing to sign over any interest to you. 

The first step after you check with your siblings would be to check the outstanding balance of the reverse mortgage and compare it to the approximate value of the home to determine the equity in the property (and you will probably even need this information for your conversations with your siblings). Remember, even if there is no equity or if the amount owed is higher than the value of the property, the lender will allow you to pay off the loan at the amount owed or 95% of the current market value, whichever is less if you want to keep the property so you won’t be at a loss.

Once you know what your siblings will and will not do as well as what the equity in the home consists of, you can contact a licensed attorney who handles probate and see what steps you need to take to have the title transferred to your name so you can get the necessary financing to repay the reverse mortgage that is now due and payable.  You need to work quickly on determining what you plan to do as the probate may take a little while as well as getting your entire family on the same page and the lender will not wait forever before they start foreclosure proceedings if there is no progress toward repayment of the loan.

Hello Denise,

There are no specific instructions that dad must put on the Deed to satisfy the reverse mortgage and he can add you to title at any time giving you right of survivorship when he passes.  You just need to be sure that the Deed does not grant all the title to you at this time (removing him from title) as that would be grounds for the lender to call the loan due and payable immediately.  He can add anyone to title he chooses, but if there is not at least one of the original borrowers remaining on title with whatever Deed you use, the terms of the loan allow the lender to call the Note immediately due and payable.

If dad’s illness is physical and he still has all his mental capacities, he can add you to title with no issues.  If dad lacks capacity (he is mentally impaired at this time) and there is no Power of Attorney which he prepared prior to that incapacity that survives any illness/incapacity, then it would probably take a court order at this time for you to be able to change anything prior to his passing.  That is a legal question though and not pertaining to the reverse mortgage rules so I would encourage you to seek counsel from a licensed attorney to determine what you can and cannot do at this time. 

I would also suggest you seek assistance from a licensed attorney for any title change to be sure that the change does not create any unintended adverse consequences.  For example, there may be a trigger for reassessment of the property that could raise taxes if not done in a certain manner.  Many times, uninsured Deeds which are transfers outside of title companies cause clouds on title later and make subsequent sales or financing difficult.  A good real estate attorney will make sure that you don’t do anything that would hurt you later simply because you were not aware possibility even existed.

Good Afternoon,

Until such time as the property is accepted and the title is passed, the property still belongs to you and all liability and obligations are yours (just as any equity would have also been yours).  You should check with an attorney in your area though to determine what that means as far as what exposure that gives you. The loan is a non-recourse loan meaning the lender can never look to any other asset to repay the loan.  I cannot tell you what rights any other parties may or may not have about the property. 

For example, if you let the homeowner’s insurance lapse, someone gets hurt on the property while you are still the owner and you do not have insurance, I cannot tell you what liability you may or may not be subjected to there either.  I would think that the only time you could be certain that you have no more liability whatsoever would be when the title passes, but I cannot advise you that this is true and would advise that you check with an attorney in the area to be certain.

Hello Linda,

It may but I can't tell you for certain.  The lender must first determine that there are no other title issues including the veracity of the Deed.  If there are any other possible claims on title, they must complete a foreclosure to protect their interest and not incur any other debt.

Hello Callie,

I am afraid I cannot tell you when this will be, but it could be any time now.  HUD must be involved in the decision to foreclose and the last thing they want to do is remove a family from their home so that is working in your favor, but they will not wait forever.  I don’t know how much your parent’s taxes are, but I would think that unless they are exorbitant, paying the taxes would be less expensive than moving into another location. 

You mention utility bills as well though and I have no way to reconcile the costs of their taxes and utilities, what repairs are needed and what that compares to moving or the costs of another place to live.  But the home they are in, regardless of how underwater the loan is, will never cost them another mortgage payment. 

Are there any local programs or groups who can help mom and dad?  If you can find a non-profit or if there are other family members who can help complete the repairs and if the taxes are not too high, it might still be much less expensive for them to live where they are. 

I don’t know if they belong to a local church or if there are others available or even what one year of their taxes comes to, but you do not have to worry about the amount of the shortfall as they never have to repay that amount so the amount that you need to see if you can help mom and dad get covered is a year’s taxes, utility bills and any needed repairs.  I would start with the internet and see if there are local groups in the city that can help with the work and go from there.

Hello Ran,

We receive this question a lot and I think it is very important to note some distinctions here.  Firstly, the reverse mortgage holder or lender does not have a right to just evict a tenant or any other person living in the home after the last person on the mortgage passes or is no longer living in the home.  The lender does not own the home.  The borrower or the borrower’s estate owns the home.  If the borrower passes, then the borrower’s heirs would have to decide whether they wanted to pay off the loan and keep the house, sell the home and keep the equity or walk away and owe nothing. 

If the son you reference is the heir, he would have to work with the probation process in the area to have the title switched to him.  If there are other family members who would rightly inherit the home, they would have to have the title to the property changed.  It would be up to the new title holders as to when any existing residents would have to vacate the premises. 

If no family members wished to keep the home or sell it, the lender would eventually have to foreclose on the loan and once the lender gained title through a foreclosure sale, then and only then could it vacate the property after it owned the home.  How long that entire process would take depends on the area in which the home is located, and all the steps required of the lender. 

It could be as quick as 5 to 6 months and could take over a year.  You would be more well served to check with a local real estate attorney to determine the most likely timeframe in your area if you are the heir but do not intend to take possession of the property and intend to let the lender foreclose on the home.  If you are aware of other family members who will be taking title, you should contact them about timeframes.

Hello Letisia,

You have two issues you must concern yourself with now.  Firstly, you need to get the property into probate to have the title transferred.  If you do not have funds for an attorney, there should be free legal aid services available to assist with this process.  The second issue you need to start on immediately is that fact that the loan will now become due and payable. 

From what you are telling me, it does not sound as though your brother will be able to refinance the loan to repay the reverse mortgage that is now due and payable.  If this is the case, I would suggest that you consider listing the home for sale so that you can use the sale proceeds for the housing and care of your brother. 

Hello Laura,

Whatever they did not borrow, they do not owe.  Any equity in the property still belongs to your parents’ estate and therefore to their heirs.  The loan becomes due and payable now and so anything they did borrow plus any accrued interest will be due, but then the heirs will have to decide if you want to pay the loan off and keep the home or sell the property.  Either way though, the equity belongs to the heirs, not the lender.

Hi Candice,

This is a legal question regarding ownership transfer, and I am afraid I cannot give you legal advice.  I can, however, possibly point you in a direction that would help.  In most areas there are free legal aid services available to folks over 55 and I don’t know where you are located, but I must believe those services are also available to you.  This is not a terribly difficult issue and it can probably be resolved by a paralegal or someone familiar with title issues in your area.  I suggest that you do an internet search for free legal aid in your area and they should be able to assist you with the steps to have the property probated (if that is needed) and the title transferred.

Hello Bernard,

I cannot give you legal advice and must refer you to an attorney for this.  I hesitate to try to even guess what might be going on without any information at all.  All HUD HECM reverse mortgages are “non-recourse loans” and it specifically states this in the legal documents.  I don’t know when your mom first closed her loan, if it is a HUD insured reverse mortgage or if it is one of the private loans that was available in about 2010 and before. 

I honestly don’t know how anyone can try to enforce payment of a debt on you when you never signed anything promising to pay, if that is even what they are doing here, but I would not just ignore the notice.  And the terminology “…if such right exists” could be the most telling because if no right exists, it could just be notifying you of the action being taken.  But I strongly advise you to contact an attorney to find out.  If you need to file something to be exempted, the attorney can also advise you there. 

Hello Jim,

Let’s start with the probate.  You must change the title from dad to you in any case and the only way to do that now is to go through probate unless dad Deeded the property to you before he passed.  I would strongly recommend you contact an attorney who handles such things to see what advice he/she gives you because it’s not always a quick process and it may be best to get it started quickly.

The lender will obtain an appraisal of the home.  The appraiser will take all the condition adjustments into consideration when determining the current value.  Probably would not hurt to be available when the appraiser is there.  You cannot by law suggest a value, but you can be sure the appraiser is aware of all the deferred maintenance and needed repairs and adjusts the sales accordingly.  HUD allows heirs to walk away from a home that is underwater and owe nothing or you can choose to pay 95% of the current market value if that is less than what is owed.  HUD knows that if they must foreclose and sell the property, they cannot sell for more than current value and therefore, they are helping heirs and doing about as well as they would anyway by selling at the 95% mark.

Your last question is one I honestly cannot answer.  I would imagine that it will all depend on the time it takes to sell your home.  The lender will not be able to wait forever to start the foreclosure proceeding.  They know that even if they start a foreclosure right away, between the appraisal and the foreclosure laws, it will take a minimum of 6 months to complete and possibly longer.  If they wait 6 months or more to even start and then you change your mind or cannot complete the sale for some reason, they could be out another year or longer and still not be ready to take the property back and cut their losses. 

If you have a set plan and can give them a definite time frame for completion, you are much better off getting them to work with you.  If you are planning on just asking them to delay with no set time that you might be able to consummate the transaction, I do not know how willing to delay they would be.

Hi Pat,

I have never specifically asked a servicer about this issue, but I believe it is for your protection.  The senior community is targeted for fraud and abuse more than any other segment of our society.  By receiving such a letter, the lender can determine that any requests for payoff are legitimate and can proceed accordingly when your title company sends in a beneficiary’s demand request. 

I’m not aware of any grounds under which they could refuse to allow you to sell your home thereby paying off the loan if you did not write such a letter, but with the added safeguards that lenders employ to protect senior borrowers, it just might create a delay later if you chose not to do so and they had to take additional precautions prior to the closing.  I believe the letter just puts them on official notice that the actions you are taking are your own and that you want them to cooperate with any requests they may receive accordingly.

Hello Elliott,

I get this question or one very similar to it quite often.  I cannot really advise you on this and suggest that you contact an attorney in the area for legal advice.  The laws may give the HOA different rights and about insurance, I cannot begin to tell you what liability you might have if someone should become injured on the property, especially while your family member is living there with no insurance. 

If the insurance lapses, the lender would force-place a policy that would only cover its interest and would not cover any contents or liability.  I do not know and cannot advise you of what that might do to your family member, your parents’ estate, etc. 

Hi Lori,

I am afraid this is a question for the attorneys and ultimately probably the courts, not for the lender.  The type of loan has no bearing on the legal rights of heirs and therefore, I could not begin to guess how the courts might rule on their rights to any funds you received in a loan together.  I really do suggest you talk to an attorney sooner than later as these things have a way of getting out of hand if left unresolved. 

It may depend on what the funds were used for, how the title was held (jointly with right of survivorship or as tenants in common with separate interests), any wills or agreements between you and the other party, local and state laws concerning rights of heirs, etc. 

The court would have to take all this into consideration to determine whether your co-owner’s heirs are entitled to anything at all (or when).  I can’t tell you how the courts may or may not consider the loan type or any claims family members might have on any remaining funds, if there even are any funds remaining from the loan.  Something to research.

Hello Colleen,

I am a little hesitate to advise you on this.  If she is also on the loan, her name should also be on the checks.  I would advise that you have your mom check her loan documents as soon as she is able to be sure she was also on the loan and that she and her husband did not have her excluded for some reason (i.e. she was not yet 62 at the time). 

The las thing she wants to do is to wait thinking everything is fine and then find out later that she forgot that she came off title and was not included in the loan and that now the loan is due and payable but since she waited, she has only a short time to decide what she will do.

If she is on the loan and there is some other reason the lender is just not including her on the checks, I would suggest you just have her continue to deposit them into an account with your father’s name on it as well with the instructions to deposit only but that will not last long so you really need to resolve the loan issue as soon as possible.

Hi Jeff,

There is no provision in the loan for a set timeframe to turn simply sign the property over to someone else and absolve yourself of all responsibility.  Your aunt owns the property and the reverse mortgage is a loan against that property.  It is not a promise to buy or relieve her of her obligations within any certain time period.  I say this because 3 weeks is a fairly short time and a lender cannot do a title search, an appraisal and everything they need to do in 3 weeks to determine if they can even accept a Deed in Lieu of Foreclosure.

I don’t know if the family has checked to see if there is any equity left in the home for a sale, but I assume that was done or you all would have sold the home and kept the equity for benefit of your aunt – is that correct?  If so, if your aunt still owns the home, whether she has a loan on the property or not, it is still her property and her asset or liability until such time as the lender can decide to accept the Deed if that is possible. 

The lender must conduct an appraisal, they must perform a title search, a property inspection and there are other duties it has to HUD.  If there are any additional liens on title, or the home is not clear of personal belongings and “broom clean”, the lender cannot even accept a Deed in Lieu of foreclosure.  If it were to do so, it would also accept the liability of those liens and belongings.  The lender is protected under foreclosure laws but to receive those protections, if the property is not ready for them to just take possession with no other liens, they must go through the foreclosure process to receive the protections under the law.

About the utilities, if your aunt is no longer living there and the heat, water, electricity etc. are on very low, they should be receiving very little usage and be of minimal amounts.  If you choose to cut the utilities off entirely or fail to pay for the insurance on the home, you could incur other issues that may affect your aunt individually especially if someone was to go onto the property and become injured. 

What you ultimately do will be your choice, but I would advise to find a way to lower the costs as much as possible, but I would not advise turning anything off until you have been told it is ok to do so.  Remember, the lender did not buy the house and it is not their responsibility.  The fact that your aunt would like to leave at this time is entirely her choice, but any repercussions from that decisions would be hers, not the lender’s.

Hello Guinevere,

Mom would never have to declare bankruptcy as a result of the loan under any circumstances.  The reverse mortgage is a non-recourse loan which means that the lender has only the property to look to for security for the loan.  Even if there is not enough equity left in the property to repay the loan, mom does not have to worry about bankruptcy. 

The church though does have to determine if the donation is worth accepting.  If there is equity in the property, they still must repay the loan that is now due and then they can do with the property whatever they wish.  If there is no equity left in the home, they may feel that it is very kind of your mom to want to make the gift, but with no equity in the home, there is nothing left to gift to the church and the hassle of selling the property is not worth the effort. 

The first thing I would do if it was my mom would be to contact a local realtor and ask the most probably selling price of the property.  Compare that to the amount owed on her last statement.  If she owes less than the amount the property is worth, contact the church to determine if they have the resources to pay off the balance until they can sell or use the home.  If not, they will lose the home to foreclosure when the lender calls the Note due and payable. 

If the property is not valued higher than the amount owed, then you may want to consider contacting the lender and just letting them take the property back so that mom and the family don’t have to worry about selling for no gain (either for the church to use the property or the cash).  And again, even if you let the lender take the property back, mom does not have to worry about bankruptcy or other measures and neither do the family or the estate.

Hi Sally,

Transferring ownership of the property and the payment of the loan that is now due and payable are two different things.  Your mom owned the home and from your comments I can’t tell if the house was in the trust at the time or not, but either way, the loan became due and payable when mom passed.  You need to make provisions to repay the loan by either refinancing the current reverse mortgage, paying it off with other funds available to you or selling the property to pay the loan balance due. 

The attorney can work with the title in order to allow you to do all of the things you need to do to perfect the title in your name (after all, you can’t sell or get a new loan until you have successfully transferred the title from mom’s estate to you), but that doesn’t change the need to pay off the loan.  It came due the day mom no longer lived in the home.

There is no 1 year right to pay off the loan or stay in the property without paying.  If you are in the process of selling the home or refinancing now, you can work with the lender and they can usually grant you up to 6 months to sell with 2 possible 90 day extensions as long as they see that you are progressing toward that goal and depending on how long it’s already been since mom passed.  I don’t know when your mom passed or how long it’s taken the attorneys to get through the courts to change the trust, but that is usually not a process that happens overnight. 

Depending on how long it’s been since your mom passed, you may be running up against the end of the time the lender and HUD are willing to wait to see what you are going to do with the loan and the property, but I can’t say.  If you do have a plan in place to pay the loan off whether with new financing or by sale, I would certainly present it to the lender and request the extension.  Even if they do begin a foreclosure, it still takes months to complete the process, so you are not out of time, but it is best to work with the lender to get them to stop the filing if possible because once that happens, you also incur additional fees.

Hello Irene,

The first thing I would do if I was in your shoes is, I would check to see the current listings of all homes in the area that are like your father’s home.  Then I would look at all the sales over the past 6 – 12 months of properties that are also very similar to your father’s house.  Make sure you are looking at houses that are truly similar in size, bed and bath count, condition, etc. 

The closed sales will give you an idea of what homes like your dad’s house, that is ones that are the same size and age in similar condition, have been selling for recently.  The listings will show you if they are selling for less now.  Don’t be fooled by a higher listing because people can list for anything, they want but it doesn’t necessarily mean someone will pay that price.  Lower listing prices may very well indicate a lowering of the values from previous sales though because they tend to indicate that the sellers are starting at a lower price than previous sales, not higher which also indicates the sales prices will be lower.

Next, wait for the lender’s appraisal to come in.  As the heir, you have the right to pay off the loan at the lower of the amount owed or 95% of the appraised value.  In other words, if the property is worth less than the amount owed, you can pay the loan off in full for a lower amount than owed if you pay 95% of the current appraisal.  Then it is entirely up to you.  If you like the house and you want to keep it apply for a standard forward loan and keep the home.  If you like the area and you know all the issues with this property, it may be better for you than some other property where you are going in blind and not knowing any hidden issues, but that is entirely your call. 

The lender and HUD will typically grant the extensions you reference if they believe you are acting reasonably in your efforts to sell.  For example, if all the other sales in the area are selling for $100,000 and you have the home listed for $150,000, they will talk to you about your expectations and if they believe your actions are not in good faith (listing the home at well over current market just to delay the outcome), they are not under any obligation to grant the extensions. 

If, however the listing price is reasonable and they see that the sales are taking a little longer, it doesn’t do them any good to foreclose and then start all over again for the same expected outcome.  They also would rather have you achieve a successful sale and the loan paid off so they are much more willing to work with you to get the property sold.  It’s all about communication and showing them that you are operating in good faith.

Hi Laurie,

The bank is not interested in “buying” your mom’s house which would essentially be the case in that scenario.  The loan is intended to give her access to funds up to the available line of credit for as long as she continues to live in the home as her primary residence.

If she has a reverse mortgage on the property and she is still living in the home, if she still has money left available to her on the line of credit, she can continue to draw from the line.   There is no provision of which I am aware that would dictate how soon after making a final draw on the line that a borrower could contact the lender and notify them that they had vacated the property. 

Depending on the amount of the draw and the proximity from that draw to the notification, I am not sure that the lender and HUD may not investigate to determine if the borrower was living in the home at the time of the request though to determine that the draw was not made under false pretenses.  That could be an issue, but I do not know.

Hello Kathy,

None of you are “responsible” for the reverse mortgage.  The loan is recorded against the property.  The loan is non-recourse meaning the lender can only look to the property for repayment of the loan, they can seek repayment from no other assets.  About the asset the one heir is keeping and the equitable split in the estate, that has nothing to do with the loan and it would be up to all of you as heirs to determine what would be an equitable buy out of the heirs for the one to keep the home.

When our family had a similar situation, we determined the cost to sell the home.  We took into consideration the repairs we would have had to make, the real estate commissions we would have had to pay and the most probable selling price of the home (not the inflated listing price the agent first quoted, but a price we felt was more in line with the actual selling prices of similar homes in the area). 

When you subtract all that out, you determine the true equity position and you divide that by the number of heirs (including the one who wishes to buy the property) and that tells you the amount each would receive if the property were sold to another buyer at this time.  That was how we determined the “buy-out” for the heir who wanted to keep the house and purchase everyone else’s interest in the property. 

We didn’t think it would be fair for the person wanting to keep the home to pay more than they would if we were selling to another entity and we had family members who were unwilling to allow the one person to keep the home without them receiving their inheritance at that time.

What works for you might be something similar or it might be some sort of shared appreciation agreement.  With our family, the sale to just one entity was so much simpler because only one individual wanted the home, had the wherewithal to buy the property and with a payout to all concerned, there was no consideration of future improvements or maintenance that had to be considered as there might have had to be such as with a shared appreciation agreement if one was living in the home and one or more just wanted to keep an interest for future value. 

If you all cannot agree on an equitable arrangement, you really should seek the advice of impartial legal counsel.  There is nothing worse than to have a rift in the family as a result of a monetary disagreement when it should be very easy to determine the value, the equity and each heir’s interest and then just make an equitable split. 

Good Morning,

I am sorry to hear about your parents and at this stage in our lives, I hear about it all too often as it is a fact of life none of us escape.  I have worked with a few senior real estate professionals and most of them also work with estate sale folks who can tell you if there are enough salable items to hold an estate sale.  If so, they will typically come in and organize the sale and even run it, donating the remaining items at the completion for a write off the estate’s final taxes when appropriate (check with your tax professional). 

A senior real estate professional can also tell you by comparing the monthly statement to the most probable sales price if there is any equity remaining that you may be walking away from by not selling the home yourself.  It just might be that walking away is not your only option if there is still any equity remaining.

In the end, if you choose to take whatever belongings you wish to keep and leave, eventually the lender will have to foreclose.  If the home is not “broom clean”, they cannot accept a Deed in Lieu of Foreclosure, they must opt for the foreclosure option as then they have the legal right to go in and clean out any remaining possessions left behind.  Those possessions would be discarded in accordance with local laws.  I would suggest you check with the local senior real estate professional first though.

Hello Larry,

I am sorry, this is a legal question and not one having to do with the reverse mortgage.  Each state has different laws regarding occupancy of a home and the fact that the loan was a reverse mortgage probably has no bearing on the rights of one individual vs another under ownership by foreclosure circumstances.  You really should contact a licensed attorney in the area to determine your rights and those of the new title holder.  That may or may not change with the identity of that new owner (meaning whether the property is now owned by the lender or whether another individual or entity bought the home at auction) and since we are not licensed to give legal advice, you really should contact a licensed attorney.

Hello Elliott,

If there is no will and you are not going to probate the property, I don’t see how you can give it back to the lender.   You don’t own the home and therefore, without going through the court to gain title, you can’t legally pass title to anyone else.  Any instrument you signed to transfer title would not be valid.  The lender must go through the foreclosure steps to ensure that their title is legal and valid.  I would suggest that you make sure the condo is empty of all personal items and then just contact them and let them know of your intentions so that they can begin the process as soon as possible. 

Hello Joann,

I can’t possibly begin to comment on papers I have never seen but I would suggest you contact a licensed attorney to discuss the papers with which you have been served and their impact on you personally.  You should remember though that legal papers always reference the individuals named in the documents with which they are concerned.  That means that sometimes, there may be no individual liability whatsoever (as is the case with a reverse mortgage foreclosure) but those documents always reference the original individuals named in the loan. 

Since you are the remainderman, you have title to the property after the borrowers’ interest in the home is gone, correct?  Usually that is from a life estate and that could mean that the borrowers have passed leaving you with the title on the home that is now about to be foreclosed.  That would mean that you now have the ownership interest in the property and if the mortgagee or lender is about to foreclose on the property, you have a right to determine whether you want to protect your interest or just let them take the property. 

If the loan against the home is for an amount less than the value of the home and you now own the property, you can pay off the loan with a new loan or by selling the property and keep the equity.  Or you can choose to let them proceed with the foreclosure and have no liability whatsoever.  At any rate, at the least, I would suggest you contact the law firm that sent you the papers to determine what the deal is.  If it is simply a matter of the borrowers passing and you now receiving the ownership rights to the property, you may be very glad you did!

Hello Samantha,

I don’t know what the attorney was counting on, so I am very hesitant to advise you one way or another.  If the move the attorney counted on to halt the foreclosure was not recognized by the court, I don’t know what the thought process was to tell you to move back into a home that the lender now owns. 

I cannot give you legal advice and I cannot read the attorney’s mind to try to determine what the methodology was for “squatting” in a home owned by the lender/HUD about saving the ownership.  There may be some law on the books in the area that he/she is counting on now to invalidate the lender’s Deed upon Sale, but I have no way of knowing that. I would certainly ask the attorney to explain to you why you have the right to live there before the Sheriff, or whoever in the area is responsible for eviction, shows up to force you to leave.

Hi Karen,

That seems a bit unusual because the lender usually contacts the heirs to determine what they want to do and then will work with them if progress is being made toward the payoff of the loan.

Have you got title to the home?  If so, I would suggest you seek a higher-level individual at the lender/servicer and show them what you've been and the listing to prove you have taken all steps to retire the loan. If you need to seek legal assistance, I would not hesitate to do so before a foreclosure because that would incur more costs.

Hello Vanessa,

It's very good that you are looking at options while Dad is still able to be involved.  I would suggest you have dad add you to title at this time so that you don't have to waste time trying to get the title issues resolved after dad is no longer capable of making his wishes known. I would also have him contact your lender and make sure you are authorized to talk to them on his behalf on the loan. Otherwise they must wait until they have something from a court that names you as the heir with the right to negotiate on behalf of the estate.

Next, start determining the value of the home and compare to the balance owed.  Your options if Dad passes are to sell or pay the loan off and if you must pay off the loan, now is a good time to determine if that is within your ability to complete. If you know for what financing you can and cannot qualify in advance, you will not waste time chasing options that are not available.  Also, it may take some time to determine the right financing for your needs and if that has all been decided in advance, you will be way ahead of the game.

Hello,

You need to determine what is required to perfect the title.  In most areas, that means you must go to court and have the will probated and the court will also grant title to you so that you can sell the home, refinance it or do whatever you need to do with the lender.  If you are unsure how to proceed in your area, contact a probate attorney and they can usually handle a simple probate inexpensively.

Hi William,

The property is owned by the borrower or the borrower’s estate.  The lender cannot sell what it does not own.  The only way a lender could sell the property would be if it foreclosed on the loan and became owner through a Trustee’s Deed Upon Sale if no other party outbid the lender at the foreclosure sale. 

So, the heirs of the borrower, or the current owner of the property, would have to assess the value of the home in relationship to the outstanding balance of the loan to determine if the property should be sold.  The heirs can contact any real estate professional they choose to sell the home and commissions are negotiable. 

I recommend you interview a few agents with an eye toward individuals who are experienced in estate type situations and are results oriented.  There are a lot of agents who are very knowledgeable with estates of seniors and the challenges that the sales of such properties often bring and can also help with any other needed services such as estate sales, etc.  I wish you the best.

Hello Kristian,

Let me first say that I am sorry to hear about your mom.  I don’t know what shape mentally mom is in, but if she is able to direct her affairs, now is the time to decide so that you won’t just be “kicked out”.  I don’t know what your mom had planned or if there are other heirs (if you have any brothers or sisters) but mom can put you or any other family member on title with her at this time so that you don’t have to worry about trying to change the title later if mom is still of sound mind.  The reason this is a good idea is so that you can begin immediately to take steps to sell the home or do whatever you need to do to refinance the home in your name if that is your choice.

Your reverse mortgage lender will need to see that you are authorized to work on mom’s behalf on the loan.  If mom has a Trust or Power of Attorney that names you as a Successor Trustee or her Power of Attorney, then you will not have to go through any court proceedings just to get authority to deal with the lender on behalf of the property.  Lenders are stuck in this process too.  Due to financial privacy laws, they can’t just deal with anyone who calls them and says they are a borrowers’ family member or heir and has the right to work with the lender on the borrower’s behalf.  The lender must be sure so that if there is another family member or heir who has that right and not the individual who is contacting the lender, the lender cannot be sued.

Then you need to decide what you want to do with the property.  If it is not in your ability to refinance it and keep it, I strongly suggest that you contact a local real estate professional and determine whether there is still equity in the home and if it makes sense for you to sell the property.  If all else fails, you can remain in the home until the lender takes possession of the property and that would not be until after a foreclosure that takes varying amounts of time based on where the home is located.  From the time the lender started the foreclosure (and that alone takes a while), the foreclosure process takes anywhere from 4 – 6 months so you have plenty of time to plan and get things in order if you begin now.

Hello Anthony,

This is a legal question for your attorney and the bankruptcy court, and I am afraid I cannot answer it.  You have several issues and I think the first thing you need to do is to contact an estate attorney to determine the steps needed to procure the title and what needs to be done with the bankruptcy.  I could not begin to advise you on the bankruptcy laws in any state and I don’t even know where the property is located, but I can tell you that a reverse mortgage lender cannot work with you until it knows you have title or authorization to conduct business on behalf of the estate. 

Heirs don’t need to “buy the home” because the lender does not own the property and therefore cannot sell it to them.  What the heirs will need to determine is who will inherit, and how you will pay the loan off because it is now due and payable.  If dad left a will or if the property was in a trust that is helpful but if not, you may have to act quickly with the rest of the family to iron out the heirship. 

The attorney will help you to decide what debts your father has that must still be settled, if any, and how that must be done.  Once you have all the information, you can put together a plan for financing or whatever you need to do to pay off the loan and any other debts as needed by the bankruptcy court if that is what you want to do (once you get the information, you may determine that the property will not support the payoff of the loan and any other debts you would have to pay to keep it).

Again, I can’t really advise you but once you have all the information together, you can approach the other siblings with the facts.  The value of the home, the total amount owed to all parties and what it will take to pay off all debts and keep the house.  At that point, if you are lucky and they are reasonable, they may just sign over any interest they may have had to you if they are unable to pursue ownership anyway.  They may not be willing to do that and may press you for a sale of the property and a division of the sale proceeds if they believe those proceeds are worth pursuing. 

Unfortunately, you don’t always know how family will respond in a situation like this and time is not on your side if you cannot come to a consensus quickly because the lender will not wait indefinitely during family squabbles before they begin foreclosure if no progress is being made.  If that happens, no one in the family wins.

Hello Rand,

The lender cannot force you to pay the taxes or insurance.  If you do not pay them, the lender will advance funds for the assessments and make it part of the foreclosure costs.

Hello Aaron,

If mom is still on the title, she may be what they refer to as an eligible non-borrowing spouse.  This would mean that she is not on the loan and could never borrow from it but can also remain in the home for life without having to make a payment under the terms of the loan.  The only way to make this determination is to review the legal documents for the loan.  If she is an eligible non-borrowing spouse, it will be spelled out in the Security Agreement, the Note and Deed (or Mortgage, depending on the state in which the property is located).

If she is not an eligible non-borrowing spouse, the loan becomes due and payable but mom still owns the home.  She can refinance the loan or pay the loan off with other funds available to her.  She can also sell the home and use any remaining equity to relocate if that is her choice.  If she was married to your father at the time the loan was closed, she had to receive all the documentation on the loan as well at that time and agree to the terms, your father could not do the loan without her involvement.  I hope they took this event into consideration at the time and made plans for its coming.  We always advised against removing one spouse from title without plans in place for the passing of the borrower and I hope your father did the same.

My father did a reverse mortgage on the home but didn’t include my mom. He recently passed away. My mom is on the deed but not the reverse mortgage contract. Does she have to move out now or is the reverse mortgage void?

Hello Carly,

I would advise you and mom to contact the lender and let them know that you are both family of the deceased mortgage holder and you wish to exercise your right to pay off the loan at 95% of the current appraised value.  Ask them what they need you to do in order to complete this process and go from there.

HUD does not want the house and they know that if they must foreclose and resell the home, it will likely cost them more than 5% so this makes sense for them in the long run as well.  It should not take a “sale” from mom to you, but you may have to both do it together initially, I am not sure what they will require.

Hello Angela,

If you also own the property, you would also have to be included in part of the process.  You would also have to attend the counseling (could be by telephone) and there would be several documents you would have to sign acknowledging the loan and its parameters, but you would not have to occupy the property and the loan could be closed this way.  You do have to remember that the loan will still come due when your brother no longer occupies the home though, even if you were to move into it later.

Hello Jim,

Just as there are many different tales told regarding the reverse mortgage, what you hear is usually second hand and based on specific information that does not always apply to everyone.  HUD has rules the lender has to follow. 

The lender does not set the value and cannot do so.  If you have specific condition knowledge that affects the value, you should present that information to the appraiser so that he/she can consider all of that at the time the appraisal is done. 

If the appraisal was already done, did the appraisal take into consideration the property’s condition?  If the appraiser used similar homes with the same or similar condition to determine the value, then that is what a knowledgeable buyer in that market will pay for a property in that condition. 

If the appraiser used all homes that are newer or have been updated and do not need repairs, then the appraisal is flawed, and you should ask for an opportunity to rebut the appraiser’s opinion of value.

You cannot simply say you don’t agree with the value.   Just like borrowers first getting their loans, a simple disagreement with the appraiser will not get you anywhere.  However, if you have specific sales information of properties that are in similar condition to your father’s home that sold for less than the value assigned by the appraiser due to the condition, you can rebut the value with facts. 

What people do not stop to consider either when they are getting a loan or at this stage is that it is illegal for a lender to suggest a value to an appraiser.  Lenders give an assignment to an FHA-approved appraiser with no value given or suggested and the appraiser goes into the assignment blind.  He/she has no idea of the amount owed. 

It’s not the lender you need to convince of the difference in the value due to the condition, it is the appraiser who supposedly took that condition into consideration when he/she arrived at a final estimate of value.  Just showing the lender that there are repairs needed will not achieve your goals. 

Giving the lender recent sales of properties that are very similar to your dad’s house that sold for much less than the appraised amount due to similar needed repairs and asking for a rebuttal of the appraisal due to the errors you believe the appraiser made not knowing of those needed repairs is your best hope if that sales information exists.

Hello Patty,

I would suggest that you contact the lender and let them know that your mom has permanently left the home due to health reasons and offer to give them a Deed in Lieu of Foreclosure at this time.  You can only do this if all her belongings are gone from the home and the house is “broom clean”. 

This means that the home does not have to be scrubbed from top to bottom and in show condition, but it does have to be free of debris and personal belongings.  If you do this, the lender may be able to accept the Deed in Lieu of having to go through a full foreclosure process and that would help all of you.

If the lender can take the property back sooner, then the loss to HUD is less.  If they can take the home rather than wait for the foreclosure process, then your mom’s liability is eliminated as soon as the transfer is complete.  Remember, if anyone gets hurt or something else happens while mom is still on title, there could be a liability to her or her estate. 

The lender should be ok to work with you with your mom’s authorization for them to do so.  If mom no longer has capacity, you may need a power of attorney or a court appointed conservatorship but in the long run, you are much better off taking care of this the correct way rather than just walking away and taking a risk if you don’t have to.

Hello Bonnie,

The reverse mortgage is not and was never intended to be a multi-generational loan.  The loan will become due and payable when your mom is no longer living in the home as her primary residence.  To ensure that your siblings can remain in the home they should be looking for ways to replace the financing with a loan that does not come due when mom no longer lives in the home if that is possible.

I realize this may be difficult, especially since the three are all disabled and may be unable to work but knowing that the loan will be due in advance at least gives everyone a chance to start planning instead of waiting until they are out of options. Perhaps there are programs in the area for which they qualify that will assist their housing. 

Sometimes there are waiting periods and they may be better off making application now.  I don't know what their income(s) is/are or what family help is available but beginning to plan now will allow you to explore all possibilities. 

Hello Kim,

You can usually get the certificate before now but if it’s taking a long time for some reason, there are expedited sources such as VitalChek that will allow you to proceed.  You can try that here: https://www.vitalchek.com/death-certificates/florida/florida-vital-statistics. 

I would just be sure to contact the lender/servicer, let them know that you are in the process of clearing the title and that you have already listed the home.  The reverse mortgage lender just wants to know the plans at this point and decide to have an appraisal completed so let them know that you have already taken steps to pay the loan off by listing the property for sale and they should be happy with the progress.

Hello Val,

I am sorry to hear this and unfortunately, I hear it all too often.  I can only hope that while you were at mom’s house and there were no payments due, you were able to put some money away for the future since we all know that this eventuality will come at some time. 

You would be in the same position if mom had other financing but would also have to have been making monthly payments all along so hopefully this has allowed the family to put money away for this time.

Also, if you are mom’s heir, any money you saved while not making mortgage payments might now be used to either help refinance the loan with new financing in your name or you might possibly assist you with a head start combined with any possible equity left in the home after you sell the property. 

I would advise you contact a real estate sales professional so that you can see exactly what the equity position is in the hope that there is enough equity to give you a good shot at a refinance on the property or at least a good start in a new location.  I’m sorry for your loss and I sincerely wish you the best.

Hello Sharon,

You cannot add another party to an existing reverse mortgage at any time.  HUD determines the benefits eligible to borrowers based on the known parameters at the time the loan is closed. 

The interest rates, the value of the home, and the age(s) of the borrower(s) are all taken into consideration to determine the benefit available making certain repaying assumptions.  If the program allowed borrowers to remarry and add new spouses or to add children to the loan at any time, all assumptions would be worthless and there could be no way to account for possible risk to the Mortgage Insurance Fund.  

If you are 62 years of age and eligible for a reverse mortgage at this time, your mom can refinance her loan adding you to title and the new loan.  You would both be subject to the new program parameters and based on your age being much younger than mom’s and the fact that the new loan would consider both your ages, the benefit available would be considerably less than mom had on her own unless the home has experienced a considerable amount of appreciation and the new loan was based on a much higher home value.  But it can be done. 

Otherwise, when mom permanently leaves the home, the loan will become due and payable and at that time you would have to seek new financing if you wish to remain in the home if you are unable to repay the loan with other funds available to you (savings, life insurance, etc.).

Hi Rhonda,

If you are your parents’ heir, you can keep the home but the loan will become due and payable.  This means that you will need to make provisions to pay off the current loan with other financing if you wish to remain in the home after your parents pass.  If there are other heirs in addition (i.e. you have brothers and/or sisters), you may have to work with them in the probate process to determine your right to keep the home or they may be looking for some sort of payment as their inheritance as well.

Hi Barbara,

If your son is 62 or older and qualifies for the loan (credit and income), he sure can.  The thing you want to remember is that he is not as old as you are and therefore his benefit amount under the program would not be as high as yours on the same house at the same value.  If the house does not appreciate substantially, if you use all the funds available to a person your age, a person much younger would not receive enough money to pay off the entire balance with a new loan based on their parameters.  He could bring in cash to cover the difference, but it could be a good chunk of change depending on how long you live there and how much interest also accrues. 

On the other hand, if you use only a small portion of the funds available to you under your loan, this may never be an issue.  You both need to know this up front though if the goal is to plan for back-to-back reverse mortgages down the line.  The other unknown pieces to the puzzle are the HUD guidelines in the future and interest rates.  HUD may lower the amounts borrower receive under the program or they could increase them. 

Interest rates could increase or decrease in the future and higher rates negatively affect the amount borrowers receive under the program.  We just have no way to know what the future will bring so there is no way to determine if future HUD program changes or interest rates would make such a plan easier or more difficult.

Hello Julie,

If I understand the question correctly, your mom used a broker to originate her loan who took the loan to a lender to fund the loan and you would like the name of the broker, is that correct?  Because depending on how long ago the loan was closed, this may or may not be an easy request. 

You can find your mom’s most recent monthly statement that she received from the servicer (the lender or the servicing agent the lender uses to service the loan now) and if you cannot locate that, you can wait for the next statement and you can call them and request them to check the documentation in the file to see if they can tell you if the broker’s name and contact information is in the file. 

If not, they may have the name and contact information for the title company or escrow company that closed the loan for the broker and you may be able to get that information from them if the loan is not too old for them to be able to look it up in their system. 

The problem you will face is that the broker does not close the loan in their name and so the legal documents that are recorded will not have their name on them.  You can always check the Deed or Mortgage that is recorded to see the name of the original lender based on the recorded documents, but if she used a broker, that information will not be there.  I am not sure why you need to reach the original broker at this point, but it might be a tougher chore than you think if you have no information and if the loan has been sold to another lender. 

The servicer will also probably need to have a signed authorization from your mom to you in order to give you any information, so you should keep that in mind before contacting them if you have not already sent them something to show you are authorized to speak on your mom’s behalf about her loan.

Hi Chris,

The loan is non-recourse and if the balance owed on the loan is higher than the value of the property, HUD knows they cannot sell the property and recoup the amount owed.  They also know that if they must sell the home, the selling costs will run 5% or more if they must foreclose on the loan and then market the home.  Therefore, they will require the servicer to appraise the property and then you will have the option to pay off the loan at 95% of the appraised value or the outstanding balance, whichever is less. 

Please note the terminology here.  The bank is not required to sell the home to anyone.  They will allow you, if you are the heir and the new owner, to pay off the loan and keep the property, for an amount equal to the lesser of the outstanding balance of the loan or 95% of the appraised value.  In other words, if you are the heir and you still own the property, the bank can’t sell you something you still own.  You make the arrangements to pay the loan off before the bank ever becomes the owner. 

If you wait until the bank takes the property back through a foreclosure action, they are not required to sell it back to an heir, or anyone else for that matter at that point.  At that time, it becomes property of the lender or HUD and is liquidated by sale through a real estate agent and you must place an offer for purchase on the home, just as any other purchaser.  You may get the home for 95% or even less at that point if they accepted a lower offer but you can also be outbid by other purchasers on the open market.

Hello Mike,

If you are referring to yourself or other family member as the “you” in this case being evicted and the “they” party being the lender, the lender can’t evict anyone until they own the property.  They do not own the property until it has gone through the foreclosure process and they become the owner of the home.  Until that time, they don’t have the right to evict anyone from a house they don’t own.

But let me lay out some alternatives for you.  Firstly, I recommend that you contact a real estate sales professional and compare a most likely selling price (not their assessment of value but what it would really sell for today for a quick sale) and compare that to the amount owed on the loan. 

 If there is still equity in the property, you may be much better off selling now and leaving the property with money than staying and waiting to be evicted with nothing.  If there is no equity, I would suggest you contact the servicer and ask about the cash for keys program.  You may be eligible to receive money to leave the home and again, you might be better off getting some cash now rather than being forced to leave later.

Whatever your choice though, the lender must secure title to the property before it can evict any owners, heirs or other occupants.  That process depends on the requirements in the area/state where you live and for that information, you really need to speak with a licensed attorney in that state.

Hello Jane,

The reverse mortgage is a non-recourse loan, so you and the estate can never be made to pay for any shortfall on the loan.  You do need the lender’s/HUD’s approval for a short sale though, so I would suggest you check with them before you attempt anything like that. 

As far as any other expenses, I cannot advise you of what other third parties may still be able to seek compensation from the estate.  One thing that comes to mind is that the estate still owns the property and if you fail to keep the home insured, the lender might have to force-place coverage, but it only covers the dwelling, it does not cover contents or liability if anyone were to go onto the property and get hurt. 

To determine any possible liability, before you stop paying for services or other property charges, I would suggest that you contact an attorney in the area where the property is located to make sure that you don’t cause yourself more problems than you want or know of by letting things go. 

There are several things the servicer must do before it can accept a Deed in Lieu of Foreclosure including title work.  If there is anything in the title that prevents it from accepting a Deed in Lieu of Foreclosure, then it would start the foreclosure process, but it certainly has had time to get the appraisal done by now.  My suggestion is to keep pressure on the servicer and don’t let up!

Hello Steve,

Have you started any probate on the property?  As the heirs, you and your sister should have started the probate to move the title from your father to you and at that time you would have standing in the property.  I would also check with a local realtor and determine a value of the home.  Compare the value of the home to the balance owed on the reverse mortgage. 

It’s just possible that there is a lot of equity left, or it could be that your father owed more on the loan than the property is worth and then you may not want to even bother with the effort to probate the property.  If you do not take the steps to transfer the title, the lender begin foreclosure and I honestly can’t give you an exact timeframe for when your sister would be displaced from the home as a result. 

An uncontested foreclosure takes about 180 – 200 days from the date of filing and there are several things the lender must do to meet HUD requirements before filing the foreclosure.  I can’t say where the lender is in that process. If you find that the property still has adequate equity and you wish to contest the foreclosure to delay it, you can, but you have to remember that even then, the loan will still need to be paid off and you, your sister or both of you would need to either have the cash or be able to replace the loan with new financing I you want to keep the home. 

If that is not possible but there is still equity in the home, I would advise that you investigate possible sale of the home before the foreclosure can take place IF you can also obtain the title because you obviously can’t sell a property you don’t own. 

It all comes down to the value versus the amount owed and what makes sense to do.  Once you talk to a real estate professional and determine the likely sales price, you may decide that it is in your best interest to also speak with a licensed attorney to see what steps you can take to get the time you need to transfer the title so you can sell or finance the home. 

Or you would at least know that the only option is to leave the property and let the lender take it back without any recourse to either of you, but you would have the information needed to make informed decisions.

Hi Connie,

Unless the home has already gone through a foreclosure and is now owned by a new entity (whether that is the bank or someone else who bought it at foreclosure sale), the lender should not have entered onto the property and secure the home.  The home belongs to the borrower or the borrower’s heirs until such time as the lender retains title through a default and foreclosure action. 

If the property is still owned by the borrower or his estate, you don’ have to “buy” the home, you already own it.  It would just be a matter of paying off the loan though.  I think you need to speak with the lender or the servicer.  It sounds like you may have waited too long, and title has already passed to the lender.  If that is the case, you are still able to purchase the home, but at that point it would be a purchase because dad and the heirs no longer own it and subject to whatever terms you were able to negotiate.

Hello Calvin,

I do not see a question here, but I do want to comment on your statement.  This is extremely unusual, and you may want to verify the title on the property.  A lender should not be able to place a mortgage lien on the home without the consent of all property owners. 

That is why the reverse mortgage requires that all owners of the property be eligible for the loan – because all owners must sign accepting the terms of the loan.  If you also held title to the property, your father should not have been able to obtain the reverse mortgage until after you agreed to Deed the property to your dad and if that was never done, that loan could be seriously flawed.

Hello Marie,

Have you checked alternatives yet?  Before you just walk away, I think it is worth your time just to make a few calls.  I recently helped a family who felt the same as you and I put them in touch with a senior real estate professional who looked at the home and at their family member’s latest reverse mortgage statement and determined that they would be walking away from a good chunk of cash and they would not have to do any work themselves to keep some cash. 

The senior real estate specialist set up an appointment first with a company that was a junk removal specialist and they came out and cleared all the trash and garbage from the home in a day.  When they found that there was enough “good stuff” left to have an estate sale, the agent obtained the family’s authority to contract with an estate sale company who for a percentage of the sale, sold everything they could and donated the remainder and obtained receipts for all donations which helped the family with final taxes.  Once the home was clear, they sold it “as is” and after all costs and commissions were paid, they walked away with over $75,000.

This family walked away without having to do anything themselves but sign the papers and before they investigated it, they were ready to give it all up because they didn’t think it would be worth the hassle.   I don’t know if this would be possible in your case, but have you checked?  A quick online search will probably net you more than one senior real estate specialist in your father’s area and they can tell you quickly what the home should sell for, in poor condition or not and it doesn’t cost you anything to find out. 

Cleaning out all the junk is not as daunting as it seems in most cases when you have a third-party professional do it and if there is money to be had, why not keep it in the family?  If you do check into it and there is no benefit to selling the home yourselves, you don’t have to do anything and can let the lender take the property through a foreclosure action and you’ve lost nothing but a little bit of time by making some calls.

Hello Renee,

You must get title to the property.  If the current title holder is his wife and she is not interested in retaining the home, the easiest way is to have her execute a Grant Deed so that you can move forward with your plans.  If she refuses to transfer the title, she would effectively keep you from proceeding because the reverse mortgage lender cannot work with you if you under those circumstances. 

 I do not know if a letter to you relinquishing her rights to the property will get you what you need as it is not a legal document that can be used to transfer title.  We can’t give you legal advice, it would probably be best that you contact an attorney to determine what steps, if any can be taken to pass the title if she doesn’t want the property and is unwilling or unable to cooperate in the title transfer. 

In that case, it would probably take some sort of a court order, if it can be changed under the circumstances at all, and for that you need the help of an attorney in the area where the property is located. 

Hello Carletta,

Your stepmother could not have been on the loan if she was not also on title to the property, so you really need to have someone review the title.  If she was not eligible at the time (not old enough, etc.), she could have been an eligible non-borrowing spouse which would allow her to stay in the home under the terms of the loan, and that would be a whole different situation. 

But her rights under the loan to stay in the property after your father passes is not a legal decision regarding rights of property ownership and heirship between her and you and your brother.  The loan does not determine who owns the home and at what time, the terms of the loan determine when it becomes due and payable but your legal rights to ownership may or may not come at an earlier date. 

If so, you just need to know that once you take ownership to the home the loan will be due, and you will have to refinance the loan, pay it off with other funds available to you or sell the property to pay the loan off.  To determine your ownership rights, you really need to seek the help of an attorney so that he/she can review the title of the property, the heirship rights in the state in which it is located and any wills, trusts, etc.  We are not attorneys and could not advise you in this area.

Hi Rhonda,

I’m afraid I can’t be of any help here.  I’m not even sure what the reason is that you are being evicted but if the reverse mortgage borrower does not live there with you, the reverse mortgage borrower never should have rented the home in the first place. 

I don’t know if the owner has passed and the heirs have given you the eviction or if it is the lender or who, and even if I had the information, that would be a legal question for an attorney in the area where the home is located. 

Unfortunately, I can’t give you legal advice and would not know where to begin in your case.  I’m sorry, but in this instance, we are not able to be of any assistance other than to let you know you should seek legal advice to determine if you have a grievance against the owner or any other party.

Hello Steve,

Wish we could give you a solid answer here, but every servicer is different, and every situation is different.  We have heard of loans going to foreclosure after just 6 months if they feel that there is not enough effort being made to pay off the debt and we have seen blog questions where people are still dealing with servicers that have not started a foreclosure action from 2014.  There are several things the lender or their servicer must complete before they can proceed and that is not always a smooth process. 

The lender won’t wait forever though, especially if the probate is not moving forward and it does not appear that the steps are being taken to retire the debt.  The fact that they have the taxes and insurance current are a good step. 

You may want to seek legal advice to determine what legal steps may be taken to temporarily delay any foreclosure action to give you time to complete the probation but here again, that would not give you an endless deadline so I would strongly suggest that you work toward ending the family issues that are impeding the probate as quickly as possible.  After all, none of the family will benefit if the home is lost to foreclosure while the family is locked in conflict.

Hello Amy,

I am a little hesitant to give you a solid answer on this one way or the other.  Servicers can allow heirs a lot of latitude to sell or obtain financing when they see progress being made toward that end.  On the other hand, if they feel that the heir is engaged to deceive, it could bring an immediate foreclosure action.  By doing a pocket listing that is obviously intended for no one to see, it might buy you some time, but it also might cause the servicer to accelerate the due provision. 

HUD’s desire is for the borrower or in this case, the borrower’s heir to pay the loan off.  The last thing they want is to own a property.  But they also must balance that with the fact that the longer they leave the loan outstanding, the more interest accrues and the higher the claim to HUD if the loan is not repaid. 

I think if the son can procure his financing quickly, he would be fine, but I don’t see this as a solution that would work for a longer period since the servicers typically review progress every 90 days.  I am concerned that if the servicer sees a pocket listing with no activity as an attempt to deceive, they may speed up their efforts to foreclose. 

Hi Manny,

After you pass, you won’t be paying anything off, whoever you leave the home to will have to decide if they want to pay off the loan and keep or sell the home, or just walk away and owe nothing.  They have several choices.  They can use other funds available to them, they can refinance the home with another loan, or they can sell the property and pay off the loan with the sale proceeds. 

If they choose either of the first two options and keep the home, they can pay off the loan at the amount owed on the loan or 95% of the current market value, whichever is less.  So, if they want the house, they would never have to pay off more than the house is worth to keep it, no matter how much you borrow or how much interest accrues.

Or if you live a long life and use all the equity in your home and they don’t want to keep the home or worry about selling it, they can walk away from the home and owe nothing.  The loan is a non-recourse loan so your estate or your heirs can never owe anything more than the property on the loan.  So, in that case, you and your heirs still don’t have to pay off anything if you choose not to, your house would pay off the loan.

Hello Linda,

I am not sure how you would do this.  If I am understanding you correctly, there was no will or executor and it sounds like you have never gone through probate on the property.  Is that correct?  Because if this is correct, you have not taken the steps to change the title from your mom to you.  If you don’t own the home, there is no way to legally transfer title, or sell it, to someone else – it’s still in mom’s name. 

If you did do the probate and the title is in your name now, then yes, you can sell a home that belongs to you even if it is in foreclosure if you have a buyer willing to purchase it as such.  If there is equity in the property, you and your siblings should really have been trying to sell the home since 2014 instead of waiting until after the home was placed into foreclosure but there may still be time if the title is in your name and the buyer has the ability to move quickly enough to resolve the debt before the foreclosure sale.

Hello Robert,

You really need to consult with an attorney for this because it involves legal advice.  I think you will find that bankruptcy will not help a tax defaulted borrower and may just add to her expenses with legal fees but I cannot tell you for sure.  I would suggest that you seek free legal aid in mom’s case to determine what options might be available for her if she is unable to pay the taxes.

I might also suggest that you contact the lender to determine the amount of back taxes owed.  I encourage families to see if they are able to assist parents and other family members, especially in areas like California where the taxes are not crushing due to measures that keep existing taxes low for long-time owners.  If the family can help her become current, you can at least make the decision whether or not she can make the payments in the future or whether or not a sale is needed at this time rather than a foreclosure of the property.

Hi Nell,

I think it all depends on the heirs and what their plans are now.  They will receive title to the property, will have a loan that is due and payable, and they will have to decide if they want to sell the home, keep it or let the lender foreclose. 

Each of these options would require them to do something different and might call for a different time frame but would most likely require them to take different actions.  I would strongly suggest that you speak with the owner’s heirs if you have that information and can contact them to see what their plans are.

Hi Tracy,

I would strongly suggest that you contact a licensed attorney to determine your options.  I am not licensed to give legal advice and therefore can’t advise you but your attorney can.  I find it interesting that when you showed them that the probation was underway and that you were taking positive steps to obtain title so that you could obtain your own loan that they proceeded anyway.  That clearly is not HUD’s intent. 

I do not know who the servicer is but have you tried contacting someone further up the chain of command there?  We work closely with CELINK and they are very good about explaining things to people and letting them know what is happening and why.  I think you should at least try to reach someone in management to see if you can get a better explanation of the status and then check with an attorney soon to see what options you have to delay a sale if you don’t feel you are getting anywhere.

Hello Dee,

The lender has to do certain things to be in compliance with HUD requirements.  They may send you a notice but that does not mean that they have to live by the timeframe outlined in the notice itself.  They can always grant additional time if warranted by the fact that you are making positive strides toward the repayment of the loan.  They can’t go back and restart the process if they never start it though.  I suggest that you contact the lender again and give them an update on where you stand on your efforts and let them know of the anticipated completion of the probate.

Give them a timeline of your actions taken, what still needs to be completed and when you expect to have that done.  If you do not feel that you are getting the cooperation you need to complete your actions in the most expedient manner available, I would suggest that you contact competent legal counsel to determine your rights and what actions he can take to delay any enforcement until the probate is completed.

Hi Kim,

The heirs have a right to pay off the loan at less than the full amount owed under the terms of the loan, but the lender cannot sell the property to anyone, they don’t own it.  If you want to buy the house on a short sale, for an amount less than is owed on it, you must negotiate the purchase with the individual who owns the property and then you need the approval of the lender to accept less than the full amount owed as payment in full for the debt. 

The lender has no say in to whom the property is sold as long as it is owned by the borrower or an heir of the borrower but the lender can accept or reject an offer for payment of less than the full amount owed.  If the offer is close to current market value, the lender and HUD are inclined to accept the offer whether it is close to the amount owed or not because they would not be able to do better in an open sale even if they took the property back by foreclosure.  If the offer to pay off is well-below what is owed and well-below current market, then lender and HUD will not approve the short payoff as they would not benefit from such an arrangement.

Hello Kate,

I cannot tell you how that would ultimately be resolved.  If you sign the property over by Grant Deed at this time, (in Lieu of Foreclosure or in any other instance) since it is not a sale with prorations, etc for taxes, I honestly do not know what the legal requirements would be for reimbursement of any assessments you had already paid.  This would probably be a question for the lender themselves to see what they were willing to do or for legal counsel if you were not satisfied with their response.

However, I would encourage you not to give up too quickly on the sale.  It sounds like the buyer has gone through a lot and does want the house, so are you sure that is no longer possible?  I would contact HUD directly if it were me and let them know that the sale was about to go south which would cause them to almost surely have to pay a claim if the servicer doesn’t perform very quickly. 

Brian Montgomery of HUD recently addressed the National Reverse Mortgage Lenders Association (NRMLA) and stated that HUD has not seen the drop in the losses to the HECM reverse mortgage program they had hoped to see with all the recent cuts and changes to the program and yet we still keep hearing stories of loans not clearing the system at the conclusion in a timely manner just such as this.  I would think that if you bring this to their attention, letting them know that they have the opportunity to have this property sold and off their books soon if they could just move a bit more quickly, they may be willing to expedite the process.  It’s worth a try especially since with a sale, those taxes would be prorated between buyer and seller.

Hi Wendi,

I wish I could help you here but this really has nothing to do with a reverse mortgage whatsoever.  This entire question pertains to the legal rights of heirs and the binding effect of the will versus the actions of the executor of the will.  Wills can be challenged and we hear from people all the time that those charged with administering the final actions of the estate do not always follow the wishes of the creators of the will. 

The reverse mortgage is the financing on the property at this time and unless there was a new will or an amendment done after the 2010 will you speak of, I don’t see how the loan itself would have any effect on the existing will but then again, there may be some provision in the will that the executor is talking about and not necessarily the fact that it is a reverse mortgage.

I have no way of knowing this but even so, I am not an attorney and I cannot give you legal advice.  I would strongly suggest that you seek the counsel of an estate attorney in the area where the property is located who can review the will and determine the rights of any heirs pursuant to the owner’s stated wishes and the local laws.  He or she can then counsel you on the best actions to take, if any should be taken, to protect your son’s rights as an heir to the property.

Hello Scott,

There really is no magic formula to obtain additional extensions.  HUD allows lenders to work with heirs to sell the property and will grant extensions typically as long as they see progress being made in the effort to pay off the loan whether that be from the sale of the property or the refinance of the obligation.  I don’t know what part of the country you are in, but a foreclosure action typically takes a minimum of 4 – 6 months to complete after the notice of foreclosure has been filed.  If May is a hard date for you, I would suggest that you contact the lender and give them a timeframe for when you would be willing to complete the Deed in Lieu of Foreclosure and that might or might not work for them. 

Lenders cannot always accept a Deed in Lieu of Foreclosure for a number of reasons.  Firstly, title to the property would have to be yours and the probate would have to be completed or you don’t have the legal right to Grant Deed anything.  Secondly, if there are any other liens on the property, the lender would be forced to take the property in a foreclosure action in order to be certain they did not incur those liabilities.

In a foreclosure, any junior lienholders would have the option to protect their lien positions but if they chose not to do so, their liens would be removed when the lender gained the property by foreclosure sale.  Or another party may outbid the lender at the foreclosure sale (the lender’s bid can only be the amount owed plus any foreclosure costs) and then the additional lienholder may be paid off some or all of their lien but the lender would not be liable for any portion of that lien whereas if the lender just accepted the Deed in Lieu of Foreclosure, it would also inherit any other liabilities.

Your best option would have been to show them that you were making positive strides to sell the home.  Have you done anything to perfect your title to the property or market the home for sale?  Do you know if there is any equity still in the home?  My suggestion is that if you have not, to contact a real estate professional as soon as possible and determine if there is any equity remaining and see of you can sell the home quickly to retain some or all of the equity before you walk away.  Also, the lender and HUD will be much more willing to offer additional extensions if they see an effort being made to pay off the loan via sale of the property.

Also See: Steps for Heirs to Repay Reverse Mortgage After Death

Hello Cassandra,

I would really need to know all the information as to why she was removed from title in the first place, where she has been living and if there are any other specific reasons an underwriter might think she is not or may not live in the home as her primary residence to tell you for sure, but there is no reason she cannot get the loan if she did own the property and was removed from title for a good reason and now wants to be added back.

Every once in a while we see instances where family members think it’s best to take mom off title for one reason or another, not realizing what that does if she decides she does want a reverse mortgage later and typically with a good letter of explanation and supporting documentation, the loan can still be closed.  I would have to see all the circumstances but if it all makes sense, then there should be no problems.

Hello Susan,

They can call the loan due and payable and begin foreclosure at any time.  There are a number of things they must complete first though to fulfill their obligations to HUD.  And even once they begin foreclosure, that process normally takes 4 – 6 months from filing until it is complete.  If you really need to know that information, your best bet is to contact a local real estate attorney once you receive any legal notification that they have officially begun the process and the attorney can tell you for certain which way the lender has elected to proceed and what the most likely time tables will be.

Hello Irma,

Your mom can add anyone to title she wishes without any issues with her loan.  As long as she is also still on title and still lives in the property, mom can add your sister, you, and all your aunts and uncles if she wishes.  The loan will still become due and payable when she no longer lives in the property as her primary residence but a lot of borrowers do like to have the title resolved in advance and this is perfectly fine and even spelled out as ok in her loan documentation.

Hello Ray,

Let me start from the end and work my way forward.  With regard to your brother’s actions against the other heirs, I’m sorry, I can’t advise you there.  From what you are telling me, you are the administrator of the estate but did mom leave the home to your brother exclusively or as part of the estate to be divided?  I am not an attorney and cannot give you legal advice. There is, or more importantly can be, a difference between the person who has the charge for managing the duties of the estate and distributing the assets and those who will be the beneficiaries or the recipients of the estate.

As the Administrator, you could also be someone receiving the property or a portion of the property or just the individual charged with managing the estate during the probate process.  And then there is the fact that your brother has been living in the property.  This may or may not give him additional rights as a tenant of the property until all is settled.  The only one who can tell you this for sure would be a licensed attorney and possibly the courts in your area.  I would not want to venture a guess as to whether or not your brother’s actions are justifiable under the law let alone legal.

With regard to renting out rooms, the reverse mortgage does not prohibit your mom from renting out rooms and collecting boarder income.  Now that mom has passed, the loan will become due and payable.  If your brother is renting out rooms now though and is not the owner of the property, then that would be another question for your attorney as there would be a few questions.

For example, if your brother is not the owner of the property, does he have the legal right to enter into a rental contract on the property?  And if he does not own the property and it has not been left solely to him, is that his income or income of the estate and therefore should be collected and split by all heirs?  I would certainly also discuss this with a licensed attorney in the area where the property is located as well.  I wish I could be of more help but these are not issues relating to the mortgage but rather your rights as heirs and for that you really need competent legal counsel.

Hello Lynn,

I can’t really advise you on this.  The lender can only look to the home as security for the loan but I can’t tell you that if you don’t pay the HOA fees, insurance, etc. that others may not have other recourse.  If you are concerned about the ramifications of ceasing payments to other parties or any other possible liabilities, you should contact a local real estate attorney and find out what the rights, liability and obligations of the estate are and what the rights of the various creditors are.  The attorney can also let you know if your mother-in-law’s estate or any heirs (especially if the title passed to them before the foreclosure was completed) would bear any liability from others if something happened and the property did not contain adequate insurance while it was still owned by them.  That’s a legal question that we just can’t answer.

Hi Julie,

You have that a little backwards. Your lender has a lien on the property and so when the borrowers pass, the new owners (heirs) have to contact the lender to make arrangements for the payoff of the loan either through a new loan or the sale of the property or they could choose to just walk away with no liability but it is not up to the lender to start looking for the next of kin.

The lender may not even know who the heirs are.  The heirs will however find out that they own a property and it will be their responsibility to contact the lender on the home to make arrangements.  This is the same as with any other loan.  If the heirs never do contact the lender (as happens when there are no heirs), eventually the lender would have to begin a foreclosure action to protect their lien position if the courts did not produce an heir during the probate action. 

Since you know your parents have the reverse mortgage and presumably have access to their records, you should be able to contact the lender when the time comes and hopefully you will have discussed this with your parents and made plans well in advance so that when that time does come, you won’t have to add the stress of trying to figure out what you want/need to do to add to the grief of losing your loved ones.  Your plans will have all been made well in advance and you can just execute the plan.

Hi Steve,

Nothing is a waste of time.  Communication is key and as long as the servicer and HUD feel that you are still working toward the ultimate payoff of the loan, they will work with you as long as they can.  I think you are doing the right thing and I would only caution that you not let things just sit or stop paying any of the taxes, insurance, HOA etc. or that would definitely cause them to feel like they had to make a move sooner than later.

Hello Veronica,

I’m not entirely sure what your question refers to but I am going to guess that dad has passed and you are questioning the timeframe for the servicer to perform the appraisal to determine what your options as the heir are at this time.  Is that correct?  If so, HUD spells out the time requirements for the procurement of an appraisal in their Mortgagee Letter 2015-10   and it is as stated below you can find the entire Mortgagee Letter on HUD’s site HERE):

As you can see, the Lenders requirement to perform an appraisal depends on if there is going to be a foreclosure, if there will be a claim to HUD and if the heirs are going to sell the property and the heir requests it (presumably due to the fact that there may be a basis for lowering the payoff amount).  Then HUD requires the lender/servicer to perform the appraisal within 30 days from the last event shown above.

Further in the Mortgagee Letter, HUD outlines the only real penalty for non-compliance with the time requirement and that appears to be curtailment of interest accrual.  This is from HUD to the lender/servicer though.  If you feel that you have been injured by a lender due to their inability to perform and their reason was because of their need to get an appraisal on the property, then I would have to advise you to contact an attorney in your area to determine your legal rights above and beyond the curtailment of interest accrual, if any.

Hi Karyn,

I can’t see what they are asking you to sign but I assume it is just because you are your mother’s heir.  The loan is a non-recourse loan and the only thing the lender can use to repay the obligation is the property itself, they cannot go after you or mom’s other assets or estate.  If you are concerned about the nature of the paperwork, I would suggest that you have an attorney review them but you are correct, you did not agree to be bound for any liability for the loan and cannot be made to pay for any of the reverse mortgage debt.  But as I stated, I would suggest you have an attorney review any paperwork with which you are not comfortable.

Hello Linda,

I’m sorry but this is a question you will need to ask of a licensed attorney in the area where the property is located.  This is not a question of the loan itself but of the rights of a tenant at that point and it will depend on the lender’s ability to take possession and the laws of the area regarding the lender requiring you to leave and on that, we cannot advise.

Hello Jacqueline,

The only allowance that HUD makes for someone who is under the age of 62 to be able to stay in the home with a reverse mortgage after the death of the borrower is for an eligible non-borrowing spouse.  To be eligible, anyone under the age of 62 must be the spouse of an eligible borrower, living in the home and on title at the time the loan is closed and then still in the house when the borrower passes and must meet all the other eligibility requirements of the ongoing reverse mortgage borrower (pay property taxes and insurance on time, any special assessments and maintain the home in a reasonable manner).

Any other family members, children, brothers, sisters, etc. would not meet this definition and to be eligible to remain must also be a minimum of 62 at the time the loan is closed, must also be on title and be part of the original transaction.  Your example of a 55 year old step-daughter would not qualify to remain in the home after the borrower passed.

Hello Raymichael,

The reverse mortgage allows your grandparents to add anyone to title they want as long as at least one of them remains on title and still lives in the home as their primary residence.  I am afraid you will not be so lucky with the actual title though.  As long as your grandfather is still alive and he has not signed away his portion of the property, just because he is not living there, he has not lost his legal interest in the property.  And depending on how the title is vested, your grandmother may or may not be able to grant deed you a portion of the property. 

Most married couples take title as joint tenants which is a manner taking title that gives one individual right of survivorship.  That means that one of the two cannot grant the title of the property to anyone else without the other spouse as well because that would affect their interest in the property.  But I do not know and cannot advise you on the legal aspects of your individual title situation.

I would suggest that you contact your grandfather.  If he is willing to sign a Grant Deed that signs the property solely to your grandmother, then she can sign a subsequent deed to add you to title without affecting the reverse mortgage. If your grandfather is unwilling to sign the Deed, then your grandmother probably does not have the ability to add you to title but as with every question that involves any type of legal issue though, I would highly encourage you to check with an attorney in your area to see how the title is vested and to see what you can and cannot do.   All I can advise you for certain is what the mortgage allows and the loan is ok as long as one of the original borrowers still lives in the home and is still on title.

Hello Steve,

Florida is one of the states that allows both Deed of Trust and Mortgages but the common instrument is the Mortgage for the HUD reverse mortgage loan there.  It usually takes about 180 to 200 days for an uncontested foreclosure in Florida and if you don’t have title to the property, you can’t give the lender title in lieu of Foreclosure – it has to go through the process.  The timeframe can be affected by court’s schedule, any issues that come up or it can go smoothly without delay.  You just never know.

There are a number of steps the lender has to take before they can begin foreclosure under the HUD requirements but you may want to contact them to see if there is anything you can do to help them move things along if you do not intend to contest the foreclosure and if you are interested in speeding the process.  However, your sister may be happier if it took even longer if she is still living there and perhaps would rather pay the HOA, taxes and insurance rather than rent or a house payment elsewhere.  But that would be a conversation for you and your sister.

Hello Nissim,

This is something you really need to discuss with a licensed attorney who handles such matters. The reverse mortgage is not the issue, it is just a loan like any other loan. The issue is what your rights are as a homeowner who had their mother on title to the property when she was on Medicaid if Medicaid tried to assess a lien on the property.

That’s what you want to discuss with the attorney, what actions Medicaid actually can take, and that might be putting a lien on the property even if not taking the home outright but the attorney will have to tell you that. If you feel that the services of an attorney are not within your budget at this time, I would suggest that you look online for free legal aid services in your area.

Also see:

https://reverse.mortgage/medicaid-ssi

Hello Kay,

Nothing happens to the reverse mortgage, it’s really a matter of what provisions the borrower makes for the property.  Just like any borrower who passes with a loan or lien on the property, if there are no heirs and the borrower did not leave the property to any other person or any other entity (a charity, etc.), the lender would eventually have to foreclose on the lien to protect their interest.  The property would go to foreclosure sale and if no one bids against the lender’s opening bid which consists of the amount owed to the lender, then the lender would own the property in order to repay the obligation.

If another purchaser bid higher than the lender’s opening bid, the lender cannot continue to bid and the next highest bidder (if there is more than one) would own the property and the proceeds would go to the owner’s estate.  If the owner has no heirs to claim the estate, then the proceeds would be distributed pursuant to the laws when individuals pass with no heirs and no one has any claims on the estate.

If the borrower did leave the property to someone or some group, they would have the same options as any other heir – they could decide if they wanted to sell the home, keep it and pay off the loan or simply walk away and let the lender take the home back if they did not feel the equity was strong enough.  That decision is the owner’s though.  Owners should make those decisions in advance and can set up provisions that their final wishes can be carried out when that time comes.

Hi Robin,

I’m not sure what you mean by everything “falling” to your mother’s name.  The loan is still fine as long as at least one of the original borrower’s is still living in the property as their primary residence.  As far as assets go and their estate, that all depends on how they have planned for that eventuality, how they took title to things, what the local laws are and how things were bought, etc.

I would strongly recommend that if mom and dad had no trust or will in place or if mom does not have one at this time, that you consider talking to mom about seeking out the assistance of a good estate attorney before the time comes that the attorney is absolutely required to settle all of mom’s affairs.  It is so much easier to have all of mom’s affairs in order while she is still here and able to convey her wishes than to wait until after her passing or an event that might make her unable to direct her affairs.

Hello Eric,

I honestly can't answer this. I have not heard of this and don't know why.  Perhaps they have been unable to obtain a copy through normal avenues and are willing to pay to obtain a copy of the document from the family because it would cost them more money if they had to go through other channels. They may be thinking this is a money saving action, not an unnecessary expense.

Hello Mason,

The reverse mortgage is just a loan on the property.  Your grandmother decided what the disposition of the property would be when she passed and made those wishes known when she appointed your uncle as her executor.  The loan has no bearing on that fact.  If you would like to purchase the home, you really need to speak with your uncle to determine what the plans are for the property. 

By being the executor, that may not necessarily mean he is to inherit the property.  Your grandmother’s will or trust or both may lay out the provisions for the ownership of the home upon her passing.  The executor is the individual who is placed in charge to see that your grandmother’s wishes are followed.  Her property may go to your uncle or to a number of people which may require a sale to split the proceeds.  At any rate, since your uncle is the one who will be responsible to be sure your grandmother’s wishes are carried out, you should start by talking to your uncle and let him know you would like to be considered eligible to purchase the home if possible.  It could be that others in the family with more claim to the home also want it, it could be that none do and you need to let them know of your interest. 

At any rate, it certainly doesn’t hurt to let everyone know that if it is possible, you would like to purchase the home.  If he was going to put it on the market for sale, perhaps you could arrange to purchase it for the sales price minus any commissions he would have had to pay a real estate sales person.  Would certainly be a win/win for all.

Hello Carolyn,

I am not sure I know what you mean by the viewer had died so I am going to assume you are saying borrower.  The company selling a loan has an obligation to reveal material facts to the company purchasing the loan and if there is not another borrower on the loan, I would be willing to bet the company that just purchased a loan that is now due and payable will require the selling company to buy it back.  If there is a second borrower, the loan is still valid and it would not be a problem.

Hi Deborah,

Your mom can Deed you on to the title as long as she adds you and does not come off of the title herself.  That will prevent you from having to worry about changing the title later after mom passes but that does not stop the loan from becoming due and payable after the last original borrower is no longer living in the home.  After mom passes (and by reading this I am assuming dad has already passed), the loan will become due and payable.

You will own the property but will have to refinance the loan at that time if you wish to remain in the home.  As the heir, HUD will allow you to pay off the loan at the lesser of the current balance of the loan or 95% of the current market value.  In other words, if your parents got their loan at the peak of the market values, they took all of the money they could and stayed in the home for many years without having to make a payment and now the balance of the loan is higher than the current value of the property, you can still pay off the balance at 95% of the current value of the home even if that is less than the balance owed.  This allows you to be able to get a loan in your name (credit and income willing) and retain the property even if the balance is very high. 

Hi Rebecca,

We get this question often.  Do you even know if mom has equity in the home?  The first thing you should do is check to see if the house is worth more than is owed on it.  If you are mom’s heirs, then you can sell the home and keep the equity in the property.  You should discuss this with mom now and take steps to clear the title to the home so that either by adding you to title now or by will or trust, the title will be transferred to you before or upon mom’s passing.

Then talk to local real estate professionals and find out the most probable selling price for the home.  If you compare that to the amount owed on the reverse mortgage and mom has equity in the home, you can put the home up for sale and possibly walk away with a lot more money than some small relocation assistance that HUD may or may not offer at that time.

If there is no equity, then you can contact the servicer and ask what programs HUD has available at the time.  There is no guarantee that there will be any program or benefits available, but you never know until you ask.

Hello Anthony,

I am afraid I cannot give you legal advice.  The loan will be called due and payable and if the owner had heirs that wish to keep the property, they can do so by paying off the loan.  I don’t know how their new ownership would affect your lease.  If the heirs do not wish to keep the property, the lender would be forced to take the property back through a foreclosure action and there again, I cannot tell you how that affects your existing lease.

It would seem that since the reverse mortgage was entered into before the lease, the reverse mortgage would have priority over any subsequent agreements regarding the property so I do not know what rights you, as a lessee, have.  If you prepaid the lease, there may be rights you have against the owner’s estate that you would present at the probate but I just don’t know.  That might also change based on local real estate law.  I would strongly suggest that you contact a licensed attorney in the area where the property is located to determine your rights, especially if you have prepaid the lease.

Hello Carl,

You really need to speak with a reputable real estate attorney for advice like this.  The time to have this counsel was before the lender foreclosed but I would absolutely advise you to seek advice soon to protect any rights you may still have to the property. 

Hello Diane,

He can add anyone he wishes using the Deed of his choice in accordance with local requirements (Quit Claim Deed, Grant Deed, Etc) and that is perfectly acceptable as long as he remains on title as well and continues to occupy the property.  So as long as he is adding his brother and his brother’s wife and not replacing himself with those two individual’s, that would be fine.

Now having said that, please remember that by adding these two people to title, you are not adding them to the loan.  The loan will still become due and payable when the last original borrower on the loan is no longer living in the property as his/her primary residence.  Adding these individuals now might help later if the plan is that they dispose of the property or take title after the owner passes, but it does not keep the lender from calling the Note due and payable once the owner no longer lives in the home.

I’m not advising against it and I agree that it is easier to make plans for the transfer of the title while the owner is still living than to wait until after the owner passes if this is your goal.  I just want to make sure that you are not thinking that this would allow these new individuals to continue to live in the property under the terms of the original reverse mortgage afterwards because it would not achieve that purpose.

Hi Lashaunda,

I am not sure I understand the question.  The home currently belongs to your grandparents and always has.  They can do whatever they want with the house or the equity in the home.  The reverse mortgage is a loan against the home, it’s not title to the house.  Just like any other loan, they still own the property and do not have to “buy the house back” – it’s theirs with a lien due to the loan. 

If you want to pay off the loan with another loan (refinance it) or sell the house and pay off the loan and use the equity for other purposes, they can certainly do so.  There is no need to “buy” anything back because they still own it now.  If they wish to pay off the loan, it would just be a matter of refinancing the loan or paying off the loan with other funds available to them as would be the case with the payoff of any loan against the property. 

If your grandparents wish to gift you the home so that you can obtain that refinance in your name, they can certainly do so but I do want to issue a caution.  They can add you to title now with no issues or negative repercussions to the reverse mortgage loan as long as they remain on title as well.  If they were to Deed the property to you entirely and come off of title, that action would trigger the due and payable clause in the documents.

For this reason, you would not want them to transfer 100% of their title in the property to you unless you were certain that you were ready to pay off the loan.  Otherwise, the reverse mortgage could be placed into foreclosure due to that transfer of title before you could complete the financing and that would create unnecessary costs at the least  and could endanger your grandparents’ home if the financing did not go through for some reason and the foreclosure proceeded.

Hi Jennifer,

If mom has been living in the home and is on title as well, then you could deed your interest to her in order for her to qualify for the loan.  However, if mom has not been the owner all along and living in the property as her primary residence and you wish to transfer the home to her now to get the loan, this is considered a bail out situation and is not allowed by HUD. 

Hi Irma,

The reverse mortgage is a loan, so your options for selling your house would be the same as with any other loan.  You own your home and if you want to move, you have the right to sell your home and move.  There is no prepayment penalty, so you should probably first contact a real estate professional to determine the most probable selling price you could get for the home. 

You set the price and a buyer has to agree to that price but as with any loan on any house, that loan would have to be paid in full at the close of escrow for you to be able to accept the buyers offer without the lender’s participation.  So when you compare the most probable selling price with the amount you owe, you have to decide if the selling price will be higher than the amount owed (take a look at your most recent statement and you will know where you stand with your reverse mortgage balance).

If there is equity in the home, then all equity is yours to keep and you can proceed with your sale.  All you have to do is list the property with a real estate broker or you can sell it by owner, that would be your choice.  You set the price for some amount above the amount owed and you keep the difference.  If there is no equity in the home, that is, you owe more than the amount for which you could sell the home, you have to decide the benefit to such a sale.  You can continue to live in the home payment free for life. 

If there is no equity in the home that you would realize with a sale, then you would perhaps be better off remaining in the home instead of paying for housing in another location if you are still able to live in the home.  If that is no longer possible and there is no equity in the home, then I would suggest you contact your servicer and explain your circumstances and why you have to move to them to determine what options may be available to you.

Hi Wynter,

The reverse mortgage becomes due and payable when the last original borrower on the loan no longer occupies the property as their primary residence.  Since your mother no longer resides in the home, that would be dad.  If dad passes, the loan would become due and payable because there is not an original borrower still living in the property.

The title to the home is another issue completely.  They may have already settled the title as a condition of the divorce.  If so, whether she was on the loan at the time or not, if she has already signed off of the title through the divorce action, she no longer has a claim to the property.  If she did not sign off her interest to the home, then she still legally has ownership interest in the home, reverse mortgage or no.  The loan would still become due and payable, but if she had joint tenancy with dad and dad passes, she becomes the legal owner of the property absent a Deed executed to remove her interest or a court order so doing. 

You should find out what the divorce settlement stated. She may have already signed a Deed to your father, she may be entitled to a payout when the property is ultimately sold, or she may become the owner if no provision was made for settlement of the home and she is currently a co-owner still.  Any way that works out though, that is up to state laws and whatever your mom and dad have executed and agreed to in the settlement.

If you feel as though you need to contest anything, you really need to speak with an attorney as the reverse mortgage would not be the deciding factor it would not affect her or your property rights – it would just dictate that the loan becomes due and payable when the last original borrower on the loan is on title and living in the home as his/her primary residence.

Hello Ann,

Your brother would have had to be 62 years of age and living in the home at the time in order to be on the loan.  If he was not, he may have been used as the Alternate Contact.  This is the 3^rd party named at the time for the reverse mortgage company to contact in the event they are unable to reach the borrowers.

If he did meet the eligibility criteria (he was 62 or over) and was on the loan but does not live in the home, he would not be eligible to stay in the home after mom and dad both passed, but as long as at least one of the original borrowers is still living in the home as their primary residence, the loan still meets the terms and conditions for an active reverse mortgage.  In other words, as long as mom is still living in the home, this is still acceptable.

When mom no longer occupies the home as her primary residence, the loan will become due and payable.  Knowing this now gives you all a chance to discuss future options so that when that time comes, you will have an idea of what you want to do with the home (sell it or pay off the loan and keep it) and what would be necessary to complete that action.

If you wish to keep the home, someone would need to either be able to pay off the loan balance with available funds or refinance the loan balance with a new loan in his/her/their name/names.  If you plan to sell the home, knowing this in advance makes the planning easier when the time comes for needed action.

Hi Steve,

You can always pull the recorded documents and that will give you a start.  The county recorder will have copies of the recorded docs and from those, you will have the name of the company that first originated the loan as well as the FHA Case number at the top of the loan documents.  If you are lucky, the same company will still own the loan.  If not, you can contact HUD and with the property address and the Case Number, they will have more information about who is currently servicing the loan.

I warn you though, if you are unable to provide documentation that you are the trustee of the estate or the current owner of the property by way of inheritance, they may not be able to discuss very much with you due to financial privacy laws.  However, you can at least find out who you need to deal with in this manner and start the processes moving.

Hello Tyneah,

To answer your first question, You can pay the loan off with a refinance loan, but at 50 years old you would not be eligible for a reverse mortgage.  You would have to be at least 62 years of age to qualify for a reverse mortgage so you would have to consider conventional financing or yes, you could always sell the home.

If the loan amount owing on the home is over 95% of the current value of the home, you have one of two choices.  1) You could either choose to pay off the current loan with a refinance for the current balance or 95% of the current value of the home, whichever is less; or 2) You can choose to walk away and owe nothing.  In other words, if the house is worth $100,000 and mom owes $110,000 on her reverse mortgage, you have the right to pay the loan off and keep the home at $95,000 (95% of the current value) or you can let the lender take the home and you owe nothing.  The loan is a non-recourse loan so if you choose to walk away, the lender cannot look to mom’s other assets to repay the loan and you are never on the hook for anything as the heir. 

Hi Nicholas,

I am curious as to how you are being “sued by the lienholder”?  The reverse mortgage is a non-recourse loan and the lender’s only recourse is the property itself.  If they have already taken the property in a foreclosure action, I don’t know what they could possibly be suing you for at this time.  After all, you never signed any agreement to repay the obligation, just your sister.  Are you sure that as the heirs you simply aren’t being named in the suit as a way to cover all the bases? 

I cannot give you legal advice and would suggest that you contact an attorney and have him/her look at the paperwork for you to be certain.  I think you will find out that the as potential heirs the lender is notifying you of the foreclosure action and thereby giving you the opportunity to protect any rights you may have.  Talk to an attorney, I think you will find you have nothing to worry about but don’t take that from me, get competent legal representation.  The attorney can probably tell you all you need to know in a quick visit or even just by having you send him/her the documents and a phone call.  I would be very surprised if you even have to make any appearances, in court or otherwise but the attorney will advise you of the best course of action. 

Hi Jennie,

This really isn’t a reverse mortgage question and is a legal question dealing with tenants rights.  I would suggest that you contact an attorney because she may have already received notice that the lender has called the loan due and payable and the lender will foreclose on the loan if she does not pay off the obligation.  Only an attorney in your area can advise you of the best way to legally protect your rights as a tenant of the property. 

As for purchasing the house, until the lender does foreclose (if that is what they are even starting), the owner of the property could be the heirs of the former owners or could still be the deceased owners.  I say this because I don’t know if the daughter ever perfected the title and there may be other heirs, she may not even have taken full title to the property or have the right to do so.  I have no way to know if it ever went through probate and was awarded to her or if it is still in her parent’s name.  If she owns the home, she would be the one you would talk to about buying the home at this time.

If she plans to sell the home anyway, you might be able to work a deal with her to save yourself some costs and also her some sales commissions.  When you say she has collected over $20,000 from you, was that the total amount over a period of 18 months?  What is the rental rate in the area?  If it is not less than $1150 per month, you have only been paying market rents even though you have paid $20,000 over the past 18 months but if the market rent on the property is less, perhaps the seller will give you credit for any amount above the rent that you have paid toward the purchase?  At any rate, that would be up to you and the seller to negotiate.  I wish you the best.

Hello Elizabeth,

There is no one set answer for this question.  The lender will start to ask about your plans to repay the obligation (refinance the loan, sell the home, etc) as soon as they become aware of the passing of the borrower.  From there, they have a number of tasks they need to complete with title, appraisal, HUD, etc.

It might take them a few months before they are even ready to start talking to you about it, it could take a year.  You can’t plan on the year though.  I think you should act as though they will be ready to begin commencement of foreclosure proceedings in a short time – even though foreclosure itself can take many months to complete even after they start it.

The sooner you have everything done on your side, the better you will be.  Don’t hesitate or delay, move expeditiously toward either refinancing the home or selling as soon as the decision is made what you plan to do with the home.  It sounds like a sale is what you have decided is the best course of action.  If so, I would advise taking the steps to effect a sale as quickly as possible for peace of mind and so that you don’t even have to worry about tight timeframes. 

Hi Nancy,

I don’t know who told you that you cannot sell the home but you have the right to sell the home at any time you wish.  That can be now or at any time in the future and any money left over after paying off the loan is yours.  If something happens to you and you are forced to leave the home or you should pass, the loan becomes due and payable,  Your heirs would have the option to pay off the loan and keep the property or to sell the home and pay off the loan. 

If the heirs did not want to or there were no heirs, then the lender would have to eventually foreclose on the home to pay back the obligation but it sounds like you do have an heir and have plenty of equity left so that would be a bad idea.  You can work with an estate attorney now to make sure that the title to the home passes to your daughter (stepdaughter) so that when the time comes, there is no need for long drawn out proceedings to determine who will get title to the property and that would make it easier for her to either get a loan in her name to refinance the property and keep it or to sell the home. 

If you are concerned about the timing if you have to move to an assisted living facility, you have up to 12 months before the move is considered a permanent relocation so you and your stepdaughter should certainly have ample time to determine that your move is permanent and remove all your belongings before she has to sell the home or make other plans.

Hello Ron,

I really have to refer you to a licensed attorney for this information.  The answer can differ depending on several items and we are not licensed to give legal advice so I would suggest you contact a licensed attorney to determine the answer based on your circumstances.  If you feel that you are unable to afford an attorney, there are usually legal aid services available in most parts of the country to provide help.

Hi Donna,

You can dispute the value, but the question is what will the next appraiser assign for the value and will it help? Under the terms of the mortgage, you have the right to walk away with no liability or to pay off the loan off at 95% of the current market value. The lender can only go by the appraisals and can put a claim into HUD for any losses sustained pursuant to the program guidelines. If you try to put in an offer to pay less than the 95% of the appraised value, they will not accept your offer due to the fact that they must secure the property, submit the claim to HUD and receive their payment. If they accepted less from you, they would lose money whereas HUD will make them whole under the program so they really don’t have a choice.

If you do want the property, I would contact them again. Don’t let them ignore you and keep on them. If it’s only attractive to you at a lower price that the lender will not be able to accept, I would think no news is good news at this point as the loan is still a no-recourse loan and you still have the same options. If the balance continues to rise, that’s on the lender, not you.

Hi Ron,

All costs associated with the reverse mortgage would be included in the foreclosure if that was the final action the lender had to take and the initial bid at the foreclosure sale.  Either the lender or another bidder would own the home based on whether or not they were the high bidder at the auction but there would not be a separate billing to anyone as a result of the foreclosure. 

Hi Chetna,

The bank can only do what the owners wish or in the absence of the proper documentation to proceed if one of the heirs will not cooperate, they would look for a court order. I would suggest you contact a competent attorney. The attorney may be able to get your mother's step brother to either act or sign over his interest in the property to your mom if he is unwilling to participate. It may require a court to intervene. The one thing you can't do is just wait because eventually the lender will begin foreclosure proceedings to retire the debt if neither of the heirs make an attempt to pay the loan off.

Hi Mary,

The reverse mortgage is just a loan.  You really need to speak with an attorney if you are contemplating different ways to pass title and any ramifications that could possibly have as the lien or loan is not a factor in the method of transfer. This is especially true if you are looking for ways to avoid probate, taxation issues, etc.  The attorney may want to talk to you about trusts or may tell you that this is not possible or advise you on things not to do, but we could not possibly advise you in this legal area.

Hi Sandra,

I am not really sure what you mean by hits the growth of Principal Limit, but you can stay in your home for the rest of your life as long as you continue to meet the requirements (live in the home as your principal residence, pay your taxes and insurance and reasonably maintain the home).

The loan does not need to be repaid until you leave the home or default on the terms as I just stated them. Your financial obligations will be to pay the taxes, the homeowners insurance and maintenance on the home, plus your living expenses – but you do not have to make any loan repayments for as long as you live in the home and keep the terms as stated.

Good afternoon,

The house is in the name of the borrower who passed with a loan that is secured by the property.  If no one claims the property, the lender would take the property by foreclosure and cannot look to any family members for payment of any kind.

Just a question though.  Have you checked the value against the loan amount?  If there is equity in the property, it really is relatively inexpensive to have a junk company come and remove all the contents from the home at one time if there is nothing you want.   If there is equity in the home, it might be beneficial to have the home emptied and to sell it and keep the equity.  Might be worth contacting a real estate agent and a junk removal company to determine a likely value and costs first to see if you are leaving money on the table.

Hi Steve,

I don’t see a question here, but your choices are simple.  If you want the condo, you need to go to court and have them declare you the heir through the probate process and then you can negotiate with the reverse mortgage lender for the payoff of the loan.  If the loan balance is more than 95% of the current market value of the home, you have the right to pay off the loan at the lesser of the amount owed or 95% of the value.

If you do not want the home, you don’t have to do anything.  You can simply take all of dad’s personal property out of the home and let the lender take the home back through a foreclosure action.  If you don’t have a Power of Attorney that was executed prior to your father’s passing or a court ordered authority to sign the title to the lender, you could not even give the lender a Deed in Lieu of foreclosure anyway and so this would be the course of action they would have to take if you don’t want the property. 

The reverse mortgage is a non-recourse loan and so the lender can look to no other assets to repay the obligation so they cannot seek repayment from any other portion of dad’s estate.  I cannot tell you what recourse any other party may or may not have so I would suggest that you obtain competent legal advice to be sure of any potential liabilities from all other parties before deciding what you do or do not pay or what further steps you take.

Hi Betty,

The lender has no ability to seek repayment from any other asset of your mom’s.  That includes any other properties, cash in the bank, personal assets – nothing.  Their only recourse is the home on which the loan is placed.  There is no requirement to sell mom’s primary residence either.  If the attorney is saying that it must be sold, it is probably because your brother is unable to retire the debt with funds available to him or to refinance the loan in his name or he would not have to sell that home either.  But you can breathe easier, the lender cannot touch any other assets of your mother’s including the property that is going to go to you.

Hi Jeff,

I have heard this more than once.  It’s not so much a matter of whether or not it will hurt dad if you don’t clean the property, it’s more a matter of the lender’s rights under the law if they take the home back by foreclosure or accept a Deed in Lieu of Foreclosure.  If the lender accepts a Deed in Lieu, That means that they are accepting the property as is and with all other liens and conditions at the time.

The lender has to make sure the property is at least what they term “broom clean” and free of other encumbrances.  If there are any other liens or issues, the lender would be forced to take the home through a foreclosure action so that any claims that others would have had would be removed if they did not step in to protect their interest before the foreclosure.

Whether or not your father will have any worse issues with credit (or whether or not it would even make any difference) with a foreclosure versus a Deed in Lieu of Foreclosure, I would seriously doubt.  The reverse mortgage is a non-recourse debt and the lender can only look to the property for repayment of the obligation anyway so there would be no financial difference.  If you are concerned about legal issues with the property and any probate, etc., I would have to refer you to an attorney as we are not licensed to give legal advice.

Hi Sherry,

The fact that someone wants to buy the house has no bearing on the loan.  Assuming that mom is not going to need the proceeds of the sale of the home for her needs and that the home is worth more than the loan against the house, the sale of the home to any other party (her son, your son, a complete stranger) would work the same as it would in any other instance.

Just keep the following things in mind.

1) there is a house with a loan on it.

2) the heirs (presumably you and your sister) will own the home after mom passes and therefore own the asset that has a monetary value minus the amount of the mortgage against the house.

3) Whether the loan was a reverse mortgage or a forward loan, the equity is the value minus any mortgages but the true cash value is what you would be able to sell it for after all costs so you and your sister will decide for what amount you want to sell the home to the grandchild and any remaining funds after the payoff of the loan and all costs would be the amount you and your sister have to split in whatever manner your mom directed or you agree to.

I can’t tell you how to split this up or what to do, but if the home is worth $300,000 and the reverse mortgage balance is $100,000, the equity in the home is $200,000.  You and your sister would undoubtedly incur some costs if you had to sell the home so you may want to give the grandchild the “family special” but that is entirely up to you. 

If you have to pay a real estate agent and market the home, etc, you can figure 8% costs plus carrying time and who knows what you may have to correct/repair in another sale so in this example, you may want to give that discount to the family member and all parties come out ahead if you sell to the grandchild at some price less than current market.  After the loan is paid in full, you and your sister would then split any remaining proceeds and you certainly would not be losing anything that you would have received by selling the home and paying the costs and commissions to a third party.

Seems like a win/win solution if you can all agree to the numbers!

Hi Vicki,

I cannot give you legal advice.  You never signed any paperwork agreeing to pay for the loan so you are not in any way liable for the repayment.  I don’t know what the summons is for or why you are getting it.  It may be because you are her heir or because you are living in the home and they are trying to notify you of the exact timeframes you are trying to determine now.  Have you tried to contact the servicer to ask?  That might be a very good first step.  If you are the heir, there might also be equity in the home and it might be a benefit to you to list the home and sell it before the lender forecloses.  All very good reasons to find out what is going on.  If you need some assistance, you should speak to an attorney licensed in your area or a legal aid service if you cannot afford the services of an attorney.

Hello Stephen,

I think it would be best to ask them.  The only thing I can think of is that they are going to do something such as take the property back by foreclosure and want to be sure to include any and all possible heirs in all notices but I am not certain of this.  I would suggest that you ask the bank’s attorney why the need for the additional information.

Remember this, you and your kids never signed anything promising to repay the obligation and the reverse mortgage is a non-recourse loan which means the lender can only seek repayment for the loan by taking the property if none of the heirs wish to pay off the loan and keep the home. 

Assuming there are no grounds for any other action which I cannot even begin to consider which would not be in the general course of the reverse mortgage, I can’t think of any other reason they would want the information so I really think it best to just contact them and ask them why they need it and if you are not satisfied with their answer, then give serious consideration to contacting an attorney of your own for legal advice as to how to answer.

Hi Lisa,

I’m afraid you’re not looking at the loan correctly.  The amount that your mother-in-law did not use was a line of credit available only to her.  Just like a Home Equity Line of Credit or even a credit card, this was a pre-approved amount that she had available to use whenever she wanted.  The fact that she didn’t use the money means that it does not have to be repaid now, but it is not extra money that is just sitting someplace that is already included in the amount shown on her balance owed.  She never borrowed it so it is not included in her loan balance.  In other words, if she had $50,000 left that she didn’t use, and you took the other $50,000, that would also increase her balance owed by $50,000 so it would not have the effect of lowering the balance.

To use an example with round numbers, if a borrower borrowed $100,000 of a $150,000 line and then passed, the heirs only have to pay what the borrower borrowed, not the entire line (plus any interest that accrues).  In this case, the heirs would have to repay $100,000 and not the additional $50,000 because the borrower never used that money but the heirs could not use the remaining $50,000 to pay back the $100,000 owed.  If they tried to do that, the borrower would have taken $100,000, the heirs would have taken $50,000 and then the balance owed would be $150,000.  Even if the heirs used the $50,000 to pay right back to the balance, it only takes you back to the $100,000 you started with that the borrower had already borrowed.

Now this example is not real because heirs cannot take money on the reverse mortgage – only a borrower can draw from the funds.  If the borrower does not draw the funds, then they are not owed later but if they do, then they are added to the balance and will be due when the borrower permanently leaves the home.  You have to consider the amount owed in your plans as to whether you keep or sell the home but there are no additional funds floating around that are going to be available to assist you to pay that balance off.

Hello Susan,

I’m not 100% sure I know what you are asking but let me answer as best I can and see if that covers your question.  There is no “obligation to pay” by the heirs for the HECM loan – by any of the heirs - at any time.  The heirs never signed a Promissory Note with the lender agreeing to make any payments at any time.  The loan is due and payable and the heirs must decide if they want to sell the home, pay off the loan or let the lender take the property back.  There is no obligation on the part of the heirs at any time to pay off the loan if they do not wish to do so and the lender can never look at any other assets of the estate for repayment, just the home.  This is the nonrecourse nature of the loan.

The reverse mortgage lender has a lien against the property that is due and payable once the last remaining borrower on the loan no longer occupies the home as their primary residence.  The obligation to repay the loan is always there IF the heirs (some or all) wish to keep the home or sell the property to keep any remaining equity, but the heirs are under no individual liability to repay the loan whether they sign their interest in the property over to other heirs or not.

The lender’s only recourse is the property.  If one or more heirs sign their interest in a property over to other heirs, the same would be true.  The remaining heirs would still have the option to repay the amount owed on the loan, sell the house or let the lender take the property back, but none of the heirs would still be “obligated” to pay the loan back if they did not want to do so, not even the heir who retained title.  The heir who Quit Claimed their interest away (as well as the heir who had received the title) would have no liability whatsoever to the lender should the lender take the property back through a foreclosure action.   There would be no individual liability or negative ramifications (no credit reporting against the heirs, etc.) for such action against any of the heirs. 

Hi Linda,

My earlier answer is correct then.  The lender cannot work with anyone who is not on the loan or who was never authorized by the borrower to receive information about the loan on the borrower’s behalf.  It is sometimes a real big pain, but lenders have been sued for violating financial privacy laws and they will not give out any information to any third party they are not authorized by the borrower to give (and that includes you if you were also not on the loan and were never authorized by the borrower to receive information about the loan on his behalf).  Same thing would happen if the sons try to access the bank records and accounts.  The bank will not give them the information about his bank accounts either or the funds in those accounts if they were never authorized by the account holder unless the sons go through probate and the courts say they are entitled to them.

So we are back to the beginning.  The lender cannot “sell” the sons the property, they don’t own it and it is not theirs to sell.  The property title is still in your husband’s name and the sons must go to court and through a probation action, have the court award them the property as the man’s heirs.  The bank cannot grant title to the borrower’s sons, it has no right to convey title on a property it does not own.  Once the sons can prove to the lender that they are the rightful owners due to the probate court’s award as the deceased owner’s heirs, the lender can work with them to dispose of the loan.  Until then, the lender does not know who will be awarded the property and will not become involved in the title resolution.  As I stated, the lender has a loan against the property which gives them no rights to transfer title to the sons.  If the sons wait for the loan to go through foreclosure and the lender does own the property, then any equity still in the home would be lost as the bank only bids what is owed to the bank at a foreclosure auction.  At that point the property would be open to be sold to anyone at market value and the 95% allowance I outlined in the previous answer would no longer be available.

The bottom line is that the sons are dealing with the wrong entity at this point.  If they want to keep the home, the first step is to go through a probate action through the court and get title to the home.  At that point, they don’t have to buy anything, they would own it.  They would have to pay off the reverse mortgage loan though and as the legal owner(s) at that point, the lender would give them a Beneficiary’s Demand for Payoff so that they would know exactly how much was owed and they could then make arrangements to pay the loan off. 

Hi Judy,

The loan becomes due and payable when the last borrower on the loan permanently leaves the home.  So if you are the only borrower on the loan, then the property would go to whoever you designate in your legal documents (will, trust, etc.) and that person or those persons would have to decide if they wanted to keep the home or sell it.  If they sell the home, they would just pay off the loan with the sale proceeds.  If they wanted to keep the home, they would have to find a way to pay off the loan which usually happens with the refinance of another loan in their name.  If however they don’t want the property or the home is not worth enough to pay off the loan, they don’t have to do anything.  They can just let the lender take the home and since the reverse mortgage is a non-recourse loan, your estate and no one else can ever be made to pay any money in to cover any shortfall.  Any person(s) to whom you leave your home can simply walk away with no obligations if that is what they choose to do.

Hi Linda,

I am sorry, but I am having a difficult time following your question.  Firstly let me ask, were you also on the loan?  If so, the title to the property is still in your name and the loan is still active as long as you live in the home.  If you want your sons to be able to pay off the loan and fix up the property, then you would contact the servicer to request the payoff demand as the owner.

If you were never on the loan or the title to the property, then you have a situation where the lender will have to be certain that they follow the proper protocol.  The sons can’t send them an intent to purchase, the lender does not own the property.  The property would typically go into probate at that time and the court would have to determine the owner of the home based on any legal documents filed by the previous owner or laws of the states regarding the rights of heirs for inheritance.  Once the court determines who owns the property, then the owner(s) will have to decide what they wish to do with it.  If the owners are the sons, they don’t have to “buy” it, they would already own it.  They do have to find a way to pay off the loan that is now due and payable though. 

The lender will conduct an appraisal to determine the value of the home as it is today.  If the home is worth less than the amount owed and the heirs still want to keep the home, the reverse mortgage allows them to pay off the loan for the balance owed or 95% of the current market value.  In other words, if the amount owed is $125,000 but the current value is $100,000 and the heirs still want the home, the lender will accept a payoff of $95,000 or 95% of the current market value of the home even though it is less than the amount owed.  If the home is worth $125,000 and the amount owed is $95,000, that would be the amount the heirs would have to pay in order to keep the property from going into foreclosure. 

The process is not extremely quick.  If there has to be a court probate, an appraisal and all of the other steps, it can take months to complete.  If your husband passed without a will and the property was not in a trust, or other liens or claims on title are present with other family members claiming rights to title, the process can be drawn out even longer.

Hi Teresa,

If your mom left you the home, all you need to do is realize the the reverse mortgage is now due and payable so you need to make arrangements to replace the loan with a new loan in your name. If you are 62 or over, you may want to look into a reverse mortgage yourself. If you are not yet 62 or if that would require you to bring in too much cash to close the loan, you can look into conventional or even FHA financing. 

If you did not receive the home outright, you may have to work with other family members or obtain title through a court action and then work on paying off the reverse mortgage.  Either way, if the reverse mortgage balance is greater than the current value of the house, you will not be required to pay more than the amount owed or 95% of the current market value, whichever is less.

Hello Estelle,

The house is the security for the loan. The loan would be repaid when the house is sold so you are paying the loan back, not your heirs.  If the home did not sell for at least the amount owed on the loan, they could never be forced to pay more than what the home is worth and the lender cannot look to any other assets of the estate for repayment.

Hi Ron,.

Typically the real estate agent will not be able to tell you anything, you need to contact the lender if you do not believe the home will sell for an amount adequate to repay the loan.  Only the lender can authorize a short sale (a sale at less than the amount owed) so you need their approval before you have the real estate agent sell the home not knowing if the lender will approve the short payment.

Hi Barry,

I can’t really give you the answers to the questions you’re asking because I can’t give you legal advice.  I can tell you that the reverse mortgage is a non-recourse loan and that the lender has no other recourse than the property itself.  I can tell you that the utilities are obtained by the owner of the property, so they would not become “responsible” for existing service at any point in time.   Any recourse against the estate for non-payment of utility bills would be whatever the utility company can do in accordance with the laws.  Again, I can’t tell you what recourse the utility companies may have against the estate.  I don’t know if they would file against the estate at probate or file a lien against the property.  You should seek counsel from an attorney to make that determination.

What I can tell you is that once you have spoken with an attorney to determine all potential liability for the estate, you can contact the lender and tell them that on the advice of counsel, you will be doing “XXXXX”, and give them the opportunity to take the property immediately through a Deed in Lieu or proceed with the foreclosure.  I know there are times when a lender has to take the home back through foreclosure and will not accept a Deed in Lieu so that other liabilities do not convey to the lender with the Deed, but it’s in their best interest to complete this as soon as possible as well.  I don’t know why the “broom clean” requirement would be a hardship or such a large expense in your case that it could not be completed, but lenders can’t just take things or dispose of them unless they are still in the property after the home is taken back in a foreclosure action and then there are certain laws they have to follow.  If you leave it full of personal belongings and can’t clean it out, they are forced by law to take the property back in a manner that protects them later from borrowers and heirs who may claim that they accidentally left things in the home that they want back after everything has been removed.  The lender cannot be responsible for items left behind.

One thing I would also suggest you at least look into, there are many real estate professionals who specialize in elder property sales.  Many work with estate sale professionals who will conduct a sale if there are items there that can be sold and at the completion of the sale, will donate any remaining items or have them removed and thus you will meet the broom clean requirement.  Depending on the difference, the real estate professional may also be willing to lower their fees to collect half a commission which is better for you and is better than no commission for them.  We have seen some people successful having the property sold with no shortfall or even a little cash back to the estate.  It might be worth a shot.

Hi Pam,

If your father has been living in the home the entire time, you usually won’t have any trouble with this.  Many seniors do transfer the title for some reason or other no realizing later that they may want to do a reverse mortgage but still live in the home and then later need to transfer the title back.  The title needs to be back in his name before you begin the transaction and he may need to write a letter of explanation regarding why the transfer was done in the first place but with a viable reason and it is usually not a problem at all.

Hi Lydia,

I’m sorry but I can’t answer this for you.  The loan has no bearing on yours and your siblings rights after the passing of your mom.  For that, you should speak with a licensed estate attorney to determine what rights you and they have based on what your mom put in her trust or will if she had one or established laws if there was none but the reverse mortgage has no bearing on any of that and I could not possibly comment.

Hi Susan,

I can’t tell you what you should do, I can only tell you what the loan requires and possibly give you some ideas that may help you.  The loan allows your mom to stay in the home for as long as it is her primary residence and once she permanently leaves the home, the loan becomes due and payable.  Knowing the loan will now be due, I would think you would want to contact a real estate professional and determine a most probably selling price of the home.  If the house will sell for more than is owed on the loan, the best for all concerned would be to put the house on the market and sell it while there is still equity in the home and your mom or you as her heirs can still realize the benefit of that equity.

If the balance of the loan is higher than the value of the home, as the heirs, you have the right to pay off the home after mom leaves at an amount equal to the balance owed or 95% or the current value, whichever is less.  This means that you and your siblings could apply for a loan yourselves and continue living in the home.  I don’t know what the rental costs are in your area or the condition of mom’s house, but if you can save the rents for three families, it might be a much better call in the long run for the three of you to go together and continue to live in the home as you have.

Finally, you don’t have to do anything.  If you don’t pay the taxes or insurance, it will create a default which will cause the lender to call the loan due and payable immediately upon receipt of the notice but if that is your intent anyway and mom has already left the home, it may just be a moot point for you.  The water bill is again a personal decision, if you intend to continue to live there it would be difficult to do without water but if you plan to move out, then it probably would not bother you if the water company turned off the water service to the home. 

Good Morning,

The loan technically becomes due once Dad no longer lives in the home.  The reverse mortgage lender may discover the fact of dad’s passing relatively quickly and it may take them a while.  You then will have to decide what you want to do with the home.  If there is equity still in the property, you would want to sell it to retain that money assuming you don’t want to continue to live there and your question indicates your intent to leave.  The first thing you should do is contact a local real estate professional who works with seniors and determine a likely selling price and compare that to the amount owed.  If there is equity in the home, talk to the agent about performing an estate sale to enable you to sell the home.  They have companies who do this for a living who will allow you to take everything you wish to keep from the home, and then will conduct a sale over a relatively short time period so that the home will be ready for sale.  Once the home is sold after that, you can pay off the loan and keep any leftover funds.

If the home is not worth more than the amount owed, you can still work with the estate sale companies to remove all unwanted items after you have determined what you wish to keep.  The lender must go through HUD and also local foreclosure proceedings to take the property back so you will have many months to complete everything from the time they start and that won’t be until they become aware of the passing or your father (and again, this could be right away or it could be a little while).  The best thing you can do though is to be ready for this eventuality. 

Start the process of removing any clutter and old worthless stuff now so that when the time does come, it won’t be such a monumental task.  Sometimes seniors are very hesitant to get rid of old stuff and sometimes they are only too happy to clean out and watch it start to go away.  Your dad may surprise you and may want to be a part of the declutter process.  Talk to him and you may be surprised.

Hello Allen,

You are always better off if you  can sell the home.  I would certainly encourage you to contact a real estate professional in your area to determine if the home could sell for more than is owed on it so that you can protect credit and your equity (it does belong to you).  But take heart, if you do need to leave the home, regardless of whether or not the home is worth more or less than what is owed, the reverse mortgage is a non-recourse loan which means that the lender can look at no other assets to repay the obligation.  Their only option is to take the home if needed, they cannot attach your social security or seek repayment from any other assets or income.

Hello Paula,

When mom permanently leaves the home (if she has not already), the loan becomes due and payable.  Mom and therefore her heirs still own the home though.  There would be an amount owing on the loan that now needs to be repaid and if you wish to keep the home, you would need to either repay the loan with funds available to you or seek new financing at this time to refinance the loan. 

If you find that the balance of her loan is higher than the value of the property, you still have the right to pay off the loan at the lower of 95% of the current market value or the amount owed.  This is a safeguard for heirs that they also can never owe more than the property is worth, regardless of how much mom borrowed or how long she stayed in the home without making a payment.  You should talk to mom if she is still living or check her statements if she has passed and determine which course of action works best for you.  If there are multiple heirs, it might be more difficult to refinance the obligation in several people’s names whereas if there are multiple heirs and each of you are putting money in to retire the debt, that is a much quicker and easier goal to accomplish.  At any rate, the sooner you determine what you wish to do, the sooner you can accomplish your goals.

Hi Wendy,

Considering summer is the busy season for sales in most markets in the country, what does your real estate agent think?  If mom has had the house listed for 3 months and those 3 months spanned a portion of March, then April, May and part of June, you may just now be coming into the time when the sales begin to pick up in her market.  I have no way of knowing whether she is in a market that thrives in the summer when school lets out or if it slows due to excessive heat.  I would check with the agent first to find out if you are coming into the busy season for her location.    

The thing you have to remember is that the loan is a non-recourse loan which means that if mom contacted the lender and informed them that she was done, she was leaving now even though she was not forced to do so and they could just “take the property back” through a Deed in Lieu of Foreclosure or a foreclosure action, she would still have some lingering effects.  She may find some adverse issues with credit and she would also not qualify for any further HUD guaranteed/insured programs due to her walking away from this home if it resulted in a loss to HUD.  When borrowers pass and leave a loss to HUD, there are no ramifications because they will never need HUD services again and it does not affect heirs in any way.  Her walking away from this loan would also not affect heirs in any way and the lender can look to no other assets to repay the loan, but since mom is still living and may desire a HUD program of some sort in the future and may still rely on credit for other issues, if she can sell the home, that would certainly be the most desirable outcome.

Hi Jim,

You need to speak with an attorney in the area where the property is located.  I think you will find that it is not economically feasible or even legally feasible in most areas for a non-mortgage holder to foreclose on a property to pay off a non-mortgage debt but you are correct, the first lien-holder would have to be paid off and if the property had no equity, that would be a senseless foreclosure.  I would still tell you that you need to speak with an attorney in your area though to determine what, if anything you need to do to protect yourself and to determine your liability and rights.  If you are worried about the cost, there are many free legal aid opportunities and perhaps you could find one near you.

Hello Elena,

The lender cannot sell you what they do not own. As long as the home still belongs to the owner or their heirs, they can sell it to you if they want to. If they wait for the lender to foreclose, then the property will be sold at auction and you can purchase it then or wait until the lender puts the home back on the market for sale.

Hi Gene,

A reverse mortgage is just like any other loan.  The bank does not own it unless and until they go through some legal process such as foreclosure and receive the property through a foreclosure auction or the last owner deeds the property to them.  Just as with any foreclosure auction, the trustee would begin the sale at the amount owed to the lender (including any accrued interest and costs) and if no one bids against the lender, the lender would receive the property via a Trustees Deed upon Sale in a Deed of Trust state and the process is different for states using mortgages which is typically longer to complete and requires some judicial actions depending on state laws.  In either case though, the lender does not control who the owner does or does not sell the home to as long as the owner still retains title to the home.  You can’t offer to buy it from the bank unless the bank already owns it and that would only happen if the heirs executed a Deed to the bank or the bank completed an action to take the property pursuant to the terms of the loan due to default.

You can check the public records to see who owns it now.  If the heirs still own it, you can make an offer to them to purchase the home.  If they want to accept your offer and the amount is less than what is owed on the home, just like any other “short sale” offer, they will have to contact the lender and the lender would have to approve the short sale amount.  This would not be a quick process as the lender would also have to have approval from HUD to do so and that would take an appraisal of the home as well.  Of course, if the amount owed on the loan is less than your offer and the loan would be paid in full with the sale, the owners (heirs) do not need approval from the lender.

If the bank does own the property, then you could make them an offer on the home and see if they are willing to accept it.  Here again, HUD would be involved due to the Claims they stand to pay.  It could also have been already transferred to HUD and then you would have to work with the division that liquidates HUD REO property and I do not have that information readily available.

Hi Mary,

I am not an attorney and cannot give you legal advice.  You need to contact competent legal counsel for a question such as this.  There are a number of things that your attorney will have to determine before deciding if it is in your best interest to go before a court of law.  Was the title in the name of just the borrower at the time the loan was placed and the second person added later?  If so, it would seem that the lien not be affected by a subsequent change in title whereas if the title was in the name of two individuals at the time of the lien and the second individual was not included in any way with the transaction, there may be some recourse.  It would be strange if not all owners at the time of the loan agreed to the financing and an attorney can tell you what your rights would be and what possible remedies exist. 

Any owner of a property who feels that they are not being dealt with fairly should seek immediate legal aid before it is too late for alternative action if necessary.  Unfortunately, many times people get facts mixed up or forget things and rely on memory which may not be accurate.  If you wait and find out too late that the lender is acting in accordance with law and the loan terms, it might be too late to sell the home or take other actions necessary to protect your interest.  That’s why we say if in doubt, don’t wait, verify your options as soon as possible while they are all still available.

Hi Betty,

It's not a matter of how much she borrowed in relation to the amount available but rather the amount available to you versus the value of the home when compared to what you will need to pay off the balance of her loan. If this is under 50% of the value of the home, chances are good you may qualify for a reverse mortgage of your own. You can go onto our website at https://reverse.mortgage/calculator and I can show you what you could expect to receive.

Hello Mark,

This is a legal question that you really need to ask of a competent attorney.  The loan will now be due and payable and I don't know what the legal rights would be for others in the home or if the owner has heirs who will want the property.

Hi Roger,

The loan is a non recourse loan.  If the value is not sufficient to repay the loan, the lender cannot seek repayment from any other assets. Before you accept any offers less than an amount to pay the loan in full, the lender would have to assess the value of the home and get HUD approval as that would result in a claim HUD would have to pay. But the bottom line is that you and your family would not have to pay any shortfall.

Hi Butch,

I can’t comment on the rights of heirs after your parents pass, the validity of the trust your parents set up would be up to a court of law.  If your parent(s) is/are still alive though, I would think you would want to talk to them about amending this provision while they are able if they so desire to compensate her for her original investment plus interest and then split the remaining estate equally between the remaining siblings.  Remember, it’s your parents who own the house and I would think that the courts would want to follow their desires.  But at any rate, I am not licensed to give legal advice and I do not know what rights you would have, legally, with regard to ownership or to continue to occupy a home based on a lease from deceased owners.

You see, for your sister or any of you to be able to keep the equity in the home, the property would have to sell or the loan would have to otherwise be repaid before the lender has to take the home back in a foreclosure action.  That would obviously affect your ability to stay in the property as well.  If the loan is not repaid after the death of the last borrower, the lender would eventually foreclose on the loan.  The property would be sold at a foreclosure auction and if no one bid over the amount owed to the lender, then there would be no money for any of you.  Most properties sold at foreclosure auctions sell for much lower than actual value (people buying at these auctions are not looking to pay top dollar).  If the plan is to sell the home, the sooner you can get it on the market and get it sold, the better off you will be.  I can’t answer your questions due to the nature (legal) and arrangements (will you all work to sell it right away or will it go back to a lender or what), but I can tell you that it may well be in the best interest of all concerned if you do communicate, work out your differences and come up with a plan to get the property sold as quickly as possible when the time comes.  Otherwise, you may really be looking for a hole in the wall to hide out.

Hi John,

I would suggest that you contact Champion if you do not still have a copy of the original paperwork and get a copy.  He may have to sign a letter requesting the copies so the sooner the better.  Once you have the copies of the documents, you can determine exactly what your rights will be at any given time.  The lender has no more rights to the home than the owner gives them at the time the loan documents are signed.  In other words, the lender cannot change the rules at a later date and go back on any of the original terms as they will be contained in the original documents.  If you were an owner of the property and also signed those documents, that will be evident and all of the terms to which you and your father agreed will be spelled out within those documents.

Once you receive them, you can take them to an attorney for a legal opinion if there are any parts about which you are unsure.  I would have suggested this happen before you closed the loan rather than now, but it might still be a very good idea.  I am concerned that you might have some of your facts confused.  I don’t know how long you had the loan, but to my knowledge I do not remember a time HUD allowed underaged, unmarried individuals on reverse mortgages.  This means you may have been on title prior to the loan, then signed a Deed to come off of title in order to allow your father to close the reverse mortgage loan.  If that was the case, you really should know because you may want to take steps at this time to add yourself back to title now, before dad passes, and also to determine the best course of action for you to take at that time.  The loan does not allow non-borrowing relatives to keep the loan outstanding once the borrower has passed and would typically require you to either refinance the obligation with a loan in your name or sell the home to retire the debt if that was not possible.  These are things the original documents will tell you and that by knowing in advance will allow you to take the necessary steps to be ready when you do have to take action.

Hi Cathy,

Unless you are certain the house went through a foreclosure action, the house could be vacant and title could be going through probation while the ownership is ironed out.  In that case, the lender and HUD do not own the home and cannot rent it out.  If the home has gone through a completed foreclosure action (and you could tell this by checking public records to see who the current owner of the property is), you could approach the lender or HUD’s agent to determine what options are available.  I would be surprised if they wanted to rent it out, it would probably be more likely that they wanted to sell the home as quickly as possible and having a renter occupy the property is an impediment to a sale in most instances.  But you never know unless you try.  Check public records to see who the legal owner is and start there. 

Hi James,

I find it interesting that a lender would allow you to take out a loan on a property you did not own, and then a title company would insure that title.  But to determine how binding the loan would be would probably ultimately require a court of law to rule on it and it would start with you visiting an attorney.  Usually the lender and the title company would be certain that the title passed to you as her heir before they would allow you to take out a loan using that property as collateral for the loan but it would not be the first time in lending history an error was made on title.  I will also tell you that in over 40 years, I have seen legitimate errors made on loans that when brought to court the lender did err but the error did not always result in the elimination of the loan.   I’m sorry, I can’t tell you what they would do in that instance but I can tell you this is not a question regarding how the loan works but of whether or not the lender placed a valid lien on the home and then what the court feels the recourse should be if they did not.  For that answer, you really do need to seek the aid of an attorney and go from there.

Hello Brooke,

The reverse mortgage is a loan just like any other loan but it is now due and payable.  You can make the determination as to whether or not you want to keep the home based on the amount owed on the loan that you would have to pay off.  I would first compare that amount to the value of the property and your ability to either retire that loan or obtain a new loan in your name to refinance the obligation in order to make a sound decision.  In other words, if the home still has plenty of equity and you have the wherewithal to pay off the loan or the means to obtain a loan in your own name, you just need to pay off the reverse mortgage that is now due with your funds or with a new loan.  If that is beyond your means but there is sufficient equity in the home, you may wish to contact a local real estate professional and sell the home so that you can retain the equity upon sale. 

If the value of the home is not greater than the amount owed, then you have another decision to make.  If you want to keep the home anyway, HUD allows heirs to pay off the reverse mortgage at an amount equal to the amount owed or 95% of the current property value.  If you plan to take this option, you would need to contact the servicer and let them know you are aware of the value and the amount owing and wish to pay off the loan at the lower amount and they will have to get an appraisal as well as receive the approvals from HUD, etc.  If you determine that you do not want to worry about the sale of the home or to keep the home due to the value vs the amount owed, you should just make arrangements to remove all of your personal property from the home and let the lender know that you do not intend to pay off the loan.  They may be willing to accept a Deed in Lieu of Foreclosure or they may have to proceed with a foreclosure action to eliminate any other possible claims on title, but none of those actions will affect you or your credit and they cannot seek repayment from any other assets so it does not affect your mother’s estate either.

Hi Wayne,

The reverse mortgage is a non-recourse loan.  This means the only thing the lender  can look to for repayment of the loan ultimately if the borrower is unwilling or unable is the home itself.  The lender cannot go after mom and dad's other assets nor can they attempt to make your brother pay back any portion of the loan.

In fact, HUD knows that family members will not step in to retire the debt when that amount exceeds the value and they also know that if they have to take the property by foreclosure and resell it, they will not be able to sell it for more than the current market value. For this reason,  if the property is not worth at least as much as the amount owed on the loan, the heirs may keep the home by paying the lesser of the amount owed or 95% of the current market value.  They are not required to pay  any shortfall between the value and the amount owed.

Hi Richard,

Just as with any other property on which the owner passes while there is still a loan on the property, the lender cannot start to to anything with the property until it is determined what the heirs wish to do.  Unless they either Deed the property to the lender or allow it to go through a foreclosure action, the owner's estate still owns the property and may elect to sell the property or one of the heirs may choose to move into the home. Have you got any way to contact the owner's family?  If no one makes any attempt to pay off the loan, it will eventually go through foreclosure and once the lender owns the home, they would take any actions necessary to sell the property.

Hi Glenda,

I honestly don't know, you really need to ask them.  Take a look at the affidavit to see what it is for and if you are not sure whether or not it is in your best interest to sign it, you should seek legal assistance.

Something has to be done now to pay off the loan and you all need to agree on that decision if there is not one of you charged with making those decisions in advance.  You should not unnecessarily delay the needed decisions and actions but I don't blame you for making sure of what you sign.

Hello Eszter,

He sure can!

Hello Evelina,

This is really more about property and heir's rights than the reverse mortgage loan and I'm afraid I can't give you legal advice. I can tell you that lenders usually are notified when borrowers pass which leads me to believe your stepmom was probably on the loan as well (or the lender would have called the loan die and payable when Dad died). 

If you don't know who the current lender is, you can contact HUD and let them know by the address that the property is not owner occupied and you believe your father's loan has been compromised which might protect some of the equity, but I would suggest you contact a qualified attorney to see what your rights are.

Hello Javier,

The first thing I would do is check with a local real estate agent to see if there is still equity in the home. If so, you may be much better off selling the property. If not, then contact the servicer to see what they can offer at this time.

Hi Christina,

The reverse mortgage is a non recourse loan which means the lender can seek repayment from no one and no asset other than the borrowers or the property after the borrower passes. They cannot seek repayment from you and your assets are safe.

Hi Daniel,

There are many things they have to do in order to take the title back and that is done with a Deed in Lieu of Foreclosure.  My suggestion would be fore you to contact an attorney and discuss your rights and obligations.  The reverse mortgage is a non-recourse loan which means the lender cannot go after any other assets other than the home.  They cannot force you to pay anything and you never signed on the dotted line agreeing to be responsible for any obligations so your credit can never be impacted.  If the lender has to force place insurance, it will not cover any of the contents, just the home but if you have all the contents out, seems to me that would be an empty threat.  I would definitely contact your attorney though as I am not licensed to give legal advice and it would probably be good for you to know exactly what can and cannot be done.

Hi Jann,

The lender does not give anyone the option to buy the home, they don’t own it.  As the owners, you can leave the home to anyone you want – including your sister.  Now, that would give her title to the home and take care of who owns the home after you pass but there is still the issue of the mortgage.  Your sister would have to pay off the reverse mortgage that would become due and payable.  She could do this by refinancing the loan with a new loan in her name, with other money available to her or she could sell the home and keep the equity.  Which option she chooses would depend on her financial situation and the amount of equity in the home at the time.

Hello Heidi,

Your mom can add anyone to title at any time she wishes as long as she remains on title as well, continues to live in the home as her primary residence and meets the conditions of the loan (continues to pay the taxes and insurance in a timely manner and maintains the home in a reasonable fashion).  But whether she adds you now or later (and I do recommend that she adds you now or places the home into a family trust with you or other heirs as the successor trustee and beneficiary) whether you intend to keep the home or not.

It is much easier and quicker to change the title now while mom is still alive than to wait and go through probate later and the terms of the loan do not prohibit this action.  If she adds you to title and remains on title as an individual, you don’t even need to involve the lender.  If she intends to transfer title to a trust, be sure to have the trust approved before you actually transfer title just to be sure the trust meets all HUD requirements (most do but you don’t want to run into any problems after you have already transferred the title).

The real issue you have is that once mom no longer occupies the home as her primary residence, the loan becomes due and payable.  At that time, you either need to refinance the loan with other financing, pay it off with other funds available to you or sell the home.  If you intend to keep the house after mom passes or no longer lives in it, you need to put a plan in place to be able to retire the loan.  This is how you will ensure that the home is ultimately able to stay in the family even more than changing the title at this time because if you have the plan and the means to pay off the loan, the timeframe to change the title becomes a lot less pressing.

Hello Amy,

The simple answer is NO, they cannot.  A lender only has the rights and remedies given to them by the borrowers as agreed to in the Promissory Note and the Deed of Trust or Mortgage.  As you said, you were not even a party to the loan and therefore, you didn’t agree to anything on the reverse mortgage.  Therefore, the lender has no remedy against you or property you own. 

And by the way, the reverse mortgage is a non-recourse loan.  This means that the lender’s only recourse against your mother or her estate is the property itself, it cannot look to other assets to repay the obligation.  What that means is that the lender cannot go after bank accounts, other property, etc.  They can foreclose on the property against which the reverse mortgage was recorded and that is all.  My suggestion would be that you make sure you have your mom’s personal effects out of the home and if the lender would like a Deed in Lieu of Foreclosure after that, it is your decision if you want to oblige. 

Hi Alex,

You never signed anything and any foreclosure action would be against the property and against your deceased parents.  Because they are no longer even affected by adverse credit ratings, reverse mortgage actions typically are not even reported and if it were, it would be against them, not you.  If the servicer cannot move quickly enough then you do not have to do anything further to cooperate with the change of title and can simply let them take the property back in a foreclosure action.  If you are not sure if there are any other factors that could affect the estate, you may want to seek the consultation of an attorney just to be sure that nothing else can be adversely affected but the lender cannot report any negative comments on your credit if you decide to let them foreclose.

Hi Taylor,

Yes it is possible that your grandfather may have only taken a small amount of money out on the loan and may still have a small balance owing.  He receives a monthly statement and his balance would appear on that statement.  When he passes, the loan would become due and payable and his heirs could sell the home or pay the loan off and keep it.

The last part of your question is not one I can answer, that depends on you, your grandfather’s children and the courts.  Who the title would pass to after his death would be a legal matter and I could not tell you how that might be determined.  If his health is declining but he still has his mental capacity, maybe you should has him what his wishes are and should act to make those legal and binding before he loses capacity or passes?  If it is too late for that, then you would have to speak with an attorney to determine your options.

Hi Bridgett,

I really can’t make any comments from the information provided.  However, something doesn’t seem right.  Usually, the lender will let you know as soon as the taxes go delinquent and you have an opportunity to bring them current.  I would try to contact them to make arrangements to bring the taxes current.  If it is just one tax year, it should not be that tough between you and your sister to come up with just one year’s taxes, right?

Hi Claudia,

If this home belongs to your father and you and your brother are just on title now as a matter of convenience, you would have to deed the title back to your father for him to complete the reverse mortgage loan unless you are also over the age of 62 and living in the home.  The equity loan would be paid in full with the reverse mortgage proceeds and if your mom was on title before she passed, if she was never removed the lender has to send a death certificate to title in order to clear the title but that can be done at any time.  You are your brother would have to come off of title before the loan started.

The loan does not prohibit your father from adding others to title as long as he is still living in the home and still on title himself.  In other words, he can add someone to title but he cannot transfer the title to someone else and take himself off of title as that would cause the loan to become due and payable.  So after the loan closes, if he wants to add you and your brother back to title so that there are no issues with probate later or put the home in a family trust (subject to HUD trust provision approval), he can do either of those actions. 

Hello,

I’m sorry, this is a question that you need to present to an attorney who specializes in estates, etc.  This really does not pertain to the reverse mortgage itself but to the rights of individuals as heirs and obligations of those who dispose of estates and disburse assets.  We are not licensed to give legal advice and in all honesty, would not be the best source for this information. 

Hello Ed,

I cannot give you legal advice and I do not know what recourse any of those entities may have against your father’s estate, but I can tell you that the reverse mortgage loan is a non-recourse loan and that the lender can seek repayment for the loan from no other assets than the property itself.  I would suggest that you contact an attorney in the area to determine what others (electric company, HOA, insurance, etc) may or may not be able to recoup against other sources.  As you have stated, your dad has no other real assets and you have not signed any agreement to pay for anything so the attorney can tell you what, if any, costs you should agree to pay and what your best course of action should be. 

You mentioned something about a subsequent loan that was done recently for $6,000 for improvements.  If this loan was placed against the condo, then the lender will in all likelihood have to go through the foreclosure process and not accept the Deed in Lieu of Foreclosure anyway.  If a lender accepts a Deed in Lieu, they accept it with existing liens and they become responsible for that $6,000 loan.  If they foreclose, they force any secondary lien holders to act to secure their position.  If the loan was a signature loan and was not secured by the property, it would not affect the lender’s decision.  This is the reason that the lenders are often a little slow to accept a Deed in Lieu of Foreclosure.  They have to be sure that the title is clear of other encumbrances so that they do not inadvertently accept other subsequent liens that would be removed in a foreclosure action if those lienholders did not act to protect their security. 

At any rate, I would suggest at least one meeting with a local real estate attorney, I believe it would be worth the time and cost invested.

Hi Lis,

You could certainly apply for a reverse mortgage of your own at that time if she passes the home to you and you occupy the home as your primary residence.  Any loans she has on the property, reverse mortgage or otherwise would have to be paid in full form the proceeds of your reverse mortgage but other than that, you could continue to live in the home for life without having to make a mortgage payment (taxes and insurance would still have to be paid).

Hello Micheal,

If you are your mother’s heir, you may not have to move at all.  You just need to have the title switched to your name (if it was in a trust with you being the successor that would be the easiest, if not it must go through probate).  You have the right to keep the home and pay off the loan at the lower of the amount owed or 95% of the current market value, whichever is less.  Although you say you have lived there for 17 years, I have no way to know how long your mom had the reverse mortgage or what her balance owed would be at this time, especially in relationship to the value of the home.  She may owe just a small amount up to more than the home is worth but if you wish to keep the home, you have the right to do so by paying the lower of the amount owed or 95% or the current market value, but never more than the property it worth.  I don’t know what your arrangement with your mom was, but I sincerely hope that in the past 17 years or at least the time while your mom had no mortgage payment one or the both of you were able to put some money aside so that you could refinance the home and continue to live there even after your mom passed.  If not and there is still equity in the home, you can also sell the home and retain the equity.  I wish you the best in all your future endeavors.

Hello,

If the reverse mortgage was still on the home, the lender would have required that the insurance still be in place.  I would suggest that you contact Ocwen and ask them who the current insurer is if you do not have that information.  If you or your mom failed to maintain the insurance on the home, they probably force-placed coverage as the lender.  The good news is that it will cover the rebuilding of the home, the bad news is that the force-placed coverage will not cover any of the contents, only the structure.  Either way though, you really should contact the lender to determine what policy was in effect at the time.

Hi Carol,

No one has to be responsible for the loan.  Once the borrowers pass, the loan becomes due and payable and the lender’s only recourse for repayment is the property.  The borrowers’ heirs to the property have the option to pay off the balance and keep or sell the home (as would be a smart decision if there was still equity in the home), to pay off the balance at 95% of the amount owed if the balance exceeded the current market value of the home (as might be the case if the loan amount was more than the home was worth but the heir wanted to keep the home and live in it), or just walk away from the property after removing any personal property and let the lender worry about selling the home (as might be the case with a loan balance that exceeds the value of the home and no heirs who want to keep the property). 

The loan is a non-recourse loan which means that they can never seek repayment from any other assets of the estate or any heirs of the borrowers.  Whether any heirs choose to pay back the loan and keep the house is entirely voluntary.  None of the heirs ever signed a Promissory Note promising repayment of the loan and therefore, none can be held responsible. 

Hi Claytonia,

There is never a prepayment penalty on a reverse mortgage.  She can refinance or pay off the loan at any time with no penalty whatsoever.

Hi Corina,

To determine your rights under property ownership laws, you really need to speak with an attorney.  As far as the mortgage goes, the loan was placed before any changes to title were made and so the lender’s terms are not affected by any subsequent changes to title.  In other words, by adding you to title, you now also share title to the property and the manner in which you have that title depends on the type of instrument the owner used and the vesting.  You could have been added in such a manner which would give you right of survivorship if the other owner died and then you would own the entire property or you could have been added as a fractional owner which would give you a percentage ownership with the remaining ownership going to other heirs.  Those things would be best answered by an attorney because each would give you different obligations and rights at this time.

However, if the person who added you to title obtained a reverse mortgage loan prior to that time (and I am assuming the loan you reference when you say “after the money was received” was a reverse mortgage due to the nature of this blog), the loan is not affected by the change in title as long as that individual is still also on title.  If he/she ever comes off of title completely or passes, then the loan becomes due and payable and even though you may own the home at that time, you would have to either pay off the loan with funds available to you, refinance with a new loan, or sell the home to pay off the existing loan.  If you did not, the lender would be forced to foreclose to satisfy the debt. 

Hello Andrea,

The property should now go to probate to determine the heir.  Your mother in law should contact an attorney and if there are no other heirs to contest it in court, she would be awarded the home in probate.  Lenders work with heirs all the time while the property clears probate, it is quite common but I would say that you should not wait for this to be completed to start your loan for the refinance.  You can start that at the same time and wait to close the loan until the title is clear.

You don’t want to wait until after foreclosure because there is no guarantee that there will be any equity.  Let me explain.  In a foreclosure sale, the Trustee under the Deed of Trust or Mortgage starts the sale at the amount owed on the loan.  If no one bids against the lender’s starting bid, the lender will win the foreclosure auction.  The lender is not allowed to bid any further.  This way, they have no ulterior motives for trying to take properties to foreclosure sale.  If the property is worth more than what is owed, anyone can buy it just by bidding at the sale.  But more often than not, the final bid will be way below the actual value since people who buy properties at foreclosure auctions are looking for great deals, they are not looking to pay top dollar.  The heirs would receive any difference between what is owed and what the final sale price ended up being at the auction if someone outbid the lender, but that would not typically be a lot and most certainly not as much as the property is worth.  I would advise you to do everything in your power to resolve the title issue before foreclosure to protect your equity.

Hi Duane,

The lender can only take over the home through a foreclosure sale or if you give it back to them with a Deed in Lieu of Foreclosure.  This would be true regardless of whether the existing loan balance is higher or lower than the value of the home.  If you know you need to move, you should contact the lender and let them know of your plans and they will work with you to make the transition.  HUD also has a “cash for keys” program for which you may qualify that might allow the lender to pay you a little cash in order to have you sign the home over sooner so that they do not have to wait months for the foreclosure process.  Certainly worth looking into!

Hi William,

I can’t give you legal advice but maybe I can give you some practical advice and suggestions that might come in handy.  Firstly, does your sister have any heirs (children for example) that might have a better claim to title now that she has passed?  Also, have you compared the amount your sister owes to the value of the home?  If your sister has no other heirs and there is still equity in the home, it might be beneficial for you to seek the assistance of an attorney or even legal aid or paralegal to attempt to have the probate court award title to you.

However, if there are other heirs or if the loan on the house is higher than the current value, it might not behoove you to expend other assets to try to obtain the home.  Unless of course you really like it and want to keep it and then you have to weigh the cost to acquire with the value received.  At any rate, if you plan to let the home go, it would probably not make much sense to pay the taxes whereas if you plan to keep it, it would make all the sense in the world to keep them current so you didn’t have a problem later.

You can always attempt to purchase the home after foreclosure but I do not think you would save anything, especially if there is still equity in the home.  You may also qualify for HUD’s plan to keep the home at 95% of the current value if that is less than the amount owed so it certainly makes sense to look into all options before it goes to foreclosure and some of the options are taken away.

Hi James,

The reverse mortgage was just the loan that was on the house at the time your mom passed.  Whether or not the home has to go through probate is a legal question that would depend on the manner in which your mom had her title, what things she did prior to her passing for the title to pass to heirs, etc.  To determine what needs to be done with the home now, you really need to consult with an attorney as this is not a mortgage issue.

Hello Mavis,

I cannot give you legal advice but I would suggest that you speak with the other heirs and the bank to determine whether or not you could step in as the sole heir to negotiate the terms to pay off the loan based on the balance owed or 95% of the current market value once all heirs signed over the title to you.  If you wait until after the bank owns the home, that means it will have already gone through foreclosure and the bank owns the home which would allow them to sell to anyone.  If you can get the other heirs to allow you to be the sole heir on title before the bank takes the title, then you might have other options to retain the home before the bank ever gains title.  I would certainly look into this option if you are determined to keep the home and none of the other heirs are interested or capable.

Hi Denyse,

I’m not sure I understand what you are asking me but I am pretty sure it is something I can’t answer for you – even if I did know exactly what you were requesting.  It sounds like you are asking about the rights of a previously removed sister now that you plan to sell a home on which you had a reverse mortgage prior to removing her from title?  But I am not sure if I am reading this correctly.  I honestly could not answer the question even if my interpretation is correct though because that is a question about legal rights and not the reverse mortgage.  I am not licensed to answer questions about legal rights and would have to refer you to a licensed attorney for such.

Hi Steven,

I’m sorry, I can’t answer this question for you.  This is not a question about the loan but rather a legal question about foreclosure laws.  Unfortunately, I don’t know what is standard or legal in every jurisdiction and we are not licensed to give legal advice.  But the advice I can give is that I would check with another attorney just to determine if this is true and what you can expect to make sure you’re getting the straight scoop.

Hello Bri,

I don’t know what company you are dealing with but it sounds like it is not one of the more experienced servicers – or at least not one of the more helpful in any case.  I can’t give you legal advice but I would suggest that you have your attorney send a registered letter to the servicer demanding that the lender produce a Beneficiary’s Demand for payoff within whatever period of time the attorney deems appropriate under the local laws or consider further action.  He will probably want to include all documentation under the estate paperwork, that you have the right to act on the property (if the property has been probated then provide evidence of ownership and if it is in a trust, show that you are the successors).  I would include copies to the HUD HOC office that covers loans done in your area and make sure that your FHA Case number is included in your correspondence. 

In the meantime, you do have other options available to you if you feel that the lender is acting in bad faith.  You can submit a complaint on the Consumer Financial Protection Bureau website at https://www.consumerfinance.gov/ just by clicking the “submit a complaint” link in the upper right hand corner.  The Federal Trade Commission may also be a resource if the lender is not communicating with you fairly and you feel that there is some sort of unfair dealing taking place.  Instructions to file a complaint with them can be found on their website at:  https://www.ftc.gov/news-events/audio-video/video/how-file-complaint-federal-trade-commission. 

I would advise you to seek the counsel of a competent attorney though, and sooner rather than later.  Interest continues to accrue on the loan until paid in full and if you are attempting to do just that but the lender is keeping you from paying off the loan you stand ready willing and able to pay, then I would ask the attorney what recourse you have (if any) to nullify all interest accrued after the date the lender denied producing the Beneficiary’s Demand and accepting your payoff.  I do not know what your rights are in this area, I am not an attorney and do not profess to be but I know that if it was me and I attempted to pay off a debt and the lender refused payment but tried to charge me more interest as a result, I would at least attempt to have the additional interest waived.

Hi Jody,

I think the premise of the transaction is wrong here.  HUD does not own the home, your parents do and you as an heir must decide with the other heirs how to dispose of the property and pay off the remaining loan balance if you wish to keep the property.  If you are buying out your siblings or other heir’s interests, your family still owns the home while this is being accomplished so HUD does not charge you “rent”.  The family owns the home so HUD can’t rent it to you, they have no right to do so.  The loan still accrues interest until paid though so it is in your best interest to pay it off as so as possible to keep your costs down if that is your intention.

But let’s talk about this process going out beyond 12 months and the possible ramifications.  If you and other family members are unable to come to terms for your buying them out and there is no progress on paying off the loan balance, sooner or later the lender would be forced to begin foreclosure action to protect their and HUD’s interest.  It you waited until the foreclosure began but was not complete, you could still pay the loan off and retain the home but there would be additional costs due to the foreclosure action commenced.  If you waited until after the property had gone to foreclosure sale, then the home would be known as an REO or Real Estate Owned by HUD.  At that time, HUD would own the home and this would be a whole different matter.  The moral of the story, if you intend to keep the home, don’t wait until after it goes to foreclosure to take the steps necessary to do so.

Hi Betsy,

This is a really tough question the way it is asked.  The reverse mortgage is a non-recourse loan and the lender can look to no asset for repayment of the loan other than the property.  You signed no documents stating that you would pay the obligation and therefore, you are not responsible for any portion of the repayment and I would normally tell you that their recourse is to foreclose on the home and take that property by foreclosure action.  However, in most states, that means filing a notice of default and the loan going to foreclosure sale.  When you tell me that you have received a summons for a lawsuit, I do not know if that is because you live in an area where the foreclosure must be done with a court foreclosure and you are only named as the known heir to the home or what. 

My advice would be to err on the side of caution and to seek at least one appointment with a competent attorney in the area.  It may be that all you have to do is not show up and the foreclosure will be granted and the attorney visit cost will be nominal but I cannot tell you that for sure based on what limited information I have.  The attorney can review the paperwork and let you know quickly if there is more to it and if not, it should be a pretty quick visit and not extremely costly.  If this is an expense you cannot afford, there are often legal aid services available or paralegal services that can help with the initial assessment and if you don’t have to attend the court proceedings, then you may not need any additional help. 

Hi Sam,

I’m sorry, this would be a legal issue pertaining to title of a property in accordance with local/state laws and really has nothing to do with the type of loan that the previous owner had.  I would certainly advise your friend to seek the counsel of a good real estate attorney in the area.  I don’t know what representations, if any, were made to your friend about the title at the time he purchased the home and I don’t know what type of due diligence he performed to determine the title in the first place.  I am not an attorney and I do not know all the rules in every state and can’t begin to advise so the first step would be to find out what was disclosed at the time of purchase and what is required to be disclosed.  The attorney will have to tell him where he should go from there to perfect his title so that he can get other loans.

Hi Celeste,

I cannot give you legal advise and I would strongly suggest you contact an attorney for a quick counsel on the matter.  The reverse mortgage is a non-recourse loan which means that the only recourse the lender can look to in order to resolve the obligation is the property.  I cannot tell you exactly how your attorney will advise you to answer court documents but I would be surprised if he/she would be too concerned at this point and would have you just allow them to complete the foreclosure.  The foreclosure will only be against the property and will name the individual who signed the documents (your deceased aunt).  It does not affect her credit at this point and you never signed any agreement with the bank to pay a dime .  It’s true, they will own the home after the foreclosure, but you were willing to give them title to the home initially anyway.  You don’t intend to contest the foreclosure and so it should be an open and closed case with the home going to the lender.

Many people think that lenders are only being stubborn if they do not agree to accept a Deed in Lieu of Foreclosure but there are times when they cannot.  If a lender accepts a Deed in Lieu, they agree to accept the title and any other liens that may be on the property.  If there are no liens or pending liens, they often will accept the Deed in Lieu of foreclosure to shorten the process and get on with mitigating losses.  If there are other liens or pending liens, the lender will have to go through foreclosure so that they can perfect their title or require those lienholders to take action to protect their interest.   The reverse mortgage lender may need to go through foreclosure just to be certain that they are not liable for newer, subordinate liens. 

At any rate, you should have legal representation to tell you exactly how to respond to any court documents but I think you will be happy with their response as far as any potential liability you feared.

Hello Elaine,

Your mother should have been receiving a monthly statement showing how much she owed and the servicer’s name, address and phone number.  Send them a letter requesting a Beneficiary’s Demand for payment in full.  I don’t think you need to tell them anything else except that you wish to pay the loan off and request that payoff figure.  When you have received the amount, pay them with certified funds so they do not place a hold on the check and then they will issue the reconveyance on the loan which will be recorded and sent to you after recording. 

Hello Marissa,

No, the courts are funny about things like being lied to.  Have you spoken with your attorney?  I cannot advise you legally but I’m sure he or she can determine what recourse is available. 

Hello Gregory,

I’m sorry, this is a question for qualified legal counsel in the state in which the property is located.  We cannot give legal advice both by law and license.  I think I would definitely contact a knowledgeable attorney because it is definitely in the HOA’s interest (not yours) to tell you that you are liable to get you to pay, regardless of whether or not that was true.  If it were me, I would certainly want to verify that information with someone who was looking out for my interests and not their own as in the case of the HOA director.

Hi Steve,

I’m not sure what you mean by HUD “approval”.  HUD would certainly have to approve any amounts less than payment in full because that would mean that there would be a HUD claim.  And because there is a second Note to HUD at the time the loan is originated, HUD would be involved with a payoff, but with a payment in full there should not be any formal “approval” process that the servicer has to engage in with HUD.  It would be unlikely that you would experience any delays with a payment in full for the lender to complete the payoff and issue the reconveyance.

Hello Zebulum,

Firstly, I cannot give you legal advice and so I can’t address legal ramifications or the “legality” of the loan.  If you were on title to the property, no one should be able to get a loan without your signature on the loan as well accepting the terms to the loan.  If this did not happen, I would certainly suggest that you contact a reputable attorney in the area where the property is located.  I also could not begin to discuss penalties or possible damages for a loan that was closed either erroneously, fraudulently or otherwise.  This is all good discussion for your attorney.

Hi Joe,

This option is given by HUD so that heirs will never be required to pay more than the property is worth when the homeowner permanently leaves the home and they can utilize it to keep the home in the family.  The intent is not nor was it ever so that borrowers could pick and choose times in the market when they could pay off the loan at less than the amount owed and still remain in the home.  Your dad can still remain in the home for the rest of his life and if the property never appreciates enough to where the loan can be repaid from the value of the home when he leaves the home, you would have that option at that time.  If he wants to repay the loan while still living there, it would require a payment of the full amount owed.

Hi Raymond,

The loan does not have the ability to simply add additional borrowers at a later date.  The terms of the loan are determined by the ages of the borrower(s) at the time the loan is closed.  If the loan allowed borrowers to be added at a later date (especially younger borrowers), that would throw off all repayment assumptions and available loan amounts.  For this reason, if you want to add her to your title, you can because that does not affect the loan as long as you remain on title as well.  This would allow her to own the home if something happened to you and she could move to refinance or sell the home without having to first gain title to the home (she would already be on title), but it would not allow her to stay in the home on the existing reverse mortgage.  If you wish to now have a reverse mortgage that does include another individual who was not on the original loan, that can only be accomplished by getting a new loan at the current parameters. 

Hi Charles,

A reverse mortgage is a loan, just like any other loan.  I’m reading that you were the seller of a property, probably as the heir?  It sounds to me like there were many irregularities that you may want to address with legal counsel if you feel that the transaction was not handled in a legal or ethical manner and you were harmed as a result.  I can’t comment on the disclosure requirements of the state in which you are located but typically if there is a relationship between parties, those relationships must be disclosed in advance.  The whole thing sounds pretty strange.  Typically, to close a transaction with the payoff of another loan, the settlement agent has to get a Beneficiary’s Demand from the Note Holder to know what they have to pay in full and that Demand is typically only good for so many days.  I verified that the settlement companies with whom we work want the Demands to be no greater than 30 days old and that they have the owner of the property sign the Demand to indicate their agreement with the amount.  Then, before the loan closes, they issue a Closing Disclosure showing all fees and amounts to the seller of the property, again for this party to sign in agreement, before the final closing. 

I think you need to review the documentation that you have from the escrow and the buyers to see what terms you agreed to in the transaction and seek legal assistance if you are not satisfied with the details of the closing.  Escrow companies are typically required to carry Errors and Omissions insurance and if you feel that you were harmed by them not acting in good faith and contrary to the terms you agreed to, you may have some recourse against the Escrow and possibly the broker who owns them as well since he/she did not disclose the relationship but that is not something I can advise or determine.  If you feel that you have suffered damages, I definitely would suggest that you contact competent legal counsel and discuss the matter.  I don’t know what your goal is at this point.  I can’t tell if you are saying that you would like to have kept the property and would like the deal unwound or if you are looking for a settlement.  The attorney can tell you what can be done in either instance, if there are damages that can be had or if not, and whether or not it would still make sense to file complaints with regulatory boards with which the broker and escrow company must license.

Hi Daphne,

There is no mystery about a foreclosure on a reverse mortgage versus any other loan.  The laws are the same and it is handled the same as if the loan were a standard, forward loan.  Every state has their own foreclosure laws so I can’t give you the exact process where you live (and don’t know where that is), but I can give you a general idea.

The lender had to follow a number of written laws/rules to get to the point where the property could even be foreclosed upon.  Part of that process is giving public notices.  If the home is going to foreclosure sale, there would be or has been notice made in newspapers in which these notices are typically listed.  You can probably find them online as well.  The lender will start the bidding at the amount that is owed plus any interest and fees due for the foreclosure.  While we do not profess to be experts in foreclosure laws and proceedings, most states have laws against the lender entering another bid after their initial bid. 

In other words, if no one bids against the lender, the property will revert to the lender.  However, if even one bidder bids higher, the lender cannot bid again, regardless of the value of the home.  This is to prevent lenders from having a possible interest in foreclosing on a home for purposes of seeking to gain on that foreclosure.  So for you to obtain the home at the foreclosure sale, you would have to show up on the appointed date at the sale location and bid higher than the lender’s opening bid and any other bids from other prospective buyers.  The location of the auction is publicized in the local paper that usually publishes these auctions and they usually require cash or certified funds for the winning bidder – but you can verify that with the auctioneer.  If you wait until after the auction is over and the property goes back to the lender, you would be subject to whatever sales price they put on the home.

With regard to eviction rules, that would be something you should discuss with a real estate attorney to obtain the local laws and what protocols and timeframes would be required. 

Hi Kayla,

I can’t give you legal advice and since there is a bankruptcy involved and that indicates to me that there are other debts, so you really need to speak with an attorney to determine what would be the next best step if you want to keep the home.  The reverse mortgage is easy enough, but if there are other liens on the home behind the loan of which I am not aware, that could complicate the matter and I don’t want to give you bad advice and I can’t give you legal advice so you really do need to contact a licensed professional who can look into all aspects and then advise you.

Hi Sherman,

I would strongly suggest that you go back and review the documents and the transaction.  The first answer to the question is yes, the loan is now due and payable so you need to decide if you want to pay the loan off and keep the home or sell the home, and then make plans accordingly because the clock is ticking. 

The reason I tell you to go back and review the documents and the transaction is for a number of reasons.  I think you may have the wrong understanding of the transaction that occurred in 2012.  Let me explain.  At 49 years old, you would not have been eligible to be a borrower and the loan could not have closed with a 49 year old co-borrower under any circumstance in 2012 (spouse or otherwise) in any state on a reverse mortgage loan at that time.  Also, if you were a co-borrower on the loan, that also would have meant you were on title at the time and there would be no need for a deed upon death, you would have already been on title (in Texas, you cannot remove an underaged spouse from title for the purpose of obtaining a reverse mortgage, but you can other individuals).

What I believe may have happened if you were on title prior to the loan, is that you would have had to come off of the title by deeding the property over to your mom as her sole property.  Since you had been on title when the loan started, you would also have had to attend the counseling at the time, even though you were coming off of title.  Also, if you lived in the home with mom, there are additional documents you would have had to sign as an adult resident in the home even though you were not a party to the transaction.  But none of these made you a co-borrower on the loan.  It sounds like someone also had a Deed prepared so that you were covered in the event of mom’s passing, the property would revert to you (although you could have been added to title any time after the loan closed which could have achieved the same result depending on the vesting).

The non-borrowing spouse provision that now allows eligible spouses under the age of 62 to remain in the home even after the reverse mortgage borrower’s passing did not come into being until 2014 and so it is not included in any mortgage completed prior to that time and would not apply to your circumstances anyway since you are the son, not the spouse of the borrower.  And just as a note, HUD has since issued their “final rule” in 2017 and now allows eligible non-borrowing spouses to remain on title but again, that does not include children.  And as a separate side note, the state of Texas never has allowed taking a spouse off title to obtain a reverse mortgage, non-borrowing spouses under the old rules and has still not announced that they will allow non-borrowing spouses under HUD’s new rules.  However, taking another family member who is not a spouse was allowed in 2012 and what you are describing to me sounds like that is what happened.

So to recap, I would verify your circumstances but first and foremost, know that the loan does become due and payable and you need to decide what your goals are with regard to the property.  If you wish to continue living in it as you stated, you need to determine the best way to pay off the loan that is due.  Most heirs seek new financing in the heir’s name (refinance the loan) to achieve this goal (unless of course other assets are available to you to pay off the loan and that would be your decision).

Hi Dianne,

Unfortunately you can’t just add another borrower to an existing loan.  You can refinance the loan with a new loan in both your names when you are 62 but you have to remember that since you are probably younger at 62 than your mom was when she got her loan and interest has accrued on her loan if she has had an outstanding balance for any length of time, the benefits now available may not be high enough to pay off the existing loan and it might not work for you.  On the other hand though, the property may have increased in value enough to where it does.. The only way to know for sure is to request a proposal based on both your ages, the current balance on the loan and the property value.

Hi Roldan,

The lender will find out very quickly with Social Security records so the first thing you should do is determine what you plan to do.  Decide if you are keeping or selling the home.  If keeping, then review the last statement to see the approximate amount needed to pay the loan off and determine where the funds will be coming from (cash you have, will you need a loan, etc).  If you plan to sell, then again, review that statement and compare it to the home’s current value.  There are some real estate professionals who deal with estates and they can help you decide what to do with personal items you may not wish to keep as well as help you determine a market value of the home.  Once you know that probably value, you can compare that to the amount owed to decide the next best step. 

Once you know what you will do and how long you think it will take to do it, then you may want to get it started but be ready when the lender contacts you or you may want to contact the lender first, that is your call.  Either way, the more prepared you are to let them know what you are doing and show that you have your plans ready to execute, the better and smoother things will go.

Hi Barbara,

I can’t give you legal advice but I can tell you what I would do in your shoes.  If your attorney is telling you that you do not need the documents from the court that the lender is requesting, if it was me, I would sign an authorization for the attorney to contact the lender on my behalf and then have him/her do so.  He/she can lay out the case for no requirement for the requested documentation directly to the lender based on the legal grounds he/she feels applies and get something in writing that they agree with his/her position.  Then you can also establish an understanding with the lender in writing of the new timeframe requirements for the probate to be completed and the loan to be repaid.  

As I said, I am not an attorney and do not pretend to know the foreclosure laws in all states.  But if I had a lender telling me that they were going to do something if I didn’t produce documentation and an attorney telling me I didn’t have to do it, I think for peace of mind I would have the attorney write a letter to the lender to verify that position and copy me on the response.

Hi Robert,

The surviving heir should contact the servicer and let them know what she is doing to retire the debt.  It’s been over a month since her sister passed so the lender has to start someplace.  In this case, they are giving the heir notice that the loan is due and payable and that they could begin foreclosure but keep in mind a foreclosure also takes many months so they won’t wait forever to begin if it does not appear as though positive steps are not being taken to close the loan.

The lender does not want to foreclose but they do need to let the heir know that if she does not contact them and make arrangements for the repayment, they will start the process.  If you have not contacted them yet and informed them of your plans, at this point, they don’t know if anyone is planning on keeping the home, selling it or just letting it fall back to the lender.  Many heirs don’t want to be bothered with the home and if the latter was your family’s plan, the lender would need to start the process as soon as possible to mitigate the losses. 

However, if you contact them with a game plan, I think you will find that they are accommodating and everything should work out fine as long as your game plan is not  “sometime in the next couple years we will sell and pay the loan off…”.  Give them steps you have taken, where you are in the process and what you expect to do by when.  Be realistic in your plans and expectations.  Remember that the lender has probably already done a preliminary appraisal.  If your plan is based on unreasonable expectations (i.e. you plan to list to sell for $300,000 on a house worth just $175,000) the lender will be honest with you and if you are not willing to negotiate the issues, they may feel it is necessary to begin the foreclosure at this time anyway rather than waiting a year with no offers due to an over-priced home.

Hi Bruce,

You are not eligible as a non-borrowing spouse and therefore, cannot be eligible to remain in the home with the existing loan under the program parameters if something were to happen to mom.  The only way you could do the loan is if you deeded off title and mom did the loan on her own.  She could deed you back on title right after the loan closed which would prevent any issues with the ownership of the property if something happened to mom, but it would not protect you against the loan being called due and payable.  You would have to refinance the loan or sell the home at that time so I would caution you to consider this option very carefully and if you don’t have insurance to pay off the loan when mom passes or other plans to move, etc., this may not be the best option at this time.

Hello Amber,

If the heir has title to the property, he/she can sell the home to whomever they choose.  If does not stop the fact that the loan is due and payable so the party/parties purchasing needs to be sure that he/she/they can retire the debt quickly at that point though if the heir has not already done so.

Hi Anthony,

You should contact the lender to discuss the options with them once you decide what you plan to do with the home.  If all you plan to do is let the lender take the home and you do not want to keep it or sell it, then they will have to take steps to appraise the home and ultimately take possession by either a Deed in Lieu of Foreclosure if you want to Deed it to them (if the title has gone to you) or through a foreclosure action.  Foreclosures take different amounts of time in different parts of the country but it’s almost never less than 4-5 months after the lender files the proper paperwork to begin the process but I would suggest you check with legal counsel in the area where the property is located if you are that concerned about the timeframe and need to know the earliest this could happen.

Hi Robert,

You're assuming no appreciation but no matter, even if the home goes down in value, as long as you continue to pay your taxes and insurance you can live in the home for life regardless of what the value does.

Hi Pat,

If HUD now owns the property, the heir chose not to exercise their option to pay off the loan at the lower of the outstanding balance of the loan or 95% of the current market value and retain the property.  The property is now listed for sale and if you are interested in buying the home, you can purchase under the HUD Guidelines you reference.  I have read that heirs can still purchase using the 95% formula at this time, but I have no personal knowledge of this fact.

However, once the seller accepts an offer and a contract for sale is entered into (in other words agreement by both parties), the seller could not void the sale and sell to another party instead unless your sale fell through for some reason.  In other words, if the heir came along and wanted to buy the property they may have the ability to do so at the 95% number, but if the property has already been sold, they cannot “bump” the purchaser to buy the home at that time.

Hi Valerie,

Your father can continue to live in the home for life without having to make a payment, regardless of what the balance is or what the value of the home is.  If he is unable to remain in the home any longer and must leave, the reverse mortgage is a non-recourse loan and the lender can only look to the property for repayment of the debt.  If dad has to leave the home, you can contact the lender to see if it is possible to arrange for a Deed in Lieu of Foreclosure.

Hello Erin,

Let me start with your last question and work backward.  I can’t say why your mom chose to add your sister, you really need to ask mom and sis that question.  There is no requirement of it in the loan so they did that for reasons of their own and I could only speculate.  If they are both living in the home, are on title to the property and are borrowers on the loan, then if mom passes, the loan would not be due and payable until the last borrower on the loan permanently left the home.  However, you keep saying your sister and not your mom’s sister so that leads me to believe that your sister was not also 62 at the time your mom got the reverse mortgage (unless she was of a different marriage) and if that is true, then your sister would not have been able to also be a borrower on the loan. 

The only time the program allows for an eligible non-borrower to continue to live in the home after the borrower passes is in the case of an eligible non-borrowing spouse.  Your sister would not qualify as a non-borrowing spouse and therefore, even if they added your sister to title after the loan closed, the loan would still be due and payable when your mom is no longer living in the home (whether because she passed, moved out to assisted living, or what).  So from what you are telling me, I can see no way that your sister will be able to just keep living in the home without paying off the reverse mortgage when mom passes.

She can do this by refinancing the loan with other financing in her name, with other funds available to her or by selling the home.  The lender will contact her as soon as they become aware of the passing of your mother and she should have a good idea of her plan of action before this time.  If she presents them with a plan, they will work with her to allow her to sell the property or to complete the financing but they will not wait for 12 months then start some action to repay the obligation.  

Hi Sophie,

The loan becomes due and payable either when the last borrower on the loan is no longer living in the property or if there is an early payment event.  This means as long as at least one of the original borrowers is still living in the home and you have not triggered an even that would require you to repay the loan, the loan is not yet due and payable.  So it’s easy to know if you’re still living in the property, but what constitutes an early payment event? 

If you leave the home for more than 12 months, that would be a permanent departure and the lender can call the loan due and payable even if you planned to move back into the home at a later date.  Just like any loan, you are required to keep the taxes and insurance current and failure to do so could require the lender to advance funds and ultimately call the loan due and payable.  Also, just like any loan, you are required to maintain the home in a reasonable manner.

This does not mean you have to have the most upgraded or perfectly groomed paint and landscaping in the neighborhood but if the city is about to lien or condemn the property because the weeds are so high it is a fire and safety hazard or the pool is so green that the mosquitos are breeding and they need to bring in an abatement squad, that is not adequately maintained and could lead to an early repayment requirement if not corrected.  Assuming no breeches, you may continue to live in the home for the rest of your life without having to make a mortgage payment (you do have to keep the taxes, insurance and any other property charges current).

Hi Donna,

The 95% payoff is only available to heirs.  If you are interested in buying the home though, I would let the current owners know that you would like to make an offer for the property and see if the lender and HUD will accept a short sale price on the home.  If your offer comes in around the 95% range of the current value, that might help the current sellers and it would certainly keep the lender and HUD from having to take back the property, market it and then sell it.  I can’t tell you that they would accept your offer for sure, it would depend on all the factors and whether or not there are other issues involved that would need to be considered that might affect title, etc.  

Hi Liz,

If you had been the heir of the owner who had passed, you would have a number of options but if you are this close to a foreclosure auction and it sounds like the title was no longer in your dad’s name, it would have been much more advantageous if you had acted more quickly.  It has to be close to a year or more since the last owner/borrower passed and the time to act really should have been as soon as that happened. 

It sounds as though there are other issues besides just the loan as the person you refer to as “Kathy” had to have title to the property in order to do the reverse mortgage.  My suggestion would be to check with an attorney to see what options you have to delay the sale to give you time to perfect title (if that can even be done at this time because it sounds like Kathy had title to the property last, not your father) and then pay off the existing loan with a new loan of your own.  You are going to have to acquire the title in order to get a loan or your own and if you have not done that yet, your attorney is the only one who can advise you regarding the steps required to gain title as the heir which would give you the right to replace the loan with your own financing.  Again, time is not on your side at this point.  You need to act quickly before the sale date to see if there are options available to you because if you wait until after the sale date, I fear you are too late.

Hello Eleanor,

The laws regarding foreclosures in the area where the property is located would dictate any necessary advertising or redemption periods.  The timing will follow the laws in the state and there will also be notification requirements that the foreclosing entity must follow.

The fact that the loan is a HUD insured mortgage does not change the laws of the state regarding foreclosure.  The fact that HUD was listed as the owner of the loan would just indicate that the lender had assigned the loan to HUD and the lender no longer owns the rights to the loan.

Hello Eilene,

The reverse mortgage is a loan that is a bit different than other loans but is the same in many respects.  The difference is that the borrower can live in the home for life without having to make any payments on the loan for as long as at least one original borrower on the loan still occupies the property.  The loan becomes due and payable when there are no more original borrowers still living in the property so this is different from a standard loan where borrowers take out a loan for a given amount and make payments for a given period of time and then the loan is paid in full at the end of that time period.  The way the loans are the same is that borrowers still own their home in both cases and they only owe what they borrowed plus any interest that has accrued, minus any repayments they have made. 

Firstly, if the reverse mortgage ever hits a 0 balance, the loan is paid in full and closed.  But let’s assume that the balance is very low and instead of owing nothing, the borrower only owes $1,000.  Then the borrower’s heirs can pay the loan in full by paying the $1,000 plus any interest due for that period and keep the property or sell it or do whatever they choose but regardless of the loan available to the borrower, the only amount that has to be paid off is the amount actually owed.

Good Afternoon,

The owner of the property absolutely can refinance the loan and that is the best way to proceed if you want to keep the home.  With regard to your sister, I can’t advise you there but you should make sure she understands that if the lender does go through the foreclosure, neither of you will own the home at that point and the only way either of you will get anything from the foreclosure sale is if someone outbids the lender’s opening bid which will equal the amount that is owed to the lender plus any costs to foreclose.  

Hi Sara,

I’m sorry but I can’t answer this.  I don’t have enough information on the title to the property and even if I could see the current title, property rights questions land ownership/heirship rights are best directed to qualified legal representatives.  

Hi Michelle,

If it is a court holding funds, I do not know why or what you would need to do, that would be a legal question you should approach with a legal representative in your area.

Hi Yolanda,

My suggestion is that the heirs contact a local realtor and determine if there is any equity in the home.  If so, you can sell the home and retain the equity after the payoff of the reverse mortgage.  There are many elder specialists who work with heirs and often also know how to set up estate sales and provide other services as well if those would be of benefit.

If the balance of the reverse mortgage is higher than the value of the home, the heirs are not required to do anything.  The loan is non-recourse which means the lender cannot look to any other assets to repay the debt and therefore the heirs can simply choose to contact the mortgage lender and let them know you will not be taking title to the home and that they should proceed with whatever action they need to secure the property if that is your decision.

Hi Chuck,

It is not the lender's call with whom they can and cannot speak.  The lender cannot decide which family member is to get the home and it is not the lender's home to sell (unless the home goes back to the lender through a foreclosure action).  If the owner died without a will, known as intestate, there are ways under the law for family members to seek ownership of the property but that is not the lender's call.

If you as family members are looking to own the property, I would suggest you contact an attorney in the area to see about obtaining the home through probate.  If you are awarded the home by the court as heirs of the deceased homeowner, then you would still have to pay the mortgage of the now due and payable reverse mortgage but the lender would now work with you as you have legal standing with the property and could discuss all options available to you.

Hi Lisa,

The reverse mortgage loan is a non-recourse loan.  This means the only asset the lender can look to for repayment is the home itself, nothing else.  You and your brother signed nothing agreeing to pay for nothing and so you have no liability.  As long as you have already removed all of your or your dad's personal property, if the lender takes the property back via a foreclosure action, there is no harassment and no ill-effect on either of you.  In fact, since the lender knows that there is not even an issue with the effect on a borrower's credit after they pass, they do not even report the action against your father for credit purposes as he obviously will not be applying for any credit in the future and the point would be moot.  So my point now is that their "threat" to foreclose is no threat at all.  If you don't want the home, let them.  The foreclosure is filed against the original owners and the individual who signed the paperwork so it has no bearing on you or your brother whatsoever.

I am really surprised that the attorney you have working for you has not already suggested this course of action.  I can't give you legal advice but I would really suggest that you question your attorney about why to even show up in court or do anything on this at all if you don't plan to contest the foreclosure action and don't want the property.  If she has a copy of the documents your father signed, she will be able to see that they only recourse the lender has is to take the property and you've already offered that so if it was me, I certainly would not spend one more red cent attending court or chasing after anything unless there is something about which I am not aware and only your attorney can answer that question.  However, I can think of no reason off the top of my head why you and your brother could not have just sent the lender a letter from the start informing them of your intent not to retain the home and just left it at that and saved a lot of time and money.  I would certainly ask your attorney that question as well based on her analysis of your father's loan documents and the subsequent correspondence she has received from the lender.

The only real decision that you and your brother had to make was whether or not you wanted to sell the home, pay off the mortgage and keep the property or simply walk away from it.  If the amount owed is more than the value of the home, there is no incentive for you to sell the home yourselves.  If you wanted to keep the home and pay off the mortgage, you can do so by paying the lower of the outstanding balance or 95% of the current market value (i.e. if the home is worth $300,000 but the balance on the loan is $400,000 due to the decline in value in the home and the accrued interest on the loan if you want to keep the property you would have the option of paying the loan off at 95% of the current value or $285,000).  If you do not want the home, you can give the lender a Deed in Lieu of foreclosure but the lender may not be able to accept the Deed in Lieu.  If they do so, they also accept any other liens on the property as well and that lien becomes the obligation of the lender.  Sometimes they are forced to go through the foreclosure process so that they protect themselves against accepting any other obligations along with the title to the property because if they foreclose, any junior liens would either have to pay the senior lienholder to protect their interest in the case of a foreclosure or that lien would be eliminated at the foreclosure.  But here again, this would not even affect you or your brother.

Hi Kim,

Any personal property belongs to the borrower or the borrower's heirs.  Any real property is part of the home and the lender could have a cause of action against anyone who removed said items from the property.  So what appliances constitute personal property and what constitutes real property?  You should check with an attorney in that state if you are not sure but generally items that are attached to the land or the building, those that are built in to the home are real property.  Window air conditioning units that are not built and just sit in the window sill in are typically personal property and do not become a part of the home.  Those that have been screwed into the wall and attached become fixtures and are real property.  Microwaves can be both real and personal property.  A microwave oven sitting on the counter or on a shelf is personal property.  If it is built into the wall, it becomes real property.  Washer and dryer are almost always personal property.  Refrigerators again, depend on whether they are free standing or built in.  Stoves and ovens are an example of an appliance that can go either way depending on whether or not it is attached or free standing.  Fan lights that are attached are fixtures and are real property and thus are part of the home.

Again, if you have any questions about particular items, I would suggest you contact local legal counsel before removing things that could leave you open to legal action.

Hi Vickie,

This is a question for an attorney and I'm sorry, I can't give you legal advice.  I would suggest you contact an attorney in the state in which the property in located because all state laws could also be different.  It could be that the recording of the document gives constructive notice but it does not need to be recorded to be valid but I cannot possibly tell you that for certain because I don't even know where the property is located and again, I could not give you this type of legal advice even if I did.  A competent real estate attorney in the area though could answer this question very quickly (and could also assist with recording the document if needed).

Hi Kelly,

The loan becomes due and payable when none of the original borrowers still occupy the property as their primary residence but if the son is the heir, he still owns the home.  He has several options which include refinancing the loan in his name and selling the property.  If he chooses to remain and refinance the loan in his name, he can pay off the existing loan or if the property is valued less than what is owed on it at this time, they would accept 95% of the current market value to pay the loan in full as well.

Hi Karen,

I cannot begin to second guess why the originator said what he said or everything that you can and cannot do at this point with the information available, but the only reason that your son would or would not have been able to buy with you that I can think of based on your statements would be if you are over 62 and he is not and you were trying to use a reverse mortgage at this time to finance the home again in your name(s).  Otherwise, I can think of no reason why HUD would have any restriction on whether it would be you or you and your son both obtaining the home if they have already told you that you can pay off the loan and keep the property.  I have no knowledge why HUD would have any objection to one or both of you owning the home, especially if there is no concern about reverse mortgage qualification.

Hellos Melissa, How your previous mortgage was obtained has no bearing whatsoever on your reverse mortgage now. Your title needs to be clear and in your name now and there may be some paperwork involved to make sure it is now just your name that usually includes the recording of the Death Certificate by title, but that is routine and we work with this step often. If you live in some states like Texas there may be additional items that have to be resolved with Affidavits of Heirship but in most states, it does not require any additional paperwork or time.

Hi Cynthia,

The lender has to determine whether or not they can accept the Deed in Lieu of Foreclosure by doing so preliminary research.  There can be no other liens that would affect the lender's security or the lender would not be able to accept the Deed.  Once the lender is satisfied that there are no other clouds on title and has accepted the Deed, it then owns the property and would be responsible for all expenses from that time forward.

This question really deals with the time from notification until the lender takes possession of the home though.  I can tell you that the reverse mortgage is a no-recourse loan.  However, you should seek the counsel of a competent attorney in the location of the property to determine what actions may or may not constitute additional liability in that jurrisdiction.

Hi Robert,

Heirs can never draw on the loan, only the borrower.  So whether funds were set aside or whether the funds are just left on the line of credit, once the borrower has passed, those funds are not available to the heirs.  Any money not spent would be money that was never borrowed and therefore does not need to be repaid and on which the borrower never accrued interest, but no one but the actual borrowers on the loan may draw any of the funds.

Now the second part of that question is the $8,000 set aside and whether or not the borrower had access to those funds.  That depends on what the set-aside was for.  If the set aside was for future servicing fees (servicing fee set aside), then no, mom would not be able to access the funds either.  Those funds were never borrowed though and therefore would not be included in the funds required for the payoff.  However, if the set aside was for a repair of some sort, once the repair had been completed, those funds would have been available to mom again when she sent in the proof of completion of the repairs.  So unfortunately, I can't just give you a "yes" of "no" as to whether or not this specific set aside would have been accessible without further reviewing mom's closing documents to see what the set aside was for and whether it was always intended as a temporary set aside (until something was completed) or a permanent set aside (to pay future costs for the loan or property expenses).  But again, the heirs can never draw on the set aside regardless of which type of set-aside it was.

Hi Karen,

I am not an attorney and cannot give you legal advice.  I can tell you though that the loan is non-recourse, now and forever.  The lender has only those rights given to them in the documents the borrowers signed and they cannot change at a later date.  As the heir, you did not agree to pay anything and as a no recourse loan, the lender cannot recoup costs from any other asset of the borrower or their heirs.

I do advise you to seek legal counsel because there may be other ramifications of which I am not aware that have nothing to do with the lender that you need to consider.  Some areas have special fines or assessments for swimming pools that become hazards that are allowed to breed mosquitos, some for weed abatement, some for other reasons and I cannot begin to know or advise about these issues or how it may affect you if you allow the property to fall into disrepair and you are the legal owner.  If you don't pay the insurance, the lender will force-place a policy that will cover only the improvements, none of the contents.  However, I can tell you that the terms of the loan are spelled out and the property is all that the lender may look to for repayment and that cannot change at some point after the loan closes whether the loan is sold or assigned at a later date.

Hi Jo,

I'm sorry but I don't think I have enough information to answer your question accurately.  Your grandparents own the home and can do anything they want with it.  If they want to "sell" it to you, they can just sell you the house and you can use a title company to complete the transaction with the title company requesting a beneficiary's demand for payoff that you would have to pay in full at the close with your funds (whether that be with a new loan or whatever).

But if you are talking about an "inheritance", you are talking about a gift not a sale and then you would be looking at different process.  But regardless of the steps you have to take, it's still their house and they can still do anything they want with it - including give it to you if that's what they want to do.  But then the question becomes how do you intend to pay the loan off that becomes due and payable as soon as the title changes?  If your grandparents sell or gift the home to you, whether they still live there or not and they convey the title completely to you, the loan becomes due and payable and you have to have a means to pay it off.

There is a third choice, especially if you are asking about keeping them in the home anyway.  Under the terms of the reverse mortgage, they can add anyone else to title that they would like and the loan does not become due and payable as long as at least one original borrower is still on the title and as long as one original borrower continues to occupy the home as their primary residence.  So your grandparents can execute a deed to themselves AND you at this time which would not affect the loan in any way as long as they still occupy the property as their primary residence.  If the Deed and vesting they use grants you right of survivorship (usually joint tenancy or tenants in common), when they pass you would become the sole owner of the property.  The loan would still be due and payable at that time, but that might achieve your desired results.

I have to give you my standard disclaimer though - I am not an attorney and cannot give you legal advice.  I do not know which Deed or vesting is best in your state and therefore, I strongly suggest that you seek out competent legal advice to determine if this is the best way to proceed and to prepare any needed documentation to avoid problems or possible property tax implications due to a transfer of ownership.  The attorney may also have advice for you regarding income taxation, etc. about which I do not have knowledge that you should know.  My comments are solely to advise you of your rights under the reverse mortgage loan.  To determine other facts and possible issues, you really do need to speak with a legal representative in the area.

Hello Anthony,

You have two completely different issues.  One is the transfer of the title to you and the other is the satisfaction of the loan.  The reverse mortgage terms allow the heirs of the borrower(s) to satisfy the loan by paying the lesser of the outstanding balance of the loan or 95% of the current market value.  So if the loan amount is more than the property is worth, you can keep the home if you wish by paying off 95% of the current market value of the home even though that is less than the amount owed.  If you did not wish to do that, you could allow the lender to take the property back through the foreclosure action and bear no responsibility or cost, but since you do want the home, it sounds like your decision is to move forward with the payoff of the existing loan at 95% of the current market value.

That is the only information about which I can advise you - the items regarding the terms of the reverse mortgage.  If you would like advice on stopping a foreclosure with a chapter 13 Bankruptcy, you really must seek competent legal counsel.  I also don't understand why you would even want to try to list with a broker and sell.  If the property is over-encumbered, to list it would just mean a loss and then real estate commissions would need to be paid on top of that.  For these reasons, I would not be able to advise you on the ability or practicality of adversely impacting your credit to go the bankruptcy route, nor can I see the benefit of listing the home for sale if there is currently more owed on it than it is worth.

Hi Vicky,

I'm afraid I can't answer this question.  The loan becomes due and payable when no borrowers still occupy the property.  I don't know how the title is set up to pass or to whom upon his demise though and I could not comment on property rights of other heirs even if I did have this information, this is a legal matter.

Hi Shannon,

I'm sorry, but I am confused.  A reverse mortgage lender can never "seize" a home or freeze anyone's other assets under any circumstances.  A reverse mortgage is a loan just like any other loan and it is a non-recourse loan at that!  The lender can begin foreclosure proceedings in accordance with the legal documents and the borrowers' heirs have legal rights as well and can often stay those proceedings when warranted, you should check with a local attorney to determine the necessary steps in the area where the property is located.  Even if a lender begins foreclosure, the process is not instantaneous and heirs can still begin the sales process, and contact the lender or HUD for additional time if needed.   

As far as the other assets are concerned, the loan is a non-recourse loan.  Plain and simple, that means that the lender can look to no other assets for repayment of the debt - it cannot seize any other assets.  So when you say they "froze their assets", by freezing their assets, are you referring to the reverse mortgage proceeds?  Because if that is what you mean, then yes, no further loan proceeds are paid out after the borrowers pass, no matter what time frame has transpired (you indicated 21 days before they passed but there would be no reason for that based on your comments).  If the borrowers are not alive to draw assets, then there is no way additional funds could be drawn afterward.  If you are referring to any other assets, it simply cannot be done, legally or otherwise since they have no rights or title to anything other than a security interest in the real property against which the loan was secured.  They don't even own the home unless they go through the foreclosure process and receive the home at foreclosure sale and until such time the home is still owned by your parents or their heirs.

I'm sorry for your loss, but there is something amiss here.   What is the status now?  Have you removed your parent's belongings from the home?  Has the property been listed for sale as of this date?  It's been almost 4 1/2 months, are things progressing so that when you approach HUD and the lender you can show them that you are making an effort to finalize things?  These are all factors they will want to see but as for the rest of your comments, I can't really say anything one way or the other without looking at the entire situation to determine the actual facts because the lender doesn't even have the ability to "seize" a house without going through the legal foreclosure process and they can never freeze assets other on the reverse mortgage program.

If the daughter is the sole heir, she doesn't have to "purchase" the home, she merely has to pay off the loan because she probably already owns the home.  She needs to find out if the father died intestate or if there was a will.  With any luck, there was a trust and daughter became the successor trustee and the property may not have to go through probate.  All this can be answered by an estate attorney.

The loan will be due and payable and the daughter will have to obtain new financing in her own name.   If the outstanding balance on the reverse mortgage is higher than the value, then she can retire the debt for 95% of the current market value instead of the full amount owed, making it possible to still obtain FHA financing in many cases.  For those answers, she should contact a forward lender to review her credit and income for the refinance loan.

Hi Gail,

I'm sorry, I cannot advise you on this matter.  The central air unit and the cabinets are all fixtures under the laws of most states which make them real property and therefore, part of the house.  Ordinarily, I would say that if you took something from a home you did not own, you could have problems.  If the title has passed to you as your mother's heir, then now you do own the home and I guess my first question would be if you can't buy it, have you looked into selling it and is there any money you would gain from the sale? 

This is a matter to discuss with an attorney as any intentional stripping of fixtures in the home could leave you open to prosecution, I just don't know and I would suggest that you determine the sale value of the home compared to the amount owed before you consider any actions.  Maybe the first meeting ought to be with a local realtor, that one would not cost you a dime!

In conversations I have had with various servicers, it seems that they are not able to accept a Deed in Lieu of Foreclosure unless the property is "broom swept clean" all personal items are removed and the title is clear.  They do not wish to be responsible for the personal items left in the home and they cannot ignore any other liens that may be on the title (if any).  If you want them to accept the property and not have to continue on, then you should empty the home of all personal effects and then if there are no other loans/liens on title that would create an obligation if they accept a Deed in Lieu of foreclosure, they can do so at that time (and often do).  Otherwise, they will have to wait for the full foreclosure when the law will protect them from liability when all the personal items are removed after the home has been foreclosed upon and/or any other lien holders would take whatever steps they need to at that time to legally protect their interests.  

We wish to proceed with the deed in lieu of foreclosure process for our reverse mortgage. I believe that the time necessary to complete the process could extend beyond the date when property taxes and Home Owners Association fees are next due. I intend to make those payments to avoid delinquency. At the end of the deed in lieu process, can I expect a final closing settlement like that which is typical for a normal real estate closing in that expenses such as property taxes and HOA fees that have been paid in advance by the property owner for periods that extend beyond the closing date are rebated to the property owner, or are those amounts forfeited? 

Good Afternoon,

I don't know what company you are dealing with but I know most of the servicers and they know as well as you that they have no recourse against you and that they cannot sue you for a debt you never agreed to pay!  The loan states right in the documentation that it is a non-recourse loan and your mom signed the paperwork to obtain the loan, neither you nor your brother ever signed any agreement to pay for anything.  The loan documents for a reverse mortgage specifically state that the security for the loan is the property, not the heirs and not any other assets belonging to the borrower(s).

Your mom paid the HUD mortgage insurance to cover against any losses for just this reason.  The lender will post a claim with HUD, not with you or your brother.  HUD allows heirs to pay off the loan at the lower of the outstanding balance or 95% of the current market value if you do want to keep the home, but you are not required to do so.  Most of the time, lenders and servicers would love to receive a Deed in Lieu of foreclosure to speed up the process, but this is not always possible.  They have to make certain that the title is clear, that the person willing to sign the Deed in Lieu has the legal right to do so and that the property is completely vacant and is in what is referred to as "broom swept condition".  Otherwise, the foreclosure process may have to continue so that the lender is relieved of all legal liability and other liens when they take title.

If the property is completely clear and clean and you have the title now and are able, you may want to offer them a Deed in Lieu of Foreclosure at this time or if you would like to keep the home, tell them that you would like to keep the home and pay off the obligation at 95% of the current value as allowed by HUD.  Otherwise, let them know that you are not responsible for a debt you never agreed to and they can continue their foreclosure process and that they will eventually own the home as is outlined in their loan documents.

Heirs are entitled to the remaining equity of your mother's home once it is sold, of course if that is how her will was set up. You cannot borrow any additional funds from her available line of credit, that would be the same scenario as taking her credit cards to the department store and trying to spend money that is not yours to borrow from. 

Good Morning,

There are two dates that HUD used in the reverse mortgage that you refer to.  They used to use just the date that corresponded with the borrowers being 99 years old with just the knowledge that borrowers could stay for life but that "knowledge" was not adequate for most borrowers who had long lineage in their families and had some reasonable hopes of living beyond the age of 99.  So HUD added the second date in the Loan Agreement which represents 150 years old since the contract needs to have a conclusion date to be a valid contract in most states.

HUD pushed the date out to a date that represents the borrower being 150 years old in the Loan Agreement knowing that would be more than ample time for any borrower.  The loan allows you to stay in your home for life and the 150 years should be more than ample to cover the life span of any borrower.

Hi Daniel,

The reverse mortgage is a loan just like any other loan.  The same rules would apply to the property disposition in the case of a reverse mortgage borrower who passed as would with a borrower who had a traditional or forward loan.  Those answers may change with the location of the property, whether or not the borrower had a will or died intestate, whether or not there are heirs.  But the loan does not change those options, it is a loan or lien against the property that must be paid or the lender would eventually have to foreclose to protect their rights and the property would be sold at auction if no heirs stepped forward.

Hi Karen,

I don't know why the lender has said what they are saying and I know lenders typically won't give legal advice.  Perhaps they are concerned about the title passing to the heir so that the heir can perform any steps needed to complete the plans to keep or sell the house?  I can't say because I know nothing of the circumstances but it might be best to ask them "why" they believe so and then to check briefly with your friend's own legal counsel.  It could just be that the lender is saving your friend from making a costly legal mistake - but I don't know and only a competent attorney in the area can tell you for sure!

Hi David,

That's funny, I don't remember ever getting a family member or possible heir to sign an agreement in advance that they will take on the financial responsibility for the property under these circumstances.  You signed nothing with them and you have no obligation to them.  If you are concerned about any possible further liabilities with any other entity (state, county, etc.), I would suggest you contact an attorney in your area but your mom had a property she used for collateral for a loan and the lender can only take those actions granted to them in the security agreements.  Since you and your brother never signed anything that made you responsible for financial obligations to the lender or the property, I would suggest that maybe the lender should look to their own legal docs to see what rights they have to request you to do anything.

Having said that though, if you don't intend to keep the home, I myself would do whatever I could to move the title to the lender as soon as possible (deed in lieu of foreclosure, perhaps) but I would suggest a call to an attorney would probably be worth the time and limited expense for a one-time session.  Especially if you have the legal docs from your mom's loan available, I think you'll like the outcome.

Read more about non-recourse features here. 

Hi Nancy,

If your daughter is on title and you intend to keep her on title, then she would also have to be eligible for the reverse mortgage loan (62 years of age or older) and be living in the property.  The Principal Limit or the amount of money you would receive, will be based on the age of the youngest borrower so her age would dictate a lower benefit or loan amount.  So yes, having a child on title would make a difference on a reverse mortgage loan.

Hi Sherri,

The 95% provision is usually reserved for heirs who want to pay off the loan themselves, not sell it to a third party.  I can't speak for the lender, but I can see where they might be concerned that any "sale" from an heir who has not really inherited the property yet may cause issues at a later date when/if there are title concerns and the heir didn't really have the right to sell the property at that time.  If the property has not been through probate, what if there are other heirs that pop up who also claim rights and title to the property?  I can't blame Novad for not wanting to be involved with the sale transaction under those circumstances.

However, that does lead me to ask, if there is no equity left in the property, why bother being involved in the sale at all at this point?  The loan is a non-recourse loan and that means the lender cannot seek repayment from any other assets of the original owner or any heirs.  If there is no equity and you cannot sell the home at this point due to the probation requirements, you can simply walk away from the home with no consequences and let the lender worry about selling it once they receive title through foreclosure.  In the meantime,   you do not have to even worry about the sale and there are no financial consequences if there was no equity anyway.

Hi Carol,

I'm sorry, we are not licensed to give tax or legal advice and I cannot weigh in on such matters.  I would not be able to do so even if I had all the parameters of the purchase, sale, improvements, debt forgiveness, etc., because our licensing forbids it but I don't even have those items and so anything I even took a stab at would be totally unqualified and therefore inaccurate.  I would advise that if you feel you are receiving bad information for your circumstances that you contact another, perhaps more senior tax accountant or attorney for a second opinion.

Hi Larry,

If you are their heir and inherit the property, then you would own the property and would have the opportunity to choose whether you wanted to pay off the loan with another loan in your name or sell the property.  If both parents pass though, the loan becomes due and payable at that time and you would have a decision to make.  If there are other heirs as well, then you would have to work that out with your other heirs, possibly amongst yourselves or in accordance with your parents' final instructions or court order if they have no will.

Hi Bill,

I'm sorry, I really don't know how to answer this question.  They still own the home and the equity is still theirs and so a lot of their decision may will still be based not on whether or not they used their reverse mortgage proceeds but on how much the property has gone up in value (if at all), how much interest they have accrued and the marketplace in which the property is located.  Most active markets have experienced a good deal of appreciation in the recent years and so there may be a lot of equity still in the home and it may be best for them to sell the home, pay off the balance and keep the proceeds.  If they live in an area where values were hardest hit and their value went down substantially but has not rebounded, they can also be comforted in the knowledge that although they were able to live in the home payment free for a time and may have extracted some or a good deal of equity, they can never be made to pay back more on the loan than the property is worth, regardless of how much money they received or how long they lived there payment free. And the lender can never go after any other assets to repay the debts either.

Their first step would be to obtain a market evaluation from a realtor to see what the home is worth and what would its most probable sale price would be and then compare to the balance owed on the loan.  From there you can start to make some decisions but at least you don't have to worry about the payments crushing them in the mean time because there are none and they can stay there as long as they like until you all devise the plan that works the best for them and their circumstances.

Hi Dottie,

You can put your son on title after the reverse mortgage is done but not before.  All borrowers on title when you get the loan must occupy the property and meet the minimum age requirement of 62.  Putting him on title would allow him to avoid probation in the event something happens to you and your husband, he would own the home, but the loan would still come due and payable and he would have to either refinance the loan at that time or sell the home if he was unable to do so and therefore it may not be the solution you were seeking.

Hello Hellen,

You are not responsible for the repayment of the loan in any way if you did not sign the legal documents promising to make the payments.  In addition, the reverse mortgage is a non-recourse loan.  This means that the lender can only look to the property to secure repayment on the debt they cannot seek repayment form individuals.  Having said that, if you are the heir who will inherit the property if he passes, you may want to check your equity position to determine if it is in your best interest to dispose of the property and keep the equity if the result of the required repayment is that your husband has passed.  Your best alternative if you are not certain would be to seek competant legal counsel in the the area where the property is located.

Hi Tammy,

I am afraid I cannot help you with any of your legal questions regarding rights of heirs, but I can tell you that you can search on line to determine what loan(s) was/were on your father's home and it will be easy to determine whether or not he had a reverse mortgage just by looking at the Deed that was recorded.  If you are not sure how to accomplish this, a title company can assist you with this search as well and most real estate sales people in your area can also pull copies of Deeds so if you have any acquaintances in any of these professions, they can do a quick internet search for you as well.  The recorded Deed is a public record and so it is not usually very difficult to obtain.

Hi Kris,

The home is always yours and does not revert to the lender upon your death.  If you will it to a relative and they choose not to step in and either sell the home or pay the outstanding balance with other funds available (as would be the case with a refinance of the loan into their own name) in order to keep it, then they can choose to simply walk away and the lender would have to foreclose on the loan to obtain title to sell the house.  But there is no provision under which they would automatically obtain the title to your home when you pass.

Hi Stanley,

I'm confused.  If you just signed a Quit Claim Deed, you just further relinquished your possible interest to the property.  If you were being added to the property, it would not have been done with a Quit Claim Deed as this form of Deed just forever relinquishes any ownership in a property, it does not grant ownership to an individual.  For that action, you would use a Grant Deed.  I would suggest that you consult an attorney regarding the ownership rights because one person can add others to title by Granting ownership to themselves and any others they desire but a Quit Claim Deed is meant just to relinquish any ownership claims to a property and does not add additional owners.  I am not an attorney and cannot advise you regarding ownership laws or rights and you really should seek the advice of an attorney for which Deed to use for each purpose.

With regard to the reverse mortgage, if your soon to be spouse obtained the loan before you were married and you were not an owner living in the property at the time and on the loan, then the loan would become due and payable if something happened to her while you were still living in the home.  The payments would cease as soon as the lender became aware of her passing and they would be looking for the plans for the repayment of the loan, whether that was by a new loan or by the sale of the property and satisfaction of the debt.  If you are relying on a Quit Claim Deed to grant you ownership to be able to sell the home to repay the obligation, I do suggest you contact competent legal counsel as soon as possible though because I believe you may have chosen the wrong instrument to convey title (if I am understanding correctly from the comments provided).  I wish you the best.

Hi Wanda,

I'm sorry but this is a question for a competent legal counselor, and possibly ultimately the courts but not a reverse mortgage specialist.  The loan does not affect wills and how heirs will divide an inheritance.  You may want to question the attorney about your nephew's use of the home, the interest that accrued during his occupancy, and costs to rehabilitate the home due to their lack of maintenance and its ultimate effect on the value, but I certainly cannot tell you how that would be decided.  I wish you the best.

Good Afternoon,

I'm sorry but I cannot answer this question for you.  This is a legal question having to do with the rights of heirs and not a question regarding the reverse mortgage itself.  The program allows for the borrower's heirs to either walk away without having to pay a dime or to pay off the existing loan for the balance owed or 95% of the current market value whichever is less (and in this case, current value would definitely be less) but it would not be up to the lender to determine who that legal heir would be.

You could always approach your step-mother and step-sister if they do not intend to keep the home anyway to see if they would be willing to let you act as the heir in this instance since you would have to come in with 5% to keep the home.  If you wait for the lender to foreclose, you could then buy it at that time (foreclosure sale) but you would also run the risk of having to bid against other bidders at the foreclosure sale and those sales are typically all cash transactions.  The lender can't sell you anything it does not own and it does not own the home until and unless it goes through a foreclosure sale and no one bids higher than the lender's opening bid (which is what is owed the lender - the lender cannot raise its bid later).  After the sale, if the lender's opening bid holds and the lender owns the home, it is free to sell the home to anyone at whatever price it can get.

I would strongly suggest that you obtain legal representation in the area prior to that time to determine your actual rights in the matter.  Some states have stronger laws regarding rights of heirs than others and I can't begin to advise you on the matter.

Hi Michelle,  

I am not an attorney and cannot advise you on this matter.  I can tell you that the loan is a non-recourse loan and that the lender cannot look to anything other than the property for repayment of the obligation.  However, I do not know about the rights of others and could not legally advise you even if I felt I did know the correct answer.  You really should contact an attorney located in the area of the property and I suspect you will be happy with the findings, but again, you should check to protect your rights.

Hi Diana,

There is no requirement of a reverse mortgage that states that the loan the reverse mortgage retires was made to the current owner of the property.  As long as you own the property, occupy it as your primary residence and qualify for the loan under HUD's other parameters, it makes no difference that the lien being paid off was made to another individual from whom you inherited the property.

Hi Ed,

What was the company's response when you asked them this question?  We're not attorneys here and as such, I can't give you any legal advice or tell you if any "rights have been violated".  I can tell you the reverse mortgage process though, usually what is happening in a situation or what to work toward but there is still a lot of information I don't have in order to be much help here.  You say that they told you that you had 6 months to sell the home and there was no other contact until the notice of foreclosure sale?  Most often when I talk to folks they tell of much more contact with the lender.  Did you receive or did the lender ask for any kind of updates during the 6 months? 

The loan becomes due and payable when the last borrower leaves the home and if there was no additional contact between you and the lender for 4 months and the property was still not even listed during this time, they may have thought the property was abandoned and that it was not going to be sold.  Did the lender have good contact information for you during this time and/or did you contact them at all?  I always counsel heirs to contact the lender and keep the line of communication open because if they were unable to determine for over 4 months that the property would be sold, they may have made the determination that they had to take steps to protect their security for the loan.  My advice would still be to contact the servicer and discuss the steps you have taken to sell the home and anticipated timeframes for doing so.  But if you are looking to determine your rights under the law, you really need to seek competent legal representation.

Hi Robert,

I can only answer questions about those pertaining to the reverse mortgage.  For instance, I can tell you that the loan is a non-recourse loan and that the lender can never seek repayment from any other assets and can only look to the property for repayment of the loan.  I can tell you that until you leave the home, you are not in violation of your reverse mortgage terms so while I suggest that you contact your lender and discuss your proposed actions with them as soon as you know what you need to do, there is no requirement that you give them any advance notice of future plans.

I cannot make any assertions however about rights of HOA's, utility companies, municipalities, etc.  I'm not an attorney and I cannot give you legal advice.  I would suggest that you contact a local attorney to discuss these issues as they pertain to your plans to be certain that your planned actions not only protect you with regard to the reverse mortgage but also as the legal property owner in all the areas you just listed.

Hi Joyce,

You should contact a realtor in your area to determine the value of your home.  If your home is worth more than is owed on it, you can sell it and the proceeds belong to you.  If the balance on the reverse mortgage is greater than the current value of the home but you must leave the home for your medical reasons at this time, you just need to make your plans to move and then contact the lender after you have completed your move and make arrangements to give them a Deed in Lieu of foreclosure.  The loan is non-recourse which means that they can never seek repayment by going after you or any other assets you may have. 

Hi Verna,

The minimum age requirement is 62 so you are eligible.  The first thing you should do is determine the home's value and your Principal Limit or benefit amount to determine if the new reverse mortgage will give you adequate funds to pay off the old loan.  That can be done quickly just by looking at sales of similar homes in the area and then requesting a proposal from the current lender or another lender once you know the approximate value and the amount owed.

Hi Lydia,

I'm not sure what you mean by a non-borrower program in Michigan. All borrowers of a reverse mortgage loan must be a minimum of 62 years of age. One of the practices that we have never condoned that many borrowers participated in prior to HUD's recent changes, was to remove one borrower from title when that borrower was under the age of 62 and just do the loan in the older borrower's name. We had always caution bars against this course of action because if anything happened to the older spouse the younger spouse was left looking for a place to live when the loan was called due and payable.

A few years ago HUD change the program and they now take the age of the non-borrowing spouse into consideration and with certain restrictions, allow the non-borrowing spouse to continue to remain in the property even after the passing of the borrowing spouse. However, this was not the case in 2010. If your mother signed a quit claim deed and the loan was done solely in your father's name, and now he no longer lives in the property, that loan can be called due and payable.

The first thing that I would check is to see what the current value of the property is. Many properties have experienced a lot of appreciation since 2010. Depending on how much interest your mother and father accrued on the last loan and what the current value is on the property, there is a possibility that your mom can now get a reverse mortgage in her own name (assuming that she is over the age of 62 at this time).

The next thing I would do is compare that value to the statement that your mother and father have been receiving to see what the equity position in the property is. This is the information you will need to know to determine whether or not mom now qualifies for reverse mortgage on her own. With any luck, she will have enough equity in the property to where she can do a reverse mortgage on her own and not have to bring any cash into the transaction. Since she's probably younger than your father was, her benefit amount will be lower and they have accrued interest on the old loan so there has to be a good amount of appreciation for this to work. I don't know what the possibility of you and your brothers assisting her if she does have to bring in cash.

I would not wait until after the lender contacts you about the loan being due and payable before you look into a reverse mortgage for your mother though. My advice would be for you to find out what your options are before you are contacted by the lender which may not give you a lot of time.

Hello David,

I'm sorry to hear that you're having such problems but one of the biggest areas in which we see issues is between family members when communication breaks down. I do not know in which state the property is located so I can't comment on the foreclosure laws of that particular state but in every state I am familiar with it takes longer than just a month or two to foreclose on the property. I suspect that there has been much more communication than you're being led to believe.

I cannot speculate whether or not there was just no equity in the property and the reverse mortgage balance far exceeded the value of the home or what the situation may have been. I cannot believe however, that if there was equity in the home, that your half-sister would not have taken steps to sell the home and keep the equity for the family. There are also provisions in the reverse mortgage that allow family members to keep the home and pay off the existing mortgage at 95% of the outstanding balance if they wish to do so when the remaining balance of the loan exceeds the value of the property. That does not mean that it would allow you to sell it to a third-party at 95% of the existing balance.

If lenders have an opportunity to sell a property prior to foreclosure they are usually only too happy to do so. So the entire scenario doesn't make a whole lot of sense based on the way it is presented. The facts that you did not want them to do the reverse mortgage, your half-sister is not communicating with you now and it seems that nobody did with you at the time, leads me to believe that there may be more to the story and unfortunately I just can't comment without knowing all the other pieces. Have you tried contacting the attorney that handled the foreclosure with the bank for your half-sister? I don't know if he'll speak with you but I think that may go a long ways toward resolving your questions. He might be able to fill in a lot of the blanks and he might not be able to tell you anything at all. Other than that, you may have to engage the services of an attorney of your own.  The attorney can verify through recorded documents how much the property sold for at auction what the lender's starting bid was and can verify what the value of the property was.

I'm sorry I can't be of a lot of assistance, there are just too many unknowns and anything that I tried to suggest would just be the result of the guess.  I do wish you the best and I hope that you and your half-sister can resolve the communication issue so that everything can be finalized to everyone's satisfaction.

Hi Dolores,

If you are at the point now that you have only 24 hours to vacate, this is pretty far along in the process and I would really advise that you contact an attorney or possibly a legal rights advocate for your area immediately.  We strongly urge borrowers to be proactive and to seek out legal counsel and learn their options before it gets to this point.  Foreclosure generally takes many months to consummate and the sooner you begin to formulate your strategy the better off you will be.  

Hi Gloria,

The Reverse Mortgage will not be the deciding factor as to whether or not there is a court approval required for you to sell the property.  A reverse mortgage is a loan, just like any other loan.  You should speak with an attorney to see how the title is vested and what the law and a title company will require in order to pass insurable title and thus sell the home at this time.

Hi Brenda,

A reverse mortgage is a loan, just like any other loan.  If a borrower dies intestate, their heirs would have to follow the same procedures as with any other individual who passed without a will to obtain their property.  Since the loan would still be on the property and would be due and payable at that time, the heirs would have to make arrangements to retire the debt.

Just as with property that goes into foreclosure due to non-payment after the death of an owner, most state and local laws allow for procedures for heirs to halt any foreclosure proceedings until after the courts have determined ownership but for that advice you would have to seek counsel of an attorney located in the area of the property.

Hi Chrissi,

Your grandparents' loan will be due and payable when your grandfather is no longer living in the property so if you want to keep the home, you should begin looking at various financing options to see which best works for you.  If you are 62 and over (you said you are on social security and I do not know if it is age related), you could apply for your own reverse mortgage at that time as well but being far younger than your grandparents, you may not qualify for as large an amount depending on the loan limits when they acquired their loan, the value of the home at that time versus the value now and interest rates in effect at the time you apply. 

My suggestion would be to check out your qualification based on your age, the current value of the home and use the balance that your grandfather still owes on his mortgage to see if this is a possibility.  Once you know what your benefits are in relation to what he currently owes, you will know if the reverse mortgage is a possibility based on your circumstances and finances.  If a new reverse mortgage is not possible, you and your fiancé may still be able to refinance the home with a standard or forward loan at that time.  You will be able to pay off the existing balance of the reverse mortgage or 95% of the current market value, whichever is less so even if your grandfather owes more than the home is worth (he borrowed all the available funds, accrued interest and the value dropped), you still can keep the home for less than the current market value if that is your desire.  I wish you the best.

John,

A short sale is when a lender settles for less than is owed on a property at the sale, usually due to the fact that they realize that the property is not valued high enough to pay off the entire lien.  This perplexes me though.  Is the loan you applied for an FHA loan?  I am not aware of any forward rules that a borrower cannot apply for an FHA loan on a property that resulted in a loss for another borrower with FHA, but I do not originate forward loans so I am not the best person to ask about that. 

The individual(s) who suffered a loss on the previous loan was not you.  Therefore, you should not be prevented from getting any type of loan at this time.  I would suggest that you consult another lender and ask them about all available loan types if they give you the same answer about an FHA loan.  YOU did not have a short payoff of the loan on the home, your father did due to death and HUD allows for heirs to pay off the loan at 95% of the current value or the outstanding balance, whichever is less.  It would be lunacy for HUD not to allow the financing for a qualified buyer as to do so would mean they would be locking in a bigger loss for themselves.

Check with other lenders, this is completely strange to me and I just checked with one forward lender I know and they said they have never heard of such a thing.

Hi Calvin,

I assume that the property is still in your mother's name, correct?  If so, then you are not liable for anything.  I would suggest that you contact a property rights attorney  in the area to determine the city or county's possible repercussions but I would be surprised if they can do anything to anyone other than the property owner, and she has passed.  If they place any liens on the home, they will stay there until paid when the house is sold and that will be done eventually by the new owner...the lender when they finally foreclose and take title to the property.

I cannot give you legal advice but a quick call to an attorney would confirm what liability, if any, you have.  You have none on the loan but I can't speak for the municipalities and you should find out for your own peace of mind.

Hi Jason,

HUD grants longer extensions when the property or market is such that the heirs need a longer period of time to sell the home.  When the market was really bad in different parts of the United States, it was not uncommon for heirs to receive 24 months or longer to sell the homes because HUD knew it would take them just as long.

I don't know your location or your circumstances, why it has taken over a year so far to sell the property, but in most parts of the country, even if they begin the foreclosure as they have stated, it will take a minimum of another 5 or 6 months to complete at this point leaving the lender and HUD 18 months or more out from the time the loan became due and payable as it is.  The best time for heirs to begin making sure they don't run up against a wall on this timeframe is in the early stages, not at the 12 month mark.

If the property is still not sold and it is because you live in an area in which sales are just still that depressed, then I would suggest that you contact HUD directly and plead your case.  If you show them that you have been making a good faith effort to sell the home all along and the delay is market driven, not because you have not been actively trying to pay off the loan through sale or new financing, you may have a chance for more extensions.  You have to remember that the loan agreement or "contract" for the terms of the loan was with your mother and the guarantee was that she could live in the home for the rest of her life, it does not extend for the life of heirs as well.

I wish you the best.

Hi Sandy,

I cannot comment on ownership and rights of heirs, that is a legal question.  I can tell you that the bank does not own the home, your father does and when he passes, the home will go to his heirs according to his directions.  I guess the real question is whether or not dad has a will or a trust and has he directed the ownership of the property to pass to specific heirs?  It would probably be best to speak with an estate attorney in the state in which dad lives and probably not a bad idea to ask dad!

Hi Ann,

After the last borrower on the reverse mortgage permanently leaves the home, whether by moving or by death, the loan becomes due and payable.  Lenders and HUD work with heirs from the point to allow them to either obtain other financing or sell the home and the target moves based on market conditions.  When real estate sales in some markets were absolutely abysmal, HUD put out a chart giving heirs up to 24 months in some areas.  Now that sales are strong in most markets, they would be looking to see the efforts to sell the home and some results much more quickly.

You have to remember that even if the lender were to exercise its right to foreclose immediately, the process would still take close to 6 months in most areas and longer in many others.  While lenders and HUD do not want to own property, if it has been some months since the passing of the borrower(s), at some point they have to make the decision of protecting the asset.  Most of the time we hear that homes are typically sold within the first 12 months and there are no issues but then, we also occasionally hear of family members who have not even put a house on the market after more than 9 months and those often do end up with a foreclosure at least started.

Hi Joy,

I do not know where the property is located, what the city rights are there and could not advise you legally but I can tell you that YOU did not sign anything with the lender and therefore you have no obligation to the lender for the reverse mortgage loan.  The reverse mortgage loan is a non-recourse loan and they cannot seek repayment from any other assets.

My advice to you is to contact a property rights attorney in the area where the home is located to determine what the city can and cannot do.  Then you can make your decisions accordingly.  The lender cannot do anything if you turn off the utilities, remove your relatives belongings and simply stop doing anything on the home except foreclose on the Deed that the original borrower(s) signed and that leaves you in no worse position than you are in now.  That would alleviate your necessity to make any further investments into the property and it might just speed up the lender.

I think you will find after talking to the attorney that the only thing the city can do is levy liens after doing an abatement of some sort if they need to for weed abatement, etc. and if you never transferred ownership of the property to your names, those liens are against the old property owner who is now deceased and soon to be new owner - the lender who refuses to complete the Deed in Lieu of foreclosure but will be forced to incur additional expenses through an actual foreclosure.  But don't go on my hunch, talk to an attorney to be sure.

Hi Larry,

This is a legal question and one that would depend upon foreclosure laws.  If mom has been out of the home for over 12 months, then by the terms of the reverse mortgage, they can call the loan due and payable at this time.  Once they do that, if you do not pay off the balance within the timeframe they give you, they have to begin foreclosure proceedings. 

We are not licensed in Michigan and I am not familiar with the foreclosure laws in that state.  Even if I were, I would advise you to seek the services of an attorney because there are often ways to contest a foreclosure and he/she would be able to discuss that with you in depth.

Hi Cynthia,

Let's start by answering your last question. I don't know what you mean by saying that the "buyer" can't be family and must be a third-party to get the 95% option. Who was saying that? The heirs absolutely do have the option to pay off the loan at 95% of the current market value or the amount owed on the loan, whichever is less. This option is not forfeited if the heir is a family member. Now you're using another term when you say "buyer".  Heirs don't have to buy the property. They become the owners due to the passing of the original owner. As the new owner of the property in the heir to the estate they have the option keep the home and pay off the existing reverse mortgage at the amount owed or 95% of the current market value whichever is less. If you are attempting to sell the property and not retain the property as the heir, that may be where you and the servicer are miscommunicating.

With regard to how many appraisals can they do, it's a very good question. I don't know what state you're located in but if you are the heir and you now own the home, you should probably check with an attorney in your area as many states have legal requirements that a lender must give a copy of any appraisals done on a property to the owner. This would be a good question for the attorney as well. If the appraiser did a good job on the first appraisal, any subsequent appraisals should show the same or similar value. Any large differences should give you the opportunity to contest the value if you believe the lower appraisal is more accurate. You might also want to talk to a local real estate professional and obtain a broker price opinion. This is not an appraisal but it would give you a good idea of the value of the home as well from a knowledgeable professional selling similar properties in the area. At any rate a local attorney will be to tell you your legal rights.

Hi Joanne,

I am not a foreclosure specialist and you really should seek legal advice to determine your rights at this point. I honestly can't advise you but I would tell you that as long as the property is still in your father's name your mother, as the individual who listed the property, has the right to tell the realtor what you will and will not do with regard to a lockbox.

Of course the realtor will do anything and everything that he or she can do in order to sell the home and try to make it as easy on him or her as possible.

As long as your family still owns the property though the ultimate decision as to whether or not you want to comply with the realtors requests for lockbox, rests with you. The situation will change however if the lender has to go through a foreclosure and takes ownership of the property or if your mother signed a deed in lieu of foreclosure granting title back to the lender.

Without knowing what has and hasn't taken place really don't know what to tell you at this point except you should find out what the status of the ownership of property at this time. There are many legal aid attorneys available and I believe it will be well worth your while to seek counsel.

Hi Thomas,

I must admit this is a brand-new one for me and I'm not exactly certain how to answer your question. I cannot give you any legal advice and I don't know if it's legal to squat in any property that you don't own. What I can tell you though is that a reverse mortgage is a loan just like any other loan. The loan is secured by real property in the legal documents give the lender the right to call the loan due and payable, or in other words foreclose on the property if the borrower defaults on the terms of the loan. A reverse mortgage lender has the same legal rights as any other lender to secure the property  and those rights change somewhat from state to state. Not knowing where you're located I don't know if there are any "squatter's rights" in vacant homes going through the process of foreclosure in your area. I would imagine that the law would be the same for a foreclosure on a property that was encumbered by a reverse mortgage as by a traditional or forward mortgage, but I can't even tell you that for certain.

The length of time for the entire foreclosure to be completed also depends on a number of different factors and this is something I also can't answer for you. It depends on whether or not the foreclosure is just a straight foreclosure, whether or not there's been any legal filings that require the lender to go through court to clear up any matters of title, where the property is located and whether or not it is a judicial foreclosure or trustees deed upon sale among the myriad of other possible issues. When you consider all those factors, the foreclosure may be nearing the end of its process and may be completed very quickly or it could take a substantial amount of time. There is no one answer that would be accurate in every circumstance.

Hi Kim,

As long as your mom is still living in the property there is no restriction about who can and cannot live with her. She can have one or all of her kids living with her and that is completely up to her. The only restriction on reverse mortgage is that the borrower still maintains the property as their primary residence so as long as that is the case there is no problem at all having a caregiver with her, family or not.

Hi April,

This is not really a reverse mortgage issue. This is simply an issue of foreclosure and property laws in your state. You should be able to check public records to see who owns the property and find out whether or not the bank has obtained ownership through foreclosure at this time. The bank cannot do anything with the property until they actually own it. So if you're interested in buying property checking public records will tell you whether or not the bank even owns it yet.

If the bank does own it, you can make an offer directly to the bank to purchase the property. However, if the bank does not own it yet, there may still be time for you to buy it from the heirs before goes foreclosure sale. My advice to you is to make sure that you have competent representation when negotiating a purchase such as this because if this property is currently in the foreclosure process there will be costs and deadlines about which you have to be very careful and you need somebody who is familiar with the foreclosure laws and the timing of events to keep you from making a mistake in finding yourself in a bad spot.

Hi Lisa,

The reverse mortgage loan is a nonrecourse loan. This means is that the only recourse the lender has is to foreclose on the mortgage. So given the circumstances that you've outlined, if you know that the homeowner has no intention to return to the property nor do they intend to try to sell the home, I would suggest that you contact the lender and make arrangements to just sign a deed in lieu of foreclosure. Otherwise they would initiate a foreclosure and take the property back that way.

Either way, you and other heirs can rest assured that there is no recourse against you or them and the lender will not go after any other assets of the borrower.

Good Afternoon Phil,

You have to remember that although borrowers don't have to make a payment and there are a few other differences, a reverse mortgage is just a loan. And when the borrower passes, under the terms of a reverse mortgage, that loan becomes due and payable. Rights of others to step in and assume ownership of the property would be limited by the same property rights laws as if the borrower had a standard or forward mortgage.

I am not an attorney and therefore cannot give you legal advice but I am not aware of any situation where a friend or acquaintance can step in and assume ownership of a property with no legal deed to convey title. I'm sure the lender would be only too happy to receive payoff of the loan but the deceased borrower's acquaintance would still not have title to the property.

You may want to check with an attorney to see if there is some way in which the acquaintance or girlfriend can petition the court during the probation since there are no living heirs and she has a relationship and has been occupying the property but I have no idea if this is possible or how it would work. I wish you the best.

Hi Kathy,

The reverse mortgage is known as a non-recourse loan. This means that the lender can do nothing but go back to the property to seek repayment of the loan if the original borrower defaults. Since your mother has passed, the only asset the lender can look to for paying off the loan is the property that secured the reverse mortgage. If there is remaining equity in the property, then you and your mom's other heirs would benefit the most by either selling the property or by your sister obtaining her loan and paying off the reverse mortgage before the lender has to take any action such as foreclosure.

If there is no equity remaining in the property, then your sister may be paying off the existing loan at just the balance owed or possibly at 95% of the current market value if that is less than the amount owed, but in this case it would be no equity to split with the rest of the family. Either way, you are not responsible for payment of the reverse mortgage. Even if the property or any portion thereof was left to you in a will, the choice as to whether or not to pay off the loan is entirely yours. If you chose to simply walk away from the property the lender cannot seek repayment from you and there is no negative credit implication since you signed no promissory note to repay any loan.

Hi Nita,

As long as one original borrower remains in the home, there is no problem with one borrower vacating the residence. As soon as there is no longer at least one original borrower remaining in the home, then the loan becomes due and payable.

Hi Laura,

The only way I can advise you on this is to have an attorney review the title and the loan paperwork from the reverse mortgage.  Your mom could stay in the home if both she and your dad were on the loan and on title but if they were, I don't think it would have gone into probate with the notice you describe - but I am not an attorney and you need to seek the advice of one.  If they took her off title to do the loan, the lender could call the loan due and payable and you need to know that sooner rather than later.

Hi Judy,

If you are not on title to the property, then the home would go to the owner's heirs upon his passing.  If his wishes are for you to own the property at that time, there are a number of things he can do but you should check with a local attorney since some states have strong rights of heirship for relatives.  It could be just as simple as him recording a deed into both your names now so that when we passes, you would still own the property.

However, that does not resolve the loan.  If you want to remain in the home, you would have to refinance the loan into a loan in your name at that time.  If you decided not to stay, you could also sell the home at that time if you were the owner.  The timeframe is not specifically spelled out in the documents.  The loan becomes due and payable when the last borrower on the loan permanently leaves the property.  Typically the lender will work with you while they see that you are in the process of the sale or the financing but if there is no progress, sooner or later, they have to begin the foreclosure process as that can take up to a year or more to complete in and of itself. 

They would much rather you dispose of the property or obtain your financing and pay off the loan, but if they wait a year to see what you intend to do and then start the process, it could be two years or more before they could secure the property.  Unfortunately, sometimes lenders have to deal with people who have no intention of selling the home and do everything possible just to stretch things out before having to leave the property.  During this time, the property is often left in disrepair or stripped of all appliances and anything that can possibly be removed.  Sometimes it is from heirs, sometimes vandals or thieves.  But the lender and HUD do have to protect the asset against which they made the loan and so the timeframe often depends on you and the progress they see.

I have written all kinds of related articles you can find in this catagory here: https://reverse.mortgage/news-category/heirs-loan-maturity/

Hi Shari,

Unfortunately, your mom can't just add someone to an existing loan.  In order for you to be able to be on a reverse mortgage and to benefit from the terms of the financing, you and your mom would have to do a refinance and you would have to qualify based on the new terms available considering the property value and your age as the youngest borrower.

The benefits on a reverse mortgage are determined based on a number of things but one of them is the age of the borrower.  If you were to be able to just keep adding relatives on to the loan as they became 62, the loan would never mature and the program would not pencil out since the loan balance would just keep growing and never be repaid.  

Hi Michael,

The reverse mortgage requires no signatures from heirs for her to sell the property.  Anything I guessed at that she requires your signature on now would be just that, a guess.  I would guess that any paperwork requiring an heir's signature would be a result of state or local laws and rights of heirship but it is not a requirement of the loan (and as I said, that is solely a guess).

Hi Rhonda,

I'm sorry but the two issues are not connected.  One deals with a loan that was placed on the home and the other with the rights of survivorship after a spouse has passed.  Different states have different rights of heirship and I don't know what other heirs your husband had, how the title was vested, if there was a will involved and quite frankly, could not render an opinion on such an issue even if I had this information since I am not licensed to give legal property advice. 

I can give you a little advice though and that is that I would suggest that you contact a property rights attorney in your state as soon as is you can.  If you do not feel you can afford their services, look into a free legal aid in your area, but do talk to someone who is knowledgeable about your rights and your obligations to protect those rights sooner rather than later.  I know this has no specific information regarding your circumstances, but I hope this helps.

Hello Don, 

I've answered yoru question in a new blog post titled "Do Heirs Have Any Recourse to a Reverse Mortgage?"

Hi Robert,

This is a tough question for me to answer.  There are just too many unknowns to give you a straight answer.  I have to assume that mom has not passed since you are using the present tense (she has a house not had a house), so is she selling you the property outright?  If so, the fact that she has a reverse mortgage on the home does not affect the price at which she sells the home to you other than she would have to get at least enough to pay off the current mortgage.  If the house is worth more than the $550,000 she owes, it is up to her as to for how much over the current indebtedness she wishes to sell it to you.  If the home is worth less than the $550,000, then the question would be why would she be selling at this time when she can still remain in the home with no payments whatsoever on the mortgage if it meant she had to live elsewhere at a cost?

The reverse mortgage is a non-recourse debt and if mom owes more on the loan than the property is worth when she passes, the heirs have a couple of choices.  They can choose to just let the lender take the property and dispose of it if they do not want to hassle with it or if they want to keep the home, they can pay off the existing mortgage by paying the existing balance or 95% of the current market value, whichever is less.  So in this case, if your mom has passed and I am making a bad assumption on her still living, you are her heir and the property is only worth $500,000, then you don't have to "buy it", as her heir, you already own it.  You can retire the debt by paying 95% of the current market value of $500,000 or $475,000 and not the entire balance owed of $550,000. 

I hope this helps but if I did not hit your circumstances, please don't hesitate to contact us at (800) 565-1722

Hi Carol,

I would think that whether or not you have the utilities turned on would depend on your plans and goals.  If you are trying to sell the home, then it may be best to have the utilities on and depending on where the property is located, so that pipes don't freeze, etc.  However, if you do not plan to keep the home or sell it yourself, I would certainly contact the lender, let them know that you are not going to continue to pay for the utilities and plan to turn them off.  They may wish to work out a deal with you to take over payment or they may not have any issues with that plan. 

The only other thing I can think of off of the top of my head that you may want to consider would depend on whose name the title is in at this time.  For example, if the title to the property passed to you as a result of a will, etc., then there may be some sort of legal liability if you now own the home and something happened that created a hazard as a result of your actions.  I am not an attorney though and cannot give legal advice so for that aspect, I would definitely suggest you speak with a property attorney in the area before you take any action that might leave you open to liability. 

Getting back to your plans though, if you are not planning on selling the home (that is, there is not sufficient equity in the home to make it worth your while to keep the home maintained until you can sell it), I would suggest that you contact the lender as soon as possible and make arrangements to do a deed in lieu of foreclosure.  There is no personal liability to you or any other heirs on a reverse mortgage and if you do not plan to keep or sell the home anyway and just plan to let it go back to the lender, why not facilitate a quick transfer of the property and end all further expense and work?  This is also something I would suggest that you discuss with a local attorney if you are not 100% certain of the procedures or the benefits.

Hi Debi,

Before you call anything off, I would suggest you contact the lender and give them the option of accepting the sale and paying off the reverse mortgage with the available proceeds.  You are not responsible for any shortfall on the property and the loan is a non-recourse loan which means that the lender cannot seek repayment from any of mom's other assets either.  If the lender and HUD know that you have a buyer right now, they may be willing to settle for their offer knowing that if they have to take the property, market it again and pay those costs, the chances are very good that they will end up losing even more money than they would with your buyer.  As long as your offer is a bona fide current market offer (not well below the actual current value), the lender would be crazy not to just let the transaction proceed and accept the short payoff and put their claim into HUD for the loss.

As I said, you do not have to pay for anything.  You are not on the loan and you did not sign a mortgage agreeing to cover any expenses.  My suggestion is that you contact the lender as soon as possible and tell them that you are giving them back the house but have a potential buyer and ask them if they want to continue the transaction and let them decide whether or not they want to proceed with the sale.

Learn more about Reverse Mortgages & Non-Recourse 

Hi Tracie,

You need to do a few things.  Firstly, get a copy of your mom's closing statement.  I know you are going on the assumption that mom had paid for her home in full and that she did not owe other money before she got her reverse mortgage, but many times we see that families are in the dark about the borrowing habits or the true financial picture of other family members.  It would not even have to be an existing mortgage that she paid off with the reverse mortgage.  She may have had to use the funds to pay off other debts when the loan closed.  The closing statement would show what obligations, if any, (and that could include taxes, other debts, etc) were paid off with the reverse mortgage proceeds at closing.

Next, you could ask the lender for a loan history and ask them if they will confirm to which account your mom's deposits were made (if she had direct deposit).  This would tell you each time she requested funds, how much she received and if she had those funds directly deposited into an account.  Unfortunately though, I know of no way to "track" how she spent her money.  No lender tracks the borrowers' spending of their loan proceeds for any loan that I am aware of, for forward or reverse loans.  But once you have a loan history, you should be able to verify through your mom's receipt of the funds through her accounts with corresponding deposits (provided that she did not use all the funds in the beginning to pay off other liens).  I wish you the best.  Depending on how long ago all of this transpired, it may not be easy to track now after the fact if she did not keep good records and it's not clear.

Hi Richard,

The lender does not automatically get the house ever.  The home passes from the owners to their heirs and the heirs must decide what they wish to do, sell the home and pay off the loan with the proceeds, refinance it and pay off the loan with the new proceeds and keep the home or pay off the loan with other funds available to them.  We recommend that heirs contact a local real estate professional to determine the value as soon as possible so that they can make an informed decision.  If there is equity in the home, it is in the heirs best interest to move quickly to protect their interest.  If the values have not increased or even decreased, it may make a difference in their decision making.  At any rate, HUD requires lenders to give borrowers and their heirs ample time to sell the home if that is their decision (and that time changes in different markets as those markets change).

If the lender has to take the home back by foreclosure, they do it through a foreclosure sale in which their bid is just what is owed to them.  They do not sell the home on the open market for heirs.  If it gets to the point where the lender is selling the home, it is because they have already gone through the entire foreclosure process and then any loss or profit from the sale goes to the lender.  This is why heirs should use the time that HUD will allow to heirs to sell or finance the home if there is equity still in the property before it ever gets to the point of foreclosure. 

More here: Reverse Mortgages: What Happens After Death?

Hi Jill,

As an owner of the home and an heir, you absolutely can stay in the home.  However, your parents did borrower money under certain terms and as the new sole owner of the property when they pass, you will have to abide by the terms of the loan they took out.  Nothing in that loan says who can own the property or what you must do with it once you do own it, it only states that the loan must be repaid once they are no longer living in the home.

If you want to keep the home, that means refinancing the loan with a loan in your name or paying the loan off with other funds.  If you want to sell the home and keep any proceeds, that would be your decision as well.  Knowing your rights now will allow you to make sure that you have all your plans in place when the time comes that you do have to make a decision as to which way you want to act.

Hi Wes,

I'm sorry to hear about your mom.  I can't speak for Wells Fargo, but there are a few things to remember here.  Firstly, you own the home and to keep it, you are, by your measurements, just $19,500 short of owning the home free and clear.  I don't know a lot of information at this point so I can only give you some blind suggestions.  Firstly, I don't know the value of the home or your age.  If the home is valued at $40,000 or more and you are 62 or older yourself, you can probably get a reverse mortgage on your own and may or may not have to use some of the insurance money to close the loan.  Wells Fargo no longer originates reverse mortgages so you would have to check with other lenders if you think this is the way you want to go.

If you are not over 62, then there are other loan types you can also look at if Wells Fargo is not willing to extend you a new loan.  Again, depending on the current value of the home and your ability to pay mortgage payments and at what amount, you might look into a home equity line of credit, a small first trust deed or check with a local HUD approved housing counseling provider to see what other programs may be available to you for your circumstances.  We only do reverse mortgages and therefore I am not familiar with other programs for disabled individuals, etc., but I would certainly give that a try as well.

I know this is a tough time in your life and it is a very difficult time to begin looking at all these alternatives but I caution you not to wait too long.  The sooner you know what your options are, the easier it will be to take whatever actions necessary in the timeframes you have available to you.  I wish you the best.

Also See: Reverse Mortgages: What Happens After Death?

Hi Donna,

First let me say that I am terribly sorry for your loss. 

As for the insurance checks, I honestly do not know what is holding them up.  It would be purely conjecture on my part to try to guess what the lender is still researching at this time and why they would hold up any insurance payments.  There may be an issues with many different things, some out of the lenders control that would delay the process.  They may have zoning issues on rebuilding the home, there may be a dispute with the insurance company on the amount that was paid versus the actual loss or, and let's hope this is not the case, if your mom allowed her insurance to lapse, then the lender has to force-place coverage that does not include contents, just the dwelling.  what I do not understand though is why you have not been told what the hold-up is at this point and I would put more pressure on the servicing company to divulge the information.

However, I think I would put a little more pressure on the insurance company as well.  Your mother's lender is also listed a payee in the instance of a claim so that they can be certain the money is slated to going toward rebuilding the home thus protecting their collateral.  However, the insurance company can certainly tell you what coverage your mother had on the contents of the home as well as the lender.  Have they told you why they will not give you the amount of that coverage?  As long as your mothers' policy was in force which covered the dwelling and the contents, then I would at least try to push them harder for the information you are seeking or a valid reason for why they cannot give it to you.

if all else fails, I would seek competent legal counsel.  I don't know the insurance laws and I don't know what they are required to say to whom in such as instance.  Are you now the legal owner of the property?  If so, I would think that you would have rights to get information.  If the house did not pass to you upon your mother's death, there may be privacy laws that are in effect of which I am not aware and that's why you really need to speak to an attorney.

At any rate, let me again tell you that I am sorry for your loss and I do hope that this is all resolved soon.

Related: Reverse Mortgages and Natural Disasters

Hi Kathy,

The Deed of Trust allows the Lender to make reasonable inspections provided they give you prior notice and specifying a purpose for the inspection and that the inspection must be related to the lender's interest in the property.  In other words, if the lender has reason to believe that the property is no longer owner occupied, is vacant or has been turned into a business, the lender, or the lender's agent (an appraiser) has the right to inspect or perform an appraisal of the premises with prior notice.  However, if the lender did not tell you why they wanted to perform such as appraisal, they are acting in violation of the Security Agreement.   They need to have a legitimate reason for the inspection and it's not a secret, they need to tell you why.  The paragraph below is from a CA HECM Deed of Trust:

6. Inspection. Lender or its agent may enter on, inspect or make appraisals of the Property in a reasonable manner and at reasonable times provided that Lender shall give the Borrower notice prior to any inspection or appraisal specifying a purpose for the inspection or appraisal which must be related to Lender's interest in the Property. If the Property is vacant or abandoned or the loan is in default, Lender may take reasonable action to protect and preserve such vacant or abandoned Property without notice to the Borrower.

This action can be the result from the servicer receiving mail back from the post office undelivered or it can be as a result of other attempts to contact you at the subject property being unsuccessful.  At any rate, the lender must tell you why they want to do the inspection and the reason has to be a legitimate reason to protect their security interest - they can't do it "just because".

Hi Karen,

I'm sorry, I really can't give you any clear guidance on this and I would really suggest that you contact a local real estate attorney.  As far as the loan is concerned, it is a non-recourse loan and regardless of how much interest accrues, etc., your mother or her estate cannot be made to pay anything to cover any shortfall.  With regard to the rights of other parties, I really cannot comment on what they can or cannot do in any particular area to protect their interest.  If your mother has moved out of the home, she can turn the utilities off, stopping any further costs there.  Her own insurance is probably on a yearly renewal and she can probably choose not to renew her private policy which would require the lender to purchase their own coverage on the property.  I honestly don't know what rights the HOA has if they are not paid (whether or not they can seek to lien your mom) and that's why I really think you should seek the counsel of an attorney and maybe he/she can also speed the process for the Deed in Lieu of Foreclosure.

If you don't know who the lender/servicer is, then the only other possible entity you could contact would be HUD.  You can find the local office just by typing HUD.gov into your web browser and calling the office to report the circumstances.  They insured the loan and I don't know how aggressively they will pursue this but stating that you will occupy the property and then not doing so is definitely a violation of the terms of the loan.

Hi Robert,

I'm not sure I totally understand what you're asking so if I don't answer this to your satisfaction, please feel free to contact us back but here goes.  The bank does not buy any reverse mortgage borrower's home.  They are not in the business of buying and selling homes.  They prefer that the borrower or the borrower's heirs retain the property (or sell it) and pay off the reverse mortgage balance.  That is the cleanest and easiest way for all lenders to loan money, Lend the money, receive repayment at the end of the contract and then lend again.  If there is equity still in the home, then you should contact a real estate professional in the area and make arrangements to sell the home if you do not want to keep the home yourself.

The bank has only those rights given to it by the borrower under the security instrument (Deed of Trust or Mortgage).  The bank has the ability to foreclose and take the home in the instance of default to protect their interest but that is not what they want to do.  No bank is looking to increase their real estate owned portfolio and if they do have to foreclose on property, they aggressively market it to get it sold and off of their books.  So if a reverse mortgage borrower passes, had no heirs and the bank had to foreclose because no one inherited the property (or none of the heirs wanted the property), then the bank would do everything it could to sell the home as quickly as possible, if someone else didn't buy the home at the foreclosure sale.  The property would go up for public sale after a prescribed advertising period and then the opening bid is the amount owed to the bank, the bank is not allowed to bid any higher. 

I hope this answers your question but if not, please let me know.

Hi Melodye,

Have you gotten on the phone with the servicer?  I think the problem that you are having is that there is a second policy that covers the interior for condominiums known as a "walls-in" policy and that is probably what the servicer is requesting, but I can't tell you that for sure.  Homeowner's Association policies typically only cover the exterior of the building and lenders also require an insurance policy that covers any damage that may occur from a fire, etc, to the individual homeowner's unit.  Unless the Association policy does this (and I don't remember off hand ever seeing one that did) then the lender would require this coverage as well.  Your mother had to have this policy in place to close the loan.

When a lender has to force place coverage, that policy is always more expensive than one your mother can obtain for herself.  I would suggest that you help her by first contacting the servicer and determining if the walls-in policy is what they are requesting, and then if so, make some inquiries of some local insurance companies for prices.  This coverage is usually very inexpensive and she can probably get a policy that also covers her personal belongings that would be much more beneficial to her if there ever was a fire.  When a lender has to force place coverage, it not only is more expensive, but it also does not insure any of the contents so your mother's furniture and other personal property is not protected at this time.

Hi Sue,

The loan becomes due and payable at the time your mom stops living in the home, whether that is because of death, she sells the house or for whatever reason she no longer occupies the home as her primary residence.  As long as she is still living in the home, she has access to any of the reverse mortgage proceeds available to her under the program.  If she takes all the funds now, then that will just raise the amount owing at the time she leaves the home.

The question of "does it have to be paid back" is the significant question at this point.  Yes, there is a Deed of Trust securing the property for the loan.  Yes, when the property is sold, the lender would have to be paid the amount owed to the lender.  However, the loan is also a non-recourse loan.  In other words, if the loan balance is higher than the value of the home, then the lender and HUD cannot look to any other assets for the repayment of the loan.  So yes, the loan does have to be repaid, it is the terms of the repayment that are subject to some interpretation in those instances where the property is worth less than the amount owed.  And because most borrowers never really know when their time will come, there is no provision in the loan that states that if you take the money available to you within 30, 60, 90 or even 180 days from the date you pass that all bets are off and your heirs must repay the loan funds at that time.  As a reverse mortgage borrower, you are given a set of benefits and you can choose to receive those benefits at any time as long as you are not in default on the mortgage.

I wish your mother well and hope the best for her.

They should be able to send you an accounting of the loan but even more importantly now, I would take the balance off of the current statement and begin to make some quick decisions.  If you talk to local realtors in the area and the property has a good equity position based on the prices for which other similar homes in the area currently sell, then you can decide if you want to sell or keep the house for yourself.  Either of those actions can begin now while you work to get Champion to send you the entire history of the loan.  Also know that if the value is less than what is owed on the property and you still want to keep it, HUD allows you to pay off the current loan at 95% of the current market value or the amount owed, whichever is less.  So if your stepfather's balance is $135,000 and the property is only valued at $100,000, you can pay off the existing loan at $95,000 and keep the home as well - but you must look into obtaining financing in your name if you do not happen to have $95,000 of your own laying around.  If the lender will not cooperate with you after you begin your steps to either finance the loan in your own name or sell the property and still will not give you the information you are requesting, I would advise you to contact HUD directly and inform them that you are trying to settle the estate and property but are receiving no cooperation from the lender.  HUD has to pay any claims on the property and I am sure they would love to see this resolved before a claim is incurred.

Hi Sandra,

The reverse mortgage is a loan just like any other loan when it comes to your mother's rights as a borrower.  I would suggest that you contact the lender to request an accounting of the sale and amounts owed.  If the sale exceeded the amount owed to the lender, that would belong to your mother.

Hi Alinda,

The property ownership is decided by your aunt and her wishes, just like any other loan.  If she died with a will, then the ownership would pass in accordance with the will.  If she did not have a will, then I would suggest you contact any other family members and an attorney who handles such matters and see what would need to be done to pass the title to you.  Once you know what the hurdles may or may not be to get the property changed to your name, you can contact the lender and let them know of your intentions and they will do an appraisal.  You will have an option to pay off the existing loan with a new loan or sell the property and pay it off with the proceeds, whichever you prefer so if you wish to keep the home, you should also be looking into permanent financing in your name (assuming of course that there will not be any issues with the ownership and any other family members).

I wish you the best.

For this question I would refer you to an attorney practicing in the state where the property is located.  This is not question of the loan, but rather the association's rights to seek back association dues and I am afraid I cannot answer this question for you.  The fact that the second individual you refer to is a co-signer indicates that he/she signed documents agreeing to pay certain things and only the attorney can determine his/her obligations in accordance with local and state laws.  I do not know what legal rights that would give to the HOA to seek payment and therefore, a consultation with an attorney would be a very wise action.

Hi Tracey,

You can always stay after your mom passes, your mom and then her heirs always own the home.  However, you just cannot stay on the same reverse mortgage loan.  A reverse mortgage borrower cannot just add others to the loan or title after the loan closes as the loan becomes due and payable when the last remaining borrower on the loan passes or permanently leaves the home.

When that time comes, you have the option of selling the home, paying off the mortgage if the home is still worth more than what is owed on it, or paying 95% of the current market value if the mortgage balance exceeds the home value and you can keep the home that way as well.  So you can make provisions to remain in the property and keep the home in the family after your mom passes, but you would have to either pay off the loan with funds available to you or refinance the loan at that time in your own name.

Hi Paul,

The underlying guideline will be whether or not the borrower(s) is/are absent long enough to still consider the property the primary residence. If the borrowers want to take a 3 or 4 month vacation, no servicer I know would take issue with that time period. If the time frame was to be 2 years, I think it would be safe to say that the property was no longer their primary residence during that period and therefore under the HUD rules, they would have to call the loan Due and Payable.

Unfortunately, there is no set time period on the Deed of Trust for which the borrowers can be out of the home on a "vacation" basis so I cannot give you a definitive answer. What servicers are doing today as a matter of policy may not be the same as they do tomorrow and unless it is specifically spelled out in your loan documents, there is some room for HUD and the servicer to interpret and change policy. However, I can tell you this for sure: good communication with the servicer goes a long way.

If you have a reverse mortgage and you get the opportunity to travel for extended periods, notify your servicer and make sure they are aware of the circumstances. As long as they are sure that the home is still occupied as your primary residence and that the borrowers have not left the home, they can work with you to make certain there are no miscommunications. The troubles typically start when people think they need to hide something and when servicers can't get in touch with borrowers, that's when it really appears the home has been vacated for good and the servicer needs to take action.

Click here to download a helpful .pdf brochure written by our servicing company Celink in regards to occupancy requirements.

Thank you for your question. We've gone ahead and posted this in our "Ask the Expert Series" found here

You have no need to worry. The reverse mortgage is a non-recourse loan and that means that the lender can only look to the property to repay the loan. The lender cannot go after your grandmother's estate or you as the heir for any shortfall after the sale of the property. You can rest easier knowing that there will be no further recovery actions on this loan. I wish you the best of luck.