Home / Ask ARLO™ / Heirs and Maturity
reverse mortgage heirs and maturity questions and answers
Close

Hi, I'm ARLO and I Love Questions!

All Reverse Mortgage's resident expert ARLO loves to answer questions. No question is too big or small for him or any of our other experts to answer, so please ask away! We will respond as soon as possible.
Sending Your Question
* Your privacy is very important to us, we will never sell or give your email address or info to any 3rd party unless you give us express permission to do so.

Reverse Mortgage Heirs and Maturity

Accurate, Up to Date, Reverse Mortgage Information & Answers from our Experts.
 

Answered By Our Experts

Question From Irma C. on 8/16/2018

Could I sell my home that I have a reverse mortgage, and pay reverse mortgage and move out? Is it possible? How I do that? Ask for the amount owed or for whatever the value of the house? in other words, how do I get out of a reverse mortgage?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Wynter on 8/14/2018

When my father did his reverse mortgage he was still married to my mother and she signed it. They divorced 6 years ago, and she hasn't lived with us for over a year, if my father passes away will she be the borrower even though she doesn't live in the house? If so is there a way for her to remover her name from it?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Ann M. on 8/12/2018

My father passed away a year ago and my mom is the main person now on the reverse mortgage. They also added my brother's name when they got the reverse mortgage. He has never lived here when they added his name. I have been living here for over 10 years caring for both of them. I'm not on the reverse mortgage papers even as living there. Don't all residents have to be listed? I just found out he was the only sibling-not ever living here listed. Is this acceptance on a reverse mortgage? Thank you.

Expert Answer

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 3rd 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.

Do you have a question? click here for an answer
Question From Steve on 8/10/2018

My grandmother had a reverse mortgage and recently died. Some vagrant family members are living in the house and have destroyed all of my grandmothers documents. How can I find out who holds the reverse mortgage ?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Tyneah C. on 8/10/2018

If the owner dies that had a reverse mortgage and the child they left the home to is 50 years old can they do a reverse on it or they still have to by or sale it?

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Nicholas C. on 8/09/2018

In New Jersey my sister had a reverse mortgage on her condo. No life insurance , will and no executer. She died what recourse does the lender have . Myself and my sister are getting sued by the lender . I am awaiting my paperwork which my sister told me I am on. The condo was taken by the lean holder and sold.

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Jennie on 8/08/2018

My partner and I are currently living in a house that we found out has a reverse mortgage. We are renting from the daughter of the owners; they are both deceased. She has collected over $20,000 from us and is now trying to evict us. We are 1 1/2 years into a 5 year lease. What can we do? I assume the lease isn't binding. Can we try and purchase the house? How would we do that?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Elizabeth on 8/04/2018

My mother passed away May 23 2018 she had a reverse mortgage. How much time fo I have to sell the house before the reverse mortgage company forecloses? I live in New York.

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Nancy S. on 8/01/2018

My husband and I took out a reverse mortgage in 2010; unfortunately he passed about 1 1/2 yrs ago; I am still occupying the house & we took a small lump payment at that time, I continue to occupy the residence, pay the property taxes, homeowners insurance and all maintenance of the property, if something happens to me death or nursing home, what happens to the property? I do not have or won't have the money to pay back the loan. Am I allowed to sell the home, pay back the loan and move out? I was told that I am not allowed to sell the house?? I do not know how this affects my medicaid going into the future?? If I pass do they just foreclose on the property? And how long does that take and how long would my husband's daughter have to get my personal belongings from the residence? I have no relatives that wanted the house when we got the reverse mortgage, thank you for your time.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Ron on 8/01/2018

Hello, in South Florida what is the reverse mortgage foreclosure timeline from the time you have been served a summons to the time you have to appear before a judge?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Donna on 7/30/2018

My mom died Dec 2016 with a reverse mortgage that is about $60000 more than current value (they did an appraisal in July 2017). We contacted lender, provided death certificate and copy of will so they would speak with me as her executor. We have not heard from them since July of 2017, after they did the appraisal which we had requested. Yep, an entire year. My brother is living in the townhome, he is paying the maintenance, the taxes, the insurance, etc. Do I just leave everything alone until we hear from them again? We love the place, we did make a low ball offer before they did the appraisal (they place is in bad shape, needs new roof, lots of interior work needs to be completed because of water damage and mold). Told them we disagreed with the appraisal, sent them estimates on repairs from three different contractors. Since then not a word, not a letter, not a phone call, not an email, nothing.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Ron on 7/26/2018

I'm an heir of a reverse mortgage and still living in the house. if they foreclose am I responsible for paying any attorney fees or I would just have to leave when they tell me to?

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Chetna on 7/24/2018

Grand mom passed away With a will favoring my mother for the loan repayment/ retaining the property that was reverse mortgaged . How ever grand dad had another son from his first wife and has his name listed as the second nominee on the agreement . However he has not come forward to pay the loan nor has shown any interest to help . Whst happens now ?my mother is ready to pay dues and retain the property . Bank demands a power of attorney from the other legal heir . He is completely ignorant . Whst will thbe bank do or what would you suggest ?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Mary Q. on 7/24/2018

How do you pass title under a reverse mortgage to enable someone to sell the home or decide to buy it. I know a will would do it but want to avoid probate to save time and money.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Sandra H on 7/24/2018

When my reverse mortgage hits the Growth of Principal Limit, will I still be able to live in my home or do I have to start paying back the loan? What will my financial obligations be at that point?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Erm on 7/21/2018

If owner dies who had reverse mortgage does the family who does NOT want the property have to clean the place when it goes into foreclosure. Owner was a horder

Expert Answer

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.

Do you have a question? click here for an answer
Question From Steve on 7/20/2018

Dad had revers mortgage and recently passed away. Left no will. Servicing bank will not speak to me without proof of being executor.Since no assets I am not filing probate. Condo is worth just about the same as 95 percent appraised value. With my thanks

Expert Answer

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.

Do you have a question? click here for an answer
Question From Betty F. on 7/20/2018

Mom died and I'm trustee mom had two homes. Her primary which ahe took reverse mortgage on that goes to my brother and the other goes to me. Lawyer said has to sell brother home to pay reverse mortgage. Will they touch my home?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Jeff on 7/18/2018

We have started a Deed in lieu of foreclosure. The bank wants the yard cleaned. The cost will be around $1300. My question is this, what happens if I don't have it cleaned. Will this hurt my Dad?

Expert Answer

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.

Do you have a question? click here for an answer
Question From SHERRY on 7/16/2018

MOM HAS A REVERSE MORTGAGE HEALTH IS FAILING, GRANDCHILD WANTS TO BUY THE HOUSE CAN THEY DO THIS AND WHAT STEPS ARE NEEDED TO DO SO? ALSO SINCE THEIR ARE TWO HEIRS, MYSELF AND SISTER AM I BEING SCREWED OVER BY SISTER SINCE THIS IS HER SON?

Expert Answer

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!

Do you have a question? click here for an answer
Question From Vicki on 7/13/2018

My grandmother passed and I am now receiving a summons about her reverse mortgage. I have 20 days to reply. But I was only living here, I had nothing to do with her mortgage. How should I respond to the summons so that I am not in disagreement, but so I can attend hearings and be informed how long I have untill I need to leave the residence.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Stephen W. on 7/12/2018

My parents had a reverse mortgage and have since passed. None of the heirs want the house as it is worth less than the outstanding debt. I recently received a notice from the banks attorney of a court action to add my children’s name to a legal action. Why would the bank do this?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Lisa S. on 7/10/2018

My mother-in-law took a reverse mortgage in the early 2000's. She died in 2015, she did not take all the funds available to her, so can that balance resolve the mortgage and allow us to keep the property, if the value if the home is less than those funds?

Expert 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.

Do you have a question? click here for an answer
Question From Susan on 7/10/2018

My mother-in-law passed recently, and we are exploring options for the HECM payoff. There are 2 co-executors who are also equal heirs to the estate, but one does not wish to invest in the payoff and intends to sign a quitclaim deed. Will that remove the obligation to pay off the loan if he is still an heir but not to the home?

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Linda C. on 7/09/2018

Son wants to purchase. Perhaps w other son also. They sent their info in but mortgage Co not dealing w them. Has not sent them anything. As they want to purchase it they can. One son lives here in Okla went to county office and filled out papers and was mailed to mortgage Co. They not responding. And they not talking w me either being wife but not heir as was not on.mortgage because at time taken out not old enough

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Judy on 7/09/2018

What happens to reverse mortgage if I pass away?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Linda C. on 7/09/2018

Husband passed but on reverse but two sons want to file to claim property and pay off loan. Then at some point they want to fix it up and sell it. Hopefully for more. What do they need to do. They sent mortgage Co a intent to purchase but not hear back yet. Only sent me info. They had gone to county clerk and did paperwork and then sent to mortgage. Mortgage Co very very very slow

Expert Answer

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.

Do you have a question? click here for an answer
Question From Teresa on 7/08/2018

My mom had a reverse mortgage she passed i was living with her am disable i have stedy income i want to stay in the home what can i do

Expert Answer

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.

Do you have a question? click here for an answer
Question From ESTELLE L. on 7/07/2018

If I take a reverse mortgage for $40,000, pass away and have a son not on the deed or living with me, who pays the loan back?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Ron on 7/06/2018

I am an heir of a reverse mortgage. I just hired a realtor and told them that the property is worth a lot less than the money owed to the reverse mortgage company. Typically what should the realtor tell me to do in terms of selling the house?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Barry K. on 7/05/2018

A family friend passed away and it looks like her reverse mortgage is going to be more than what it would sell for minus closing and realtors costs. As the executor of the estate, I would like to know if there would be any repercussions to the estate for allowing the house to go in to foreclosure. Can I cancel her home owners insurance and notify the utilities that the mortgage company will be responsible? Also when does her real estate tax liability end? A deed in lieu of foreclosure would require me to take money from her estate to get the house broom cleaned. I don't think a short sale would work because the house will probably appraise at more than the reverse mortgage balance is but that doesn't take in to consideration of the settlement costs that would be involved.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Pam C. on 7/02/2018

My mother died in 2003. In 2004 my dad quit claimed his interest in their house (he was the sole living heir) to me. Now I would like to quitclaim it back to him so he can get a reverse mortgage. Is that possible?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Lydia R. on 7/01/2018

Mom passed away. She had a reverse mortgage. My husband and I have lived with and took care of her till her death 2 weeks ago. My other siblings want to just come and go crom the house at will. Can they? Or do i have the right to say that my husband or I must be there as we have belongings there to.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Susan on 6/30/2018

My mother has a reverse mortgage and I live with her in the house. The house is a three family home with my sister living on the second floor and my brother lives on the third floor. I have lived with my mother for nine years and have been her primary care taker and she recently has been placed in a nursing home. How long do my brother my sister and myself have until we have to stay in the house? Should my brother my sister and I keep paying the taxes homeowners insurance water bill until we get the yearly Questionnaire from the mortgage company asking if my mother is living in the home?

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Adams on 6/26/2018

I have been living with my elderly father (86 yrs since Mom diad and helping him. He has a reverse mortgage on this house that he has been living in for about 50 years. He wants to stay here and I'm trying to see that he can. My question is, when he dies, how long will I have to finish going through 50 years of "stuff" and get out of the house? If it matters, I live in Arkansas.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Allen N. on 6/21/2018

We are thinking of moving to a retirement home. We have a reverse mortage. Can we just turn the property over to the lender, or can they attach MY SOCIAL SECURITY?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Paula on 6/19/2018

My mother had a reverse mortgage that we had no idea about. What can we do to keep the house?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Wendy on 6/15/2018

My parents took out a reverse mortgage in 2010. My Father passed away unexpectedly in 2011,leaving my Mother as the remaining borrower. The borrowed amount was $228,000 now it is $297,219. She has close to $8,000 left to use if needed. Mom is on a limited income and is finding it hard to keep up with monthly household expenses, school taxes, property taxes, and homeowners insurance.My husband and I life in the attached apartment and do not want to keep the house when she passes so she has had the house listed on real estate for three months, listing price was $359,000 and then reduced to $339,000 and no offers. Yes,she could live there for the remainder of her life but does not wish to. What are her options?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Jim C. on 6/12/2018

Have a reverse Mortgage and the house has a negative equity, is it economically feasible for a 3rd party to try and recover owed funds for for non-mortgage debt owed the 3rd party? After foreclosure sale all proceeds must go to the Reverse holder and nothing will be left to the foreclosed, so why would they foreclose?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Elena on 6/11/2018

My sister rents from a home with a reverse mortgage. The owner recently died and the family member who is in charge is trying to obtain the home. If he is unable to purchase the home would the bank offer the tenant the opportunity to purchase the home? We were told that she would have to attend an auction. She is interested in purchasing the home if the relative is unable to purchase. Please advise. Thank you.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Gene S. on 6/01/2018

Can the reverse mortgage lien holder force a sale, when the borrower's have died? I am interested in buying a house with a reverse mortgage, where both parents have died and the house is vacant. The property is in a deteriorated condition and there is incentive for the heirs to sell it, since it is probably not worth what is owed? I want to contact the bank and offer to but it, but don't know what bank holds the lien. I assume this info is available at the county clerks office.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Mary on 6/01/2018

If a reverse mortgage gets done as a single owner and occupant but the title show that there are two people on the deed and the other party was not apart of the transaction dealings when the occupant of the house pass it becomes the sole property of the other name on deed can this be legal and forced sale of home?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Betty S. on 5/29/2018

My parent's got a reverse mortgage probably 20 years ago. My dad has since passed away. I have lived with my mom as her caretaker for over a year now. Someone told me that if she owed less than half on the reverse mortgage I might be able to refinance under my name (I will be 65 in July) Is that ridiculous?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Roger C. on 5/26/2018

My mother has a reverse mortgage on her house and she is 87. If for some reason we would need to place her into a nursing home or she had to live with one of her children and we could not sell the home for what the mortgage was, what happens to the balance of the loan?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Butch C. on 5/24/2018

I have been living with my parents for several years and have been their sole Caretaker for the past 3 years. Back in 2008 my Sister gave them or loaned them the money to qualify for a reverse mortgage (40k). The condition of this loan or gift was that they sign over to a family estate and a trust deed stating that she would get the home once they both had passed away or could no longer occupy the home. My question is two parts. How long do I have before I would need to vacate the home once the last parent is deceased? I do have a monthly lease agreement that has a start date but no end date. My second question is, do I have a claim to the proceeds of the home? She stands to make a pretty nice chunk of change once she sells the home, and she didn't consult with my other sibling and I before doing the reverse mortgage. Of course I would never contest the money she put up along with interest, but she stands to make quite a bit more than that 40k investment. The home is in Utah. I'm actually more concerned with how long I have before having to vacate the property because there has been a pretty bitter falling out with her and I and I don't want to be evicted before I can remove my belongings.

Expert Answer

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.

Do you have a question? click here for an answer
Question From John C. on 5/22/2018

Hope this is not too long....A number of years ago, my father and I took out a reverse mortgage. The house had been in both our names for a number of years before we did this. When we did the reverse, I, along with my dad,had to do all the paperwork, sign all the forms, do the counseling ...everything that is required, we both had to do. In our county courthouse, my name, along with my father, is still on the deed. Our loan was through Wells Fargo, but has since been taken over my Champion. So, now my question. I am under 62, and certainly was when we did this loan, but still was listed as a co-borrower. He is now very elderly, and if something happens to him, would I still be able to stay here under the terms of the reverse mortgage? Meaning, not have to refinance, just stay under the current terms? I do not have the original paperwork for this loan, so I'm not even sure I could prove that I ever signed anything. I asked about this numerous times during the loan process, and was told it wouldn't be a problem, but now from things I hear, I'm, not so sure.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Cathy M. on 5/21/2018

If a house is empty due to a foreclosure of a reverse mortgage can a person rent it to keep it from being vandalized? And how would someone go about doing this?

Expert Answer

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. 

Do you have a question? click here for an answer
Question From James J. on 5/20/2018

Deed is in mothers name my name does not appear on the deed. After her death I took out a reverse mortgage so my question is the reverse mortgage binding?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Brooke on 5/18/2018

My mother passed away I didn't even know there was a reverse mortgage on the home I received paperwork saying I'm in default where do I go from here and what are my rights to try to keep it or sell it

Expert Answer

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.

Do you have a question? click here for an answer
Question From Wayne P. on 5/14/2018

My mom and dad took out a reverse mortgage awhile back after my dad died 4 years ago my older brother signed paper on being responsible of my mom on her reverse mortgage My mom died about 3 weeks ago and the reverse mortgage told my brother they might hold him responsible to pay the difference on the house after appraised What does that mean?

Expert Answer

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.

Do you have a question? click here for an answer
Question From RICHARD K. on 5/13/2018

My next door neighbor had a reverse mortgage, he passed away on 12/17/2017. The property is in serious need of attention. Grass has not been cut, etc, who can I contact to make sure these things are taken care of.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Glenda N. on 5/12/2018

My mother passed away and she had a reverse mortgage now my sisters want me to sign an affidavit so they can sell the house why?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Eszter on 5/11/2018

Hi I have a question. My mother in law had a reversed mortgage on her house but she passed away. Her husband is in the process to pay it off and have the house put on his name. He is in his 70's. Anyways my question is that if he is able to pay the loan off and stays in the house for the rest of his life could he file for a reversed mortgage on the same house? Thank you

Expert Answer

Hello Eszter,

He sure can!

Do you have a question? click here for an answer
Question From Evelina on 5/05/2018

My dad has a reversed mortgage on his house. He had a will that documented I was to receive everything. My stepmom never produced the will or had it documented! However she managed to get her name on the reverse mortgage and ran it up! My dad died 2009! She moved out 2010 but would never give me any info in the house! She has had her family members and everyone else under the sun living there except herself. She made sure she made it like she was residing there. Now I heard she’s died! Can’t find no record of it! I have a copy of the deed and the reverse mortgage company is out of business. The document it self looks forged! Someone looked at the deed and said they wouldn’t be surprised if my dad didn’t know additional money was taken out and owed on it! I can’t get in contact with her family, only person I’ve been in contact with is the tax office! I can prove where I’ve lived, her side of the family has lived there and benefited from the money now their trying to hide her death? My hands are tied! I don’t know what to do! Her family has definately performed fraud, that’s why their hiding! Please help! I still want the house that is rightfully mine, but no I don’t have a lot of money to waste or spend trying to find out, if it’s even worth to get it or save!

Expert Answer

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.

Do you have a question? click here for an answer
Question From Javier A. on 5/04/2018

Both my parents have passed, can I get relocation funds to leave property?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Christina on 5/02/2018

My mother-in-law has a reverse mortgage, I do not know the details. My question is, once she passes, what are the next steps? She does have a family trust, of which I do not have the details to. We bought a house less than a year ago and I want to make sure that creditors cannot come after our assets in the event that her estate has lingering debt.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Daniel H. on 5/01/2018

My mom has a reverse mortgage on her home. She took it out in 2010 so she could pay off some debts incurred by her oldest son. On April 4 2018 she had to go into a nursing home with severe dementia. I called the reverse mortgage company about how to start the process of "letting her house go to the mortgage company"as I had no intention of trying to pay off the mortgage. I was told to send a letter of intent as what I wanted to do with the house as I have Power Of Attorney. I sent a notarized letter stating that I was removing all items from the house along with a copy of my Power of Attorney and was having it cleaned up ready to be taken over by the mortgage company. As of April 18 2018 I had all of the utilities shut off including canceling the Home Owners Insurance on the house. Then I received a letter today April 30 2018 from the mortgage company stating that I needed to keep Home Owners insurance on the house or they would buy insurance for the house and I would be responsible for paying whatever insurance they selected. I called the mortgage company and asked since I sent a letter of intent with what I wanted to do with the house why wasn't the process complete. They they proceeded to tell me that I would have to fill out a "Deed In Lieu" to complete the process of letting the house go back and it would take about 4 months to complete. A "Deed In Lieu" was never mentioned in the several phone calls I made to the "Reverse Mortgage Solutions" company to find out what I needed to do to turn the house over to them. Am I missing something here or are they just trying to pull a scam or am I responsible for having to fill out a "Deed In Lieu"and letting this process play out.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Jann Krone on 4/30/2018

A married couple has the wife's sister living in the home. If they do a reverse mortage, and the couple dies, will the sister have to move out or do they give her the option to buy the house. If the sister is unable to buy the house, what happens?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Heidi G. on 4/25/2018

Now that I am 60 and my mother 80 can I be added on to the title to make payments and reassure that what she has worked for all her life won't be lost upon her death but rather stay in the family?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Amy on 4/24/2018

Can a reverse mortgage company put a lien on my house after my mother died, her house was upside down and my brothers and I didn’t have anything to do with the reverse mortgage.

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Alex on 4/23/2018

My parents both passed and had a reverse mortgage for many years. The amount owed is more than the house is worth. The mortgage company is taking a long time to process the deed in lieu of foreclosure, I can't keep up the races while I wait. If I just let them foreclose will it hurt my credit score.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Taylor on 4/23/2018

I’m living with my grandfather who has a RM. His health is declining quickly and I’m scared of what will happen when he does pass away. He claims he only took $70k when the home is worth $160k, is this possible? Also, if I am able to pay off the RM after his passing, will I be allowed to stay here if there is no will and he has living children?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Bridget on 4/14/2018

My mother decided to do a reverse mortgage 11 years ago against our wishes!! ( she was diagnosed with alzhiemer's disease before she did it) my sister's and i have been taking care of her ever since!! My sister didn't pay property taxes for a year ???? we found out that financial freedom is going to but the property in foreclosure. We received a letter stated we had a court date and the house would be foreclosed on on three weeks!! Can we ask for more time in the house? My mother is currently in rehab and we need to find a place for her and ourselves!! Do you think we will be granted more time?

Expert Answer

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?

Do you have a question? click here for an answer
Question From Claudia on 4/07/2018

My dad is looking into doing a reverse mortgage. My brother and I are listed on the house title. There is a small home equity loan, and our mom passed away about 20 years ago. How will this work?

Expert Answer

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. 

Do you have a question? click here for an answer
Question From C Russo on 4/07/2018

My mom passed last year. My sister was supposed to handling her property and equally dividing it. I was sent $300 and told that was it. My mom had stocks and bonds, 2 million dollars worth of jewelry, left in access of $500,000 dollars when my father passed. Her home had a reverse mortgage on it. Obviously I am not getting no straight answers from my sister. How can I find out were financially my mom was when she passed? Also the information on the reverse mortgage? Will the courts have record of this? I am trying to find this information out as a couple of weeks ago my sister called. Telling me in a low hurried voice if the court called me just tell them we haven't spoken or seen each other in years. That she has no idea were i live. Wow. Still confused and shocked. Please any help on accumulating this information would be greatly appreciated.

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Ed F. on 4/03/2018

My father passed away a couple weeks ago. We found he had a reverse mortgage on his property (1BR condo in S. FL) and it's way underwater. "Current outstanding principal Balance" on reverse mortgage loan is $120K vs home value of around $70K. We have no interest in the place for resale. I called the bank and my 2 options are a D.I.L or a foreclosure. My father has no other assets other than a 7yr old car and a few bucks in a checking account that pays he utilities etc. He does have a $6000 loan a bank gave him 2 months ago for work around the place (he was 91 why would a bank do that!). What advantage FOR me is a D.I.L. vs foreclosure? For the D.I.L. the bank wants me to continue to pay electric, insurance & condo fees. For the foreclosure I just walk away. It seems to me foreclosure is a no-brainier choice. What am I missing here?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Lis on 4/02/2018

If my mom passes when am 62 can I continue living in the house under reverse mortgage?

Expert Answer

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).

Do you have a question? click here for an answer
Question From Micheal D. on 4/02/2018

How long until they make me move out now that my mom has passed away? I have lived here in her home for seventeen years...

Expert Answer

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.

Do you have a question? click here for an answer
Question From L. Banks on 3/29/2018

My mom had a reverse mortgage through Ocwen she passed i acquired the estate and the has since burned no homeowners insurance what do i do next the house was my primary residence.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Carol D. on 3/28/2018

Who is responsible for a reverse mortgage once the original people are deceased.

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Claytonia E. on 3/26/2018

Good morning, my grandmother has a reverse mortgage on her home, I am not sure how much she owes on it; however I was wondering if I can refinance it or can I pay back back the loan that she owes?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Corina on 3/25/2018

What if my name was put on the deed after money was received and we've been living together for 15 years; do I have any rights?

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Andrea C. on 3/24/2018

My father in law did a reverse mortgage and has now passed. My mother in law was not on the loan and there was no living trust or will. She is in danger of loosing the home obviously and is trying to get her name on the title so maybe myself, my husband and her can refinance and pay back the reverse. What is her time frame. Alison if she can’t do this and the house is sold, what happens to the equity that is left since her name is not on title.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Duane L W. on 3/23/2018

If my home is worth less then the equity loan I received and I have to move does the mortgage holder take over the property?

Expert Answer

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!

Do you have a question? click here for an answer
Question From William on 3/21/2018

My sister passed away with a mortgage on the house I live in. When trying to pay on the mortgage they asked me am I head of estate, or did she have a will. I told her there was know head of estate or will. They told me probate, which sounds pretty expensive. My question is.. dose it make sense to pay the property taxes..even if it might go into foreclosure, and is there another way I can get the house back after foreclosure? Please help

Expert Answer

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.

Do you have a question? click here for an answer
Question From James J. on 3/20/2018

My mother died and house was in reverse mortgage , my sister payed off mortgage 180,000 , but house has 560,000 which was 380,000 upon mom's death , can she take all profits are should there be probate? There 4 other siblings

Expert Answer

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.

Do you have a question? click here for an answer
Question From Mavis O. on 3/19/2018

I'm not the financial executor of my mother-in laws estate. However she had a reverse mortgage of $470K, she received $420K and post her death the house appraised at $320K. Im not named in the will but am the only one qualified to purchase this home. If I purchase this home from the back, will I receive title, will they even consider my offer, or does the trust have to purchase the home?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Denyse H. on 3/18/2018

Selling home, removed siblings name when we did reverse mortgage....Now I want to sell and i remarried...what is she entitled to, if anything by law?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Steven on 3/16/2018

My grandmother’s Home was left to one of four heirs. Unfortunately he didn’t contact the reverse mortgage lender and the sold at auction. The house sold for more that the loan amount. As Executor of the estate I was told it’ll take 6 months to recover any excess proceeds. Is that standard? Can the lawyers bill their hours against the proceeds due to the heirs for that time?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Bri on 3/15/2018

Dad & mom had a reverse mortgage. 4 heirs and we would like to keep the family home. Spoke with RM lender and they were very vague about the actual payoff amount. Was also told we need " letters of authority". Should we obtain an attorney, and if so, do you have any recommendations. Don't want our family home taken away!

Expert Answer

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.

Do you have a question? click here for an answer
Question From Jody K. on 3/15/2018

If the borrower passes away and the child wants to try to buy the home through a family sale, can HUD charge them rent if they live there if they go past the usual 12 months?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Betsy on 3/14/2018

My mother passed in Aug and Step-father in October. They had a will made to each other and left no estate. I contacted the RM co and lender and sent the letter of intent to walk as the house was not worth what was owed. Now March my brother and I received a lawsuit summons from the lender. We have 20 days to respond. I do have all the documentation where I cancelled everything and sent death certificates. Do we need an attorney

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Sam M. on 3/14/2018

My friend recently bought a home at auction that was a foreclosed reverse mortgage. Now he is trying to get a loan to remodel the property using the house and the land as collateral. He says the lender told him they will only lend on 75% of the lands value and will not lend on the house because the homeowners heirs still have claim to the home. This just did not make sense to me. After the home is purchased at auction, doesn't the home belong to him? Why would the heirs of the previous owner have any claim?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Celeste on 3/07/2018

Due to it being worth less than the loan balance, our aunt’s executor and attorney attempted to return her property to the holder of her RM...none of us were interested in it...and signed and had notarized papers to that effect...but were unable to get the bank’s cooperation in making that happen before the estate closed. So just before closure, the attorney had the executor, unbeknownst to the rest of us, file an amended petition to give each of the heirs a portion of ownership. Now, over a year later, I, as well as the other heirs named on the amended petition, have been served as defendants in a lawsuit with the mortgage holder, as Plaintiff, asking that if the loan balance plus attorney’s fees and court costs is not paid, that the property be “sold”. The Summons says I have 20 calendar days to respond to the office of the Clerk of Court, and I’m wondering if there is anything I should written in my response, other than saying that until being served, I believed that I had already relinquished any interest in my aunt’s property, and had agreed, and still do, that the title be turned over to the mortgage holder?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Elaine on 3/03/2018

My Mother had a reverse mortgage with Novad Management Co. out of Oklahoma City Oklahoma, can you please tell me the procedures of paying off this $90,000.00 bill and keeping the home, the home is valued at $113,000.00My Mother died on Jan 17, 2018, she left the home to her surviving 3 children, we want to buy the home.

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Marissa on 3/02/2018

My mother in law passed away in 2015 and my husband is still going through probate on the house she had a reverse mortgage on. My husband and myself along with our 5 year old son were living and taking care of her until her passing. However, we did communicate with the bank and also talked to the title company letting them know that my husband wanted to short sale on the house. On his second hearing he went to the original judge wasn't there and the judge that was filling in for her had postponed the date to August. Every court hearing we mailed, emailed, faxed copies of every court paperwork he had but since he didn't get the letters of administration that day because the original judge wasn't there the bank decided to foreclose on the house and lied to our realtor when they told her they moved the foreclosure date until December. We did everything they told us to do and they foreclosed, evicted us with nowhere to go. Can they really do this?

Expert Answer

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. 

Do you have a question? click here for an answer
Question From GREGORY H. on 3/02/2018

My father died on 3/27/17 and had a Reverse Mortgage. The director of the homeowner association told me that as his trustee I am responsible for the $210 monthly assoc. fees until HUD formally takes possession. I have also been forced to pay a $300.00 special assessment fee. I have been told that failure to pay will result in interest and penalty assessments. Nowhere am I listed as an owner of the property. Am/have I been liable or may I stop payments and take legal action to recoup past payments? One HUD rep said I am not liable for dues, others have said I am. Same with NOVAD who has been dragging their feet, it seems to me.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Steve on 2/28/2018

After the reverse mortgage loan is paid off, is HUD approval required before reconveyance?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Zebulum M. on 2/26/2018

Mom died 2005. 4 siblings were heirs of which i am one. Olsedg sisted lived in house and cintinue to pay mortgage to fha. Three sibling signed their interest to older sister and i did not. I just learned to got a reverse mtg for $97,500 of ehich 20 paod off fha loans. I did not assigned MY interest in property so how cam she get reverse mtg and i was heir just as she was. Did someone sign my name. Is this loan legal and how do i sue bank. Sister and reverse mtg co. What can i recover if loan fraudalent obtained.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Joe on 2/24/2018

My parents had a reverse mortgage over 20 years ago when the home was free and clear. Mom passed away in 2011. Dad still lives there but I was considering buying it back while he is still living in it. When the reverse mortgage was initiated, the value of the home was so much higher than it is today and the value is less than the mortgage. The home is in good shape but no upgrades have been made contributing to what may be a lower value compared to others in the area lower value. Would I be able to use the 95% of the value rule to purchase the home while he is still alive and living in it?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Raymond K. on 2/23/2018

I have a reverse mortgage for about 6 or 7 years want to put my live in girl friend who 62 on the mortgage. Is this possible?

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Charles S. on 2/10/2018

The property subject to reverse mortgage was under a purchase contact scheduled to close on 11/22/2017. Mid November I learned that the Escrow Company selected by buyer's sales agent was owned by the buyer's broker. Because there was no information on a closing, on 12/06/2017, I served a Demand to Close in 3 Days on the buyers, their broker and the buyer's sales agent. However, there was no response. Then I requested the payoff balance from the mortgage holder but received no response. On 12/28/2017 I received a phone call from the buyer's sales agent who informed me that the property had closed 12/22/2017, and he threatened to have the police arrest me if we did not immediately give him the keys to the property. I called the escrow officer and was told that the closing occurred on 12/22/2017 and net proceeds were sent to the trust bank account. She sent me an email of the HUD-1 Settlement. Is it possible that a proper real estate closing on property subject to a reverse mortgage, can be held without any notice or the participation of the seller or its agent? I was prepared to payoff the reverse mortgage and retain the property in the family.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Daphne on 2/06/2018

Hello. My neighbor had a RM and died a year ago and now the daughter lives there and it is being auctioned off. She won't give details about pay-off but I'm certain the pay-off is probably less than the appraised value. I want to bid at auction but not sure how these RM auctions work. Will the bank most likely be there and bid on it if it does not meet or exceed which one - the pay-off amount or the appraised value? How does that work with HUD? If it sells at close to pay-off it's a good deal but not if it has to be close to appraised value or the bank will buy it and put on market. Also, is the new owner responsible for starting eviction process on the current tenant? This is in Tennessee if that matters! Thanks.

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Kayla S. on 2/05/2018

My mother passed away and my father as well they had a reverse mortgage on their home and when my dad passed my mother filed chapter 13. My parents lived here for fifty years and I am to have the house after they passed. How can I save the home?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Sherman L. on 1/22/2018

My mom signed a reverse mortgage back in 2012. My Name as her son was also on the documents as a co borrower. Mom was 87 at the time. I was 49. My mom has passed away. I live in Texas. The inherited the house through a living will. And also have a transfer on death deed on file giving me the legal rights to the house. Can I continue to live in the house or do I have to pay back the full reverse mortgage loan within 12 months.

Expert Answer

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).

Do you have a question? click here for an answer
Question From Dianne C. on 1/19/2018

My mother wants to add me at age 62 is that possible?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Roldan H. on 1/14/2018

How soon after our loved one passes should we notify the reverse mortgage company?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Barbara on 1/11/2018

My mom passed away in August 2017, the will has not been probated because of missing people not found. The mortgage company said I have to get papers from the courts. The lawyer said I don't need papers from the court. I'm scared. What should I do?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Robert Q. on 1/11/2018

My Aunt passed away Dec 6th 2017, her surviving sister is Heir to the home and all.. She has just received a letter from the R/M company that my deceased Aunt had a loan on.. They stated My Living Aunt has 30 days to repay the outstanding loan Or face foreclosure .. 30 days seams pretty rushed to get a home prepared and sold... the home is worth sub in eqty

Expert Answer

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.

Do you have a question? click here for an answer
Question From Bruce L on 1/08/2018

My mother (who is 85 years old) and I (50 years old) co-own a home in California. We are looking at paying-off her primary loan and moving into a reverse mortgage (we have ample equity), but are unsure if we would be eligible due to my age and the fact I am not her spouse. Would we be eligible, and if so, would my name also be on the loan? I would remain on title regardless, correct?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Amber on 12/22/2017

Can a 3rd party buy the foreclosed home from the heir before auction for $100?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Anthony on 12/17/2017

My parents have a reverse mortgage and I was wondering how long after they pass do I have to get everything out of there place?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Robert H. on 12/13/2017

IF YOUR HOME WAS APPRAISED AT $190,000 AND YOU BORROWED $100,000 WITH A 5% INTEREST RATE IN ABOUT 15 YEARS YOU WOULD BE OUT OF EQUITY IF YOU MADE NO PAYMENTS. WOULD YOU GET FORECLOSED AT THAT POINT AND HAVE TO MOVE?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Pat G. on 12/12/2017

I am interested in purchasing a home that is currently listed for sale with a broker under HUD Guidelines 24 CFR 206.125. These guidelines are for a home that had a Reverse Mortgage and has been foreclosed upon by the lender. The owners died with a large outstanding balance on a RM that was secured at the markets peak around 2008. They both died about 3-4 years later when the home was worth much less. The home has been vacant since then so it has continued to drop in value as a result of neglect. I understand that heirs are/were offered the option to purchase the home at 95% of the appraised value and the balance of the non-recourse loan is forgiven. I am assuming this option was offered to the heirs after the owners death and they probably turned it down. The heirs either signed over the deed willingly or the bank eventually foreclosed and took ownership of the property. The owners died 5 years ago and the house just came on the market today. I am assuming the heirs did not hand over the deed and the bank went through the long, lengthy foreclosure process. Regardless, the bank now own the property. I believe that the purchase option is available to the heirs immediately upon the owners demise.Is that option available to any family member or must the property have been passed to them in a Will? And does that option expire after the property is foreclosed upon by the lender? The home I am interested in purchasing is now listed for sale with a broker using the above HUD guidelines. Can I assume that the purchase option (for the heir) was presented and declined? Or is it still possible that the heir can purchase the property at the 95% discounted price (appraised value - 5%) even though it has already been foreclosed upon and is now listed for sale with a broker?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Valerie M. on 12/11/2017

Hi, My father lives in Maryland & has a reverse mortgage. He wishes to sell the property, the present loan amount is $85,000 & the realtor states that my father would be lucky to get $80,000 for it. What happens if it sell for $80,000, but loan is $85,000? Help please...

Expert Answer

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.

Do you have a question? click here for an answer
Question From Erin on 12/08/2017

My mother is now 65 years old and got a reverse mortgage at age 62. Listed as the borrowers are her and my sister. After my mother dies Will the terms of the reverse mortgage continue on as it is now only it will just be property of my sister? Or once my mother dies will my sister have 3 to 12 months to decide what to do with the property next? Does this reverse mortgage die with my mother or does it carry-on with my sister since she is listed also as a borrower equal to my mother? Why would have my mother put my sister on the reverse mortgage listed as a borrower along with her on this?

Expert Answer

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.  

Do you have a question? click here for an answer
Question From Sophie T. on 12/07/2017

When I must pay back the reverse mortgage?

Expert Answer

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).

Do you have a question? click here for an answer
Question From Donna on 11/20/2017

I have contacted the daughter of a neighbor of mine to ask about her father's home that he has moved out of. Due to his age and health he has moved in with one of his other children. He has a reverse mortgage on the house. The family has started the process of doing a DIL. Apparently an appraisal has been done already but the family has not received a copy of it. The daughter says they have until 11/30 to make a decision. Could I purchase this property from them. And if so if appraised value is less than loan valve can I purchase it at 95% of appraised value? Do I have to use a realtor? And would the fees the seller be responsible for be part of the appraised value or on top of that? Example loan value to 182K lets say appraised value is 175K. Also taxes have yet to be paid for the year.........who would be responsible for those. Thanks

Expert Answer

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.  

Do you have a question? click here for an answer
Question From Liz B. on 11/19/2017

I am an heir but no will was left.I am in the home its been in family 55 yes.after my dad died Kathy did reverse mortgage on a slam and used all up.but I want to buy it or strange payments they are going to auction it off in a couple weeks what could I do? I have 26 animals on a farm 5 cars and truck and etc.including my dads mule

Expert Answer

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.

Do you have a question? click here for an answer
Question From Eleanor M. on 11/08/2017

If a property has a reverse mortgage and it goes to foreclosure, is there a 1 year redemption period from the date of foreclosure since the HUD Mortgage - "United States of America" was mentioned in the foreclosure due to the second mortgage?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Eilene S. on 11/08/2017

What happens if nothing is owed on a reverse mortgage when the entitled borrower dies?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Tomo on 11/07/2017

My question is. Currently, I live in my parents house (who both has deceased 3 years ago) and they did reverse mortgage with American Advisory Group. It has been 3 years and the house is being borderline for foreclosure. My sister is not cooperating and comprehending the situation. I am trying to keep the house, but it is not going too well. I would like to know if I can refinance or something for me to keep the house? At this moment, I am trying to build my credit score. I have poor credit score at this time

Expert Answer

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.  

Do you have a question? click here for an answer
Question From Sara on 10/31/2017

My dad said that he was the borrower on the house and my mom was not due to her credit but we looked and she is on there as a co-borrwer does that mean she has no rights to the house, even if she passes away?

Expert Answer

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.  

Do you have a question? click here for an answer
Question From MICHELLE R SNYDER on 10/27/2017

My mom's house did sell for more then was owed and the district court is holding the remainder, how do I go about getting it. They sent me a letter but not how to get it.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Yolanda C. on 10/19/2017

My Mother has a reverse mortgage. She is in end stage COPD. The heirs do not want (nor can afford to purchase) the home. Question 1. Mother has roommates ( non family members). Who tells them to leave on her death or placement in a nursing home. Question 2. Do the heirs have to sell the house or can we contact the mortgage holder.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Chuck W. on 10/14/2017

What happens in a case where there was no Will left by the individual specifying a executor? Because of this the lender would not even speak with us regarding the purchase of the property by the family.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Lisa T. on 10/05/2017

My dad passed away in August of 2014. He had a reverse mortgage. My brother and I do not want the home - the balance on the mortgage is WAY higher than the value of the property/home. (Shame on them for doing such a mortgage in 2008!!!!). My dad's attorney has been dealing with the mortgage company/attorney telling them we do not want / can not afford the home. They are threatening to foreclose. We have offered a deed in lieu and they continue to serve us with court papers and my dad's attorney has gone to the 2 court dates and told them we (my brother and I) are not responsible and do not want the home. Foreclose...we will provide a deed in lieu on behalf of his Trust. The only asset he had was the home and the only debt he had was the reverse mortgage. Now my dad's attorney sent another letter offering the deed in lieu after the last court date 3 days ago. If they do not accept this, she is withdrawing as the attorney because it has gone on for so long and is a waste of everyones time!!! What can we do? Will we need to hire an attorney moving forward? This is rediculous and seems like harrassment at this point since my brother and I had nothing to do with this property or reverse mortgage!!! Any advice is greatly appreciated! Thank you.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Kim G. on 10/03/2017

After the last borrower passes away and the heirs are not going to keep the house can they sell the appliances in the house at a sale or does the reverse mortgage company keep everything inside the house

Expert Answer

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.

Do you have a question? click here for an answer
Question From Vickie on 9/09/2017

My mother deeded her property to me and my other 3 siblings back in 2014 (signed & notarized grant deed). She informed me that I need to have this grant deed recorded in order for the Deed to be legally binding. One of my sibling's gained power of attorney over my mom in 2017, and is now trying to do a Reverse Mortgage on the property can they do this if the Grant deed is recorded? doesn't this take the property out of my mom's name therefore requiring those on the Deed to consent to the reverse mortgage?

Expert Answer

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).

Do you have a question? click here for an answer
Question From Kelly on 9/04/2017

Reverse mortgage both parties died but i live her snd disabled with son of parties thst died have to get out?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Karen C. on 8/09/2017

My parents had a reverse mortgage and have both passed. The home was in a trust to my sister and myself. The condition of the home was such that there was no equity, appraised at what was owed. My son and I wish to purchase it from the trust and my sister has agreed upon a small amount from us to pay for her share. We started talking to a mortgage broker and he has informed us that my son cannot be on the title, only me. HUD says the home is in preclosure, although we have not received any documentation as such. The initial representative at HUD who had received death certificates, trust, etc., letter of intent is no longer there and the initial info was lost, so by the time we found this out and resubmitted, said is in preclosure but we can still buy or sell. The issue is, can my son purchase property with me? He has already invested a large amount of money to renovate the property and I am in the process of either selling or refinancing my current home to buy out the reverse mortgage?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Melissa on 7/26/2017

My husband passed away last year but my mortgage is joint tenant. Can I do this?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Cynthia T. on 7/22/2017

After vacating the property and notifying the lender through a transfer of ownership through a deed in lieu of foreclosure, who is responsible for the property insurance

Expert Answer

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.

Do you have a question? click here for an answer
Question From Robert K. on 7/14/2017

I was told by Hud some years ago that the set aside could not be drawn on.After my mother's death I was told she could have drawn on it,but the hiers can't,its nearly $8000. What's the truth.?

Expert Answer

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.

Do you have a question? click here for an answer
Question From KAREN K. on 7/12/2017

I'm Executor of my brother in law's estate. The property is under water and we vacated it 11 months ago. We requested a deed-in-lieu. I have vigorously stayed in touch with the HUD assigned management company, asking routinely what the hold up was, and 8 key contacts later, one more issue, told the papers were being drawn, then told title had some small scriveners errors, then 2 months later told there lawyer said their were more differences now and that to clear title would cost 200. But management company says that HUD regulations will not let them fix it. I offered for the estate to pay for getting the title cleared. They wrote back: "Unfortunately, when a file is assigned to HUD the prior servicer is paid a monetary consideration and they guarantee HUD that title is clear. When it turns out that it's not HUD simply turns around to them and says give me my money back as an incentive to them to get fixed. This one may have to be repurchase by the prior servicer and if so they have title insurance which will pay. It isn't so much the costs but the principles." Then I asked for the status of the property: They wrote: "The decision to not have the title claim handled isn't exactly a decision, however, it relates more to HUD's rules and federal regulations regarding the assignment of loans to HUD.This is a non-recourse loan and there is no recourse against the borrowers heirs.HUD forecloses federally and doesn't adhere to any state guideline. If the prior servicer is to foreclose then they would adhere to state guidelines and not the federal. So I can only state what our company's position would be as the attorney in fact for HUD. Under federal guidelines we must obtain a foreclosure appraisal to bid at the sale. Federal guidelines state that we must accept lesser of the loan balance or the current market value as payment in full. We want to keep the door open for the deed in lieu in the event that the prior servicer is able to clear title and assign the loan properly. "Here are my questions: Can this end up not federally secured? Their statement scares me about "prior servicer is to foreclose then they would adhere to state guidelines and not the federal." Can a non recourse reverse mortgage loan end up not a reverse mortgage. Also do I need to keep paying property taxes and insurance. How do I make this end for the estate. It's been extremely frustrating! Your advice would be so greatly appreciated! It is so great your company provides help.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Jo M. on 6/23/2017

My grandparents still live in their HECM loan home, but they want to sell the home to me there granddaughter as a regular purchase to pay off their loan on the home. I was told that I would have to have some kind of paper work showing, proof of inheritance. Could this be accomplished without having them move out??

Expert Answer

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.

Do you have a question? click here for an answer
Question From Anthony on 6/13/2017

Hi my mom died in September 2016 and I always wanted to buy the house. The mortgage was higher then what the house is worth and I could get the house as a short sale 95 percent of appraisal. In my mom's will it says we can sell the home without going to court so I have been working with the bank to buy the house and now they come back to me saying I need to go through probate...the problem is that could take to long and the bank could foreclosure.Now to Dave the house as a beneficiary can I file chapter 13 to stop the auction? Or now can I list the property with a broker and sell. This mortgage company wasted months of time telling me it has to go to probate for me to buy it or sell it.i take blame also for not talking with a probate lawyer months ago but I did not think I had to because the will said I did not need the court to approve a sale...

Expert Answer

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.

Do you have a question? click here for an answer
Question From Vicky on 6/10/2017

I live with finance and he has a reverse montages if he should pass how long can I stay in the home?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Shannon Y. on 6/08/2017

CAN RM HOUSE BE SEIZED BEFORE DEATH CERTIFICATES ARE FINAL? I AM UNABLE TO SELL OR BUY ANYTHING UNTIL MY PARENTS ESTATE IS OPENED BY COUNTY AND THEY CAN NOT DO THAT UNTIL FINAL AUTOPSY. MY PARENTS HAVE ONLY BEEN GONE FOR A FEW MONTHS, REVERSE MORTGAGE COMPANY KNEW THEY DECEASED ONLY BECAUSE I TOLD THEM YET THEY COULD NOT TELL ME WHEN COURT WAS OR WHEN THEY WERE SEIZING THE PROPERTY. THEY FROZE THEIR ASSETS JAN 10TH AND BOTH PARENTS DIED BY JAN 31ST. ARE THESE PEOPLE EVEN HUMAN?

Expert Answer

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.

Do you have a question? click here for an answer
Question From R Franklin on 6/07/2017

Husband died 1 WK ago. Sole borrower on reverse mortgage. Can his daughter purchase home

Expert Answer

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.

Do you have a question? click here for an answer
Question From Gail on 6/07/2017

I live in Wisconsin, I lived with mom for over 10 years i was her caregiver and she had a reverse mortgage. My mom passed away march 30th of this year and i have no means to buy this house. My question is can I take the central air unit with me and the kitchen cabinets. The cabinets are old and i know the new owners will replace them anyway.

Expert Answer

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!

Do you have a question? click here for an answer
Question From Lisa S. on 6/06/2017

This is my moms house but I'm on it as co-borrower I'm her daughter. So how does that work can she still do a reverse mortgage. When mom dies and I still leave there with her how long do we have to move out of house. My understanding if she does a reverse mortgage then she no longer has to make payments just have to pay for house taxes each year.

Expert Answer
Hi Lisa,
 
In order to be eligible, all unmarried owners of the property must be a minimum of 62 years of age and live in the home.  You would all be able to stay until the last owner no longer lived in the home, still being responsible for the payment of the taxes, the insurance, and other payments due on the home (HOA, if any) and required maintenance.  If you are not yet 62, you would not be able to obtain a reverse mortgage as long as you were on the title to the home and if you chose to come off of title, then the loan would be due and payable if anything ever happened to mom so it's a very important decision and not one to be taken lightly if you are considering coming off of title in that event to complete the loan.  
 
If you have other plans in place (another home in which to live, family you intend to move closer to anyway, an insurance policy that would pay off the loan, etc) then those would be examples of plans that some folks had to eliminate the ill effects of the loan becoming due.  But if you plan to continue to live there even after mom passes and have no idea how you would pay the loan off at that time, dealing with the grief of a lost loved one is a terrible time to try to add that to the equation.
Do you have a question? click here for an answer
Question From Dan P P. on 6/02/2017

We (the heirs) desire to provide a deed in lieu of foreclosure. The house is filled with sixty years of living and "stuff" that we do not want. Is it our responsibility to remove that prior or will that be the Loan Servicer's responsibility?

Expert Answer

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.  

Do you have a question? click here for an answer
Question From Jim M. on 5/20/2017

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?

Expert Answer

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? 

Do you have a question? click here for an answer
Question From David M. on 5/18/2017

I am thinking of getting a reverse mortgage ( RM), but first I need to get advice. My widowed mother got a HECM and borrowed on it. We, my brother and I, did not know this. She died. When we went through her paperwork, we found that she had a balance of over $100,000 dollars on an old house worth $69,000 dollars. We do not claim the house (it is in her name only) and the Rm company wants us to pay the mortgage off. No way! We don't want the house and told the RM company this and they got mad! I know it is a non-recourse loan and our name is not on the house. We want it foreclosed on. Before I decide to get a reverse mtg. I want to know if they can sue us for her loan? She developed dementia and threw out all her paperwork and deeds, so we can't read what is on her RM contract. We know about the loan because of a monthly statement we found. Help!

Expert Answer

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.

Do you have a question? click here for an answer
Question From M. Naas on 5/04/2017

If the money obtained on a reverse mortgage is not completely used and there is an amount still available, are the heirs entitled to the difference?

Expert Answer

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. 

Do you have a question? click here for an answer
Question From MT on 4/27/2017

All Reverse Mortgage originated a Reverse Mortgage on my real property in 2012. I have questions after reviewing my loan documents that I hope you will be able to address. I read information on your website about when a Reverse Mortgage comes due. It makes it sound like as long as you live in the property as your principal residence and meet the property tax, insurance and maintenance requirements you can live in your home, free of mortgage payments for 150 years if you live that long. Is this a correct assessment?I have a fixed rate HECM , line of credit program to pay off existing mortgage and I took one draw of all remaining funds. What happens when I reach the "maturity" date of the loan in 2033, when it will be fully paid off? The Maximum Principal Limit reached? The Deed of Trust states" the term of the Note and Loan Agreement shall end in August 2100 unless the debt matures earlier as set forth in the Note and related documents." Then the HECM Federal Truth-In-Lending Loan Closing Disclosure Statement states "We can terminate your Account and immediately require payment of the entire outstanding balance in one payment if:"The outstanding balance equals the credit limit ("Principal Limit").So how long can I stay in my house? Thank you for your assistance.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Daniel on 4/18/2017

What if their are no heirs to the borrowers after the last one has left the residence and the property is sold?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Karen J. on 3/21/2017

A friend's mother passed away with a HECM on the house. The lender is telling him that they MUST put the house in probate. Have you ever heard of such a thing?

Expert Answer

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!

Do you have a question? click here for an answer
Question From David M on 3/18/2017

I have read a lot of your answers and I am impressed! I am 63 with a wife and paid off house and am thinking of getting a reverse mortgage with you. But, I need to know this: My father died 12 years ago and left my mother with a paid off home near Orlando, Fl. It is old and needs to be completely remodeled as of now. Well, her only two sons, me and my brother, did not know that she had a non-recourse reverse mortgage loan taken out in 2009. She was too proud to ask us for financial help. She passed away and when we went through her papers, we found out that the balance of the loan was way more than the house was worth (house appraised at $79,000 and the loan is $99,500).My brother and I do not want the house. She left us the house in her will and there was no probate on her estate. We donated everything in the home to charity. My question is this: I called the reverse mortgage company and told them we were walking away from the house and didn't want anything to do with it. They wanted us brothers to do the Deed of Heir-ship and maintain the yard, utilities, and home owners insurance ($3,000 per year-due soon!) and wanted us to do about 30 other things ( paperwork). It is not our loan or property. We cancelled the utilities and insurance and when I told them this, they got mad. I know you are not lawyers, but the loan is not ours and I am not going to do their paperwork. . We can't find any paperwork or deeds to the house anyway. Can we just walk away? It is not our business.

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Nancy on 3/16/2017

If my daughter is on the deed will that make a difference in the loan?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Sherri on 3/10/2017

Can the heirs sell the house, which has an under water reverse mortgage serviced by Novad, for 95% of the appraisal price, without having to go through probate proceedings? Novad's letter to me, as executor, stated that I needed to be named as executor in the will "and/or" have a probate certificate. Now, with a buyer and contract imminent, Novad tells me that the estate needs to go through probate, which would take 6 months. Has anyone had experience moving forward on a reverse mortgage short sale with a non-probated will?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Carol H. on 3/01/2017

Do we get a get a step up in basis my mothers house in a non-recourse reverse mortgage is given back as a deed in lieu of foreclosure after the death of my mother? My accountant said no because debt forgiveness reduces step up in basis, is he correct?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Larry on 2/19/2017

If I am renting/leasing a room with my parents who have a reverse mortgage and one of them passes away and then the parent passes away later while I am living there, do I have any legal rights to live on the premises and stay there?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Bill on 2/14/2017

Reverse mortgage regret, my parents need to sell but have used most of the funds they recived from a reverse mortgage, what should they do.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Dottie on 2/12/2017

I am 69 my husband is 68 our house is paid for we want to put our 49 year old son on the title. We would like to get a reverse mortgage so we can do a few home improvements and travel. Our son has a disability and we want to leave the house for him to live in.Can we get a reverse mortgage?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Helen F. on 2/07/2017

My husband has a reverse mtg on a home in Nm. We were not married when he received it, am I responsible for repayment of the RM?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Tammy H. on 2/01/2017

Hi my name is Tammy. My father passed away almost 2 years ago. I found out my dad's property is still in his name. His girlfriend lives in his mobile home that my meme bought for my dad. She's passed away as well. She also has the car. I helped my dad buy. The title and the deed to home, I don't know where it is she only gave me a little box full of what she said he had left. I found out too that he had a child that passed away before I was born. This saddens me. I grew up in that nieghboor hood as a child and I was wondering do me and my sister have any say in anything besides Brenda the woman that lived with him. There's so many questions. The main one is, how do I find out if he had a reverse mortgage? They also were never married. Please help. Thanks Tammy I really don't know what to do but all I wanted was my meme's book she made my dad and some ashes. I'm grateful for what I got. I just didn't ask for much I just got neither. What to do in Florida, Panama City. I also have a brother that passed away 4 months after my dad's death. I so don't know what to do :(

Expert Answer

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.

Do you have a question? click here for an answer
Question From Kris M. on 1/25/2017

Can I get a reverse Mortgage where my home is willed to your company upon my death.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Stanley K. on 1/23/2017

We plan to marry in 2 months. My lady partner (80) has a Reverse mortgage for 2 years. I (85) submitted a quick claim with and am now on the deed with her. If she should pass away before me what options can I take now to avoid having to sell the home? Also does monthly payments to her cease immediately upon death?

Expert Answer

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.

Do you have a question? click here for an answer
Question From WANDA K. on 1/21/2017

20 months after my nephew and myself inherited my deceased parents house in california my nephew, his wife & children are still living in the house. When my parents died their reverse mortgage balance was $430,000.00.we want to sell it but the debt on the house is $20,000.00 more since their deaths plus unpaid property taxes. The house is in complete disrepair because our nephew let the lawn die and the house is filthy but is valued at $510,000.00 if it were in good repair. if we get a buyer how is the money split. The Trust give us both 50% of all and any assets left after they die.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Kipp F. on 1/09/2017

Here's the situation...my Dad passed in 2013 with a RM on the house and it's way underwater (2016 - 100K total owed / 37.5K appraised). I am his first born and only son. I was Dad's caretaker for the last 4 years of his life. Before Dad passed, he designated me as durable POA over all aspects of his life (Dad was going deaf and blind at the time). Dad swore to me repeatedly that there was no will, but 6 months after his funeral, my step-sister produced a will written by my step-mother and signed by Dad that does not mention me. My step-sisters have not cooperated with me regarding probate. My specific question: Can the current lender sell their interest to me? Then I would deal with probate as lien holder on my house.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Michelle on 12/09/2016

My father took out a reverse mortgage on his condo. Now that he has passed, I am trying to disposition the estate. I sent in the documentation to the lender for a deed in lieu of foreclosure (death certificate, letter, affidavit), but is requiring additional information and an inspection. This is still outstanding and now has gone into foreclosure. In the meantime, homeowners dues continue to go unpaid. I am at a loss as to how to handle all of this - I want it over, but am not sure what to do. Am I (or the estate) still liable for the HOA dues? Why is the bank making it difficult to go through the deed in lieu? Besides notification, what are my other obligations to fulfill the deed in lieu of foreclosure? Thanks!

Expert Answer

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.

Do you have a question? click here for an answer
Question From Diana on 11/15/2016

I am the remainderman in an "enhanced life estate deed" a.k.a. a "lady bird johnson deed" o,r a "transfer on death" deed. There is a existing loan on the property in the name of the grantor. When the grantor dies the property will be transferred to me. Once the property is transferred to me can I then get a reverse mortgage that will pay off the existing debt that is in the name of the grantor?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Ed on 10/31/2016

I'm an estate executor in Virginia. A reverse mortgage was on the home. The company told me I had six months to try and sell the home (which is the goal), with up to two 90 day extensions. I had a listing agreement signed in four months and the house on the market. 10 days later I got a letter of foreclosure sale on the home. Are my rights being violated? I did everything they asked. Now I can't get a buyer because of the looming auction date. Help!

Expert Answer

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.

Do you have a question? click here for an answer
Question From Robert on 10/21/2016

We will be moving out of our house (with a reverse mortgage) to live with our daughter. My four questions concern contact with the mortgage holder?1. How soon before the moving truck comes should we tell the mortgage holder?2. Do I just tell the utility companies to shut off their services, and that I will no longer pay their bills?3. Our home is in a homeowners' association. What information should I give the mortgage holder so they will pay the quarterly association dues? (And not run up late payment charges and a lein against the property.)4. Some interior paint needs touch-up, and the new owner will, of course, want to replace carpet and probably other 22 year old flooring. Of course, our home is in "liveable condition." What do I need to tell the mortgage holder about the condition of the house when I inform them of our departure?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Joyce S. on 10/18/2016

My husband, 91 yrs old, passed away last month. My only income is my SS of $1178.00/per month. I am 89, cannot walk without a walker, not in very good health. There is no way I could ever pay off our mortgage. I don't even make enough to get an assisted living place. Fortunately I have relatives up north who will let me stay with them. What happens now? What happens to my home and what happens to me? Thank you so much for your helpful advice.

Expert Answer

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. 

Do you have a question? click here for an answer
Question From Verna H. on 10/08/2016

My mother died recently and left a reverse mortgage. I am her only daughter and would like to keep the house. I have asked for a 6 month extension to try to get the funding. Can I apply for a reverse mortgage as I am 64 on this house?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Lydia A. on 9/20/2016

“My father recently died. He took a reverse mortgage in 2010 on his own name only. In Michigan they have a non-borrower program so the spouse can continue to live in the home. The problem is that I have to have a title search. For my dad to get the reverse mortgage, my mother signed a quick claim deed. By her signing the quick deed, does that mean she is no longer on the title of the house. I didn’t know she signed this. When they agreed to the reverse mortgage both of my parents listened to the rules about the reverse mortgage, so I do not understand why the paperwork where only in his name. I don’t my mother to lose her home. both my brother does not have good credit to take over the mortgage.”

Expert Answer

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.

Do you have a question? click here for an answer
Question From David R. on 9/20/2016

My stepfather took out a reverse mortgage. My half sister was executor of the estate. She told me of the mortgage company calling 3 weeks after his death and telling her, she had to pay the loan. The woman had no final balance due on the note when she called and said she would get and call her in the next 5 days. She received paperwork from the mortgage company and took it to the attorney, who told her they had to send an appraiser out first to get the payoff amount and the equity amount, therefore, he told her to wait for that to be completed. No appraiser ever contacted her to come out to the house to do the appraisal. She got a call from a man asking if she had sold the house yet, and she told him the house was not for sale. He told her, the house was in foreclosure and he was willing to purchase it. She got a letter 3 days later stating the house was in foreclosure. Giving this information, she called the lender for over a month on a daily basis, not once did the lender call her, as they did not return the attorneys calls either. It was stated the house would go to auction on March 1, 2016. The lender finally called at 4:38 pm on 2-29-2016. She stated that the house would auction in the morning and the one person interested in paying cash for the home was waiting at the bank (for what reason I am not told about, but his attorney was calling the lender as well for two weeks) so I am guessing he did get in touch with the lender. My sister asked for the balance and that was what she was going to tell the interested party waiting at the bank. The woman stated it was too late to pay it, just wait til the next morning at 10:00 am and put a bid in at the auction, that way he would save himself a lot of money. The buyer made out, the lender was paid in full. The family, which consist of my sister and myself got nothing. Then the buyer continued to ask when she would be out of the house. I want to know if the lender calling after the death and not knowing the balance was obligated to call or send a letter stating the balance so she could get a loan or find a buyer? If the man calling before she was informed of the foreclosure had any right to do so? Also, and most important, was the lender obligated to call my sister upon her calling to get this problem handled and stop the foreclosure, and if so what was the time limit? Because I feel the lender waited until the last day to inform her of the payoff amount and it would have been too late to do anything since the banks were closing in less than 20 minutes. I feel that we/I have been cheated on this estate, and I am very upset that my sister informed me she is not going to call for any further information or talk with an attorney over this neglect of communication with my sister so we could have made arrangements to sale and have some equity to divide. I guess I am upset with the fact that I begged them not to do the reverse and it was done anyway, but most of all that when my mom passed my stepfather lied to me, and I think now my sister is lying to me. She won't have a reading of the will, and she has sold off everything in the house except what she wants to keep. But my problem.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Dolores on 9/08/2016

Myfather passed and had a reverse mortgage for a few years. I have been his caretaker for a few years. This home is my childhood home. I wanted to purchase the home but since I was talking care of my dad, I only did side jobs and can't show any income. The foreclosure process is in effect and I need to vacate within 24hours. I have no where to go or to take my belongings or transportation. I wanted to file something to the court about how this is an extreme hardship with no place to stay etc. What can I do if anything? Is there something I can try to file with the court? I'm in N.California. please help!

Expert Answer

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.  

Do you have a question? click here for an answer
Question From Glenda on 9/06/2016

My mom passed away I am the executor on her will she has a reverse mortgage. Do I have to take it to a probate court to sell her home?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Lisa S. on 8/01/2016

What happens when a person with a reverse mortgage dies and there is a relative still living in the house.

Expert Answer
Hi Lisa,
 
The loan becomes die and payable so if the relative is the borrowers heir, he/she has to decide if it is better to pay the loan off with other money available or to refinance the loan in that individual's name.  If that relative is not the bo=owers heir, then he or she would have to speak with the borrower's heir (s) to see what their wishes for the property were if they wished to remain in the home. 
 
If the borrower died intestate  (without a will) the relative living in the home would want to again resolve ownership as soon as possible depending on future plans always remembering that the loan was now due and payable. 
Do you have a question? click here for an answer
Question From Brenda P. on 7/14/2016

So i was wonderin, with your company in the event the borrower dies unexpectedly and left no will nor had the time to pass the house on legally. What then happens?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Chrissi on 6/12/2016

My grandparents took out reverse mortgage, Like maybe 5/6 Years Ago. Since than my Grama has Passed And my Grandpa just turned 90 & still lives in House. But God Forbid, When He Passes, I Was Raised In That House, And Would Try *Any & Every way To Try To save The House. But I Have Lived In An Apt For My Entire Life, And DONT Even Know A lot About Homes Period. What If Anything, Should I B Doing To Help Me Accomplish Getting The House, I Have Pretty Good Credit, But Am On Social Security. My Fiancee Is A Harder Worker, And I Would Do Everything I Can To Try To Get ,Finance Or Refinance, Or Whatever, But I Have No Idea, IF It Can Even B Accomplished.!!!! * Please Tell Me Any Advice U Have, Or Where I CAN Get Advice & Help With This, Once My Grandfather Passes I Will Be Even More Devastated , My Grandparents Raised Me, And It Will B All I Would Have Left Of Them, Plz Someone Help !!* Thx U So Much Everyone. God Bless

Expert Answer

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.

Do you have a question? click here for an answer
Question From John Jenkins on 5/10/2016

My father had a reverse mortgage on his house. I am trying to get financing to payoff the HECM for 95% of appraised value. Capital One says they "aren't able to do the loan" because "property is subject to short sale to settle reverse mortgage". Can someone explain to me why or better yet what that means in laymens terms?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Calvin P. on 5/10/2016

My mother passed last year August. And no one lives in the home. We all lives in another area of the state. But we been paying someone to keep the grass cut. We cut the electricity off. The amount that they want for the house is more than we can handle. My question is do we have to maintain the property until they decide to take the property? Will we be sued by the city/county if the property is just sitting there? We also didn't pay the taxes and the house isn't insured. We tried to contact the company but they will not answer mor will they call us back.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Jason on 5/09/2016

Hello. My question is coming from the point of view of the lucky heir of a reverse mortgage. First and foremost my Mother who passed away exactly 1 year ago, the day after mothers day, had a reverse mortgage which finalized the day before she passed away. My question is this. I have lived in the home, which has been my primary residence since Jan. 1, 1989, for the past year since my Mother's passing. I have asked for extensions and have got a probate attorney, and a real estate agent which the house is officially on the market to be sold. Come the 10th of this month, which is only 1 and less than a half days away, the reverse mortgage company, won't say names, is going to start the foreclosure process. It is my understanding that once the foreclosure process starts, I am going to not only loose an experiential amount of money, as far as the homes value, but I will also start to accrue attorney fees of the reverse mortgage company. I am 33 years old, and have been taking care of my mom for a few years leading up to her passing and so I have been unable to show income to be able to either A) get a loan to pay off the reverse mortgage company, which was what I would have liked to have done originally, or B) find a place to live because nobody will take on a tenant that cannot show proof of income for the last 3 years. So, basically, I will be homeless. I guess my main question is, can someone please give me any advise or does anyone know if I am able to speak with H.U.D. to push back the foreclosure process? I have spoken with A.A.G., excuse me, the reverse mortgage company and they have told me that there is nothing they can do because H.U.D. will only give a year max. Please help. Any advise or suggestions would be greatly appreciated. Thank you for your time.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Sandy M. on 5/08/2016

My dad took a reverse mortgage out on my childhood home a few years ago. He still lives there with my younger sister and her husband, long with their three children. She told me yesterday that she can buy the house from our dad now because he doesn't own it, the reverse mortgage company does, so if she get the down payment she can become the owner of the home. My dad is still very much alive and she can be self centered, so I wondering if this is true. Every thing I have read states that after the person dies or moves out permanently, then the heirs can go after the house and figure out the payments. My dad has a total of four children also, so are we included in the decision making or because she lives there is she more entitled to it?

Expert Answer

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!

Do you have a question? click here for an answer
Question From ANN G. on 5/06/2016

AFTER A PERSON DIES, HOW LONG DO YOU HAVE TO PAY BACK WHAT YOU HAVE BORROWED?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Joy H on 5/06/2016

We were trying to do a deed in lieu of foreclosure but it was rejected because of a broken door in the home. We are so frustrated with the bank after filling out numerous forms etc and getting nowhere after 5 months. We do not want to put any money into this home that we are just trying to give back to the bank. We have been paying upkeep on the home gas,electric,landscaping for over 5 months. We do not want to put any more money into this fiasco. Can the city come after the estate for lawn care bills if we stop cutting the grass. What is the estate responsible for in regards to home maintenance if we are just going to let them foreclose?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Larry on 5/06/2016

I appreciate your time! Wells Fargo has told us that because my mother has been out of her house for a year (as she is in a nursing home, but hopes to return home if she cannot tolerate her stay at the nursing home due to sharing a room) that Hud will foreclose on her, but the bank can't say what the timetable will be as to how many days before an actual sheriffs eviction will occur. And that is leaving our family very upset with this unknown information. Wells Fargo said that it is up to Hud to make that decision. We expected to have 180 days to vacate the premises as originally told to us by the bank, but now the say that they don't know. We live in Michigan.Also any ideas on delaying an actual foreclosure (sheriff eviction), as in selling the house?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Cynthia M on 4/29/2016

After my dad passing, the reverse mortgage company sent an appraiser out, who set up a time to do his appraisal when he could come in and asked me to locate the papers inside (manufactured home) he would need to see before then. He came and did thorough job, in-out-under-over, and mortgage company told us later (after many calls trying to find out what the "95% of estimate" will be, so we can decide if we can pay off the loan to keep this, as dad was very upside down in amount owed,) that his estimate is about half what is owed and they are going to get another one. Question: how many estimates are they allowed to get trying to get an amount closer to the pay off? And still confused with conflicting info saying we can buy it at 95% of estimate and then saying buyer can't be family, must be third party, to get that option??

Expert Answer

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.

Do you have a question? click here for an answer
Question From Joanne on 4/27/2016

I have been living in my (would have been stepdad's reversed mortgage house 4 yrs. now. We had to place him in long term care nursing home in March 2016. The RM loan amount payback due is higher than the home's value. My mother is his POA and they lived at a separate residence, we all live in NJ. Mother had to apply for Medicaid and they made her have a realtor list this RM home for sale. My fear is this: the realtor insists on having a key lock-box while I am still occupying the house. This really scares me as I live alone. Is this legal? I am more than willing to let the realtor and his prospects in if he calls and/or accompanies them. I was just found disabled this month (after a 4 year wait from SSDI) and I am desperately trying to find housing. Can they throw me out?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Thomas M on 4/26/2016

Can you squat in a home being foreclosed from a reverse mortgage? If not how long is the process ?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Kim on 4/25/2016

My mom has a reverse mortgage and she lives alone and is now in need of a caregiver. Can one of her children move in her house to take care of her as she is not able to live alone anymore.

Expert Answer

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.

Do you have a question? click here for an answer
Question From April on 4/22/2016

A neighbor of mine passed away and had a reverse mortgage on her house. Her heirs did not want the house or could pay so they let the bank have the house. It is now "abandoned" and I would guess in the foreclosure status. I know the bank as to where the mortgage is and they are not giving me any information. Is there anything I can do? I'd like to purchase the house from the bank. The house still has a fridge fully stocked and no utilities are on so it's becoming run down in a great neighborhood.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Lisa on 4/21/2016

What would happen to someone that was behind on taxes and insurance on their reverse mortgage and became very ill and had to leave home and move in with family to be cared for and he / and family do not have the income to pay this and make the repairs for the house to be sold due to age of home. What would happen to this person if they just walked away?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Phil S on 4/19/2016

An elderly man passes away intestate. He had no Will and no heirs, spouse, or family members to inherit his estate. His estate will be probated by the State (FL). He has a reverse mortgage on his home. Can only family members (heirs) repay the reverse mortgage? or can a close friend or non-family member repay the loan? Is there anyway the current tenant (girlfriend) living in the home now keep the house or repay the loan to remain in the house?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Kathy on 4/12/2016

Hi my 90year old Mother died in December 2015. She had a reverse mortgage and a will. Her will states all assets will be divided equally between her six children. Since I am not "listed" on her mortgage paperwork am I legally responsible for her now due mortgage? one of my sisters is buying the house we have a purchase agreement & she is in the process of getting a loan. Thanks

Expert Answer

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.

Do you have a question? click here for an answer
Question From Nita W. on 4/11/2016

If two names are on a reverse mortgage and one moves what happens?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Laura on 4/06/2016

My parents took a reverse mortgage on their home a few years ago. The reverse mortgage was taken out in both of their names. My father passed away in July and my Mother was just notified that the house was in probate because only my Father's name was on the title that is filed with the county recorder. Is my Mom still eligible to stay in the home under the reverse mortgage?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Judy on 3/28/2016

My roommate that owns the home took out a reverse mortgage when he dies can I buy back the house? Or can I buy back the house now? If not how long will I have until I have to vacate the house?

Expert Answer

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/

Do you have a question? click here for an answer
Question From Shari on 3/18/2016

I live with my Mother who has a reverse mortgage. If she adds my name when I am 62 can I stay in the house after her death? thanks for any info

Expert Answer

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.  

Do you have a question? click here for an answer
Question From mMchael on 2/27/2016

My mother and her husband that has passed took out a reverse mortgage - years back - she has now sold the home - we are my mothers heirs - when you complete reverse mortgage papers - is there a part of that document that they ask for beneficiaries - my mother is disclosing no information yet - the house has pending contract - but she attempted to contact me and ask me to sign documents regarding being her heir and offered me $2000 - and i am guessing she has to have my signature regarding this sale - please help because she has yet to send papers and being stubborn and not disclosing information

Expert Answer

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).

Do you have a question? click here for an answer
Question From Rhonda on 2/25/2016

My husband & his first wife took out a reverse mortgage on the house, she has passed years ago. I'm a new widow Feb, 20,2016. Does the house go to me now?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Donn H. on 2/19/2016

My mother passed, age 92,. She and my stepfather, married 14 years, obtained a reverse mortgage on the house she has owned for 50 years about 6 years ago.. She left my brother and me the house upon her death. My brother is the executor. The house was in her name alone. Did not leave my step father anything as he mishandled her money in the worst way. There is a trust. She took the house out of the trust prior to her death. However, the reverse mortgage payments are going into an account that only he has access to in the trust. So what we have here is we inherited a house and are paying my stepfather a reverse mortgage payment of $ 3,000.00 month and he continues to run up credit card bills that are in the trust and in both of their names. He moved out of the house approx. 2 months ago while my mother was dying of cancer. We have tried to get a copy of the promissory note re: the reverse mortgage but have not been unsuccessful. Do we have any recourse or can you give any advice

Expert Answer

Hello Don, 

I've answered yoru question in a new blog post titled "Do Heirs Have Any Recourse to a Reverse Mortgage?"

Do you have a question? click here for an answer
Question From robert lacoerte on 1/11/2016

My mother has a house and its under a reverse mortgage she owes 550,000 on it ,if i wanted to buy it from her ,how much do i have to pay!!!

Expert Answer

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

Do you have a question? click here for an answer
Question From Carol on 1/04/2016

My father passed away 8 months ago and no one is living in the home, can I legally have the utilities turned off?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Debi Merante on 12/06/2015

Hi. My Mom is now in a nursing home and she has a reverse mortgage on her home. I have an offer to sell it for $5,000 over the amount owed on the reverse mortgage, which is good, but the real estate commission will be $14,000 and I don't have the money to pay that. I fear that medicaid will take the $5,000 profit on the home, which still leaves me (daughter) owing the $14,000 real estate commission. Even if I can apply the $5,000 to the real estate commission, I will still owe $9,000. Also, the property taxes are due and my Mom has the money for me to pay them and I was told I can get that amount back at the closing, but again, not sure if Medicaid will take that money, too. I cannot afford to pay anything so I don't know what to do. Would calling off the sale of the home and abandoning it be an option? I just want to be done with the house without having to pay out any money.

Expert Answer

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 

Do you have a question? click here for an answer
Question From Tracie M on 11/29/2015

My mother had a reverse mortgage, her house was totally paid off. How can I find out where the money was spent or when she made withdrawals? I found no evidence in her checking account of where the money was spent however, we had to secure a loan and pay off the debt.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Richard Bentson on 1/18/2015

When both borrowers die are their heirs given time to sell the house and pay off the loan, or does the lender take possession of the house, sell it , and give the heirs any funds in excess of the debt?

Expert Answer

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?

Do you have a question? click here for an answer
Question From Jill Morlong on 1/09/2015

My folks have reverse mortgages my name is not on it but I am on the deed. Their will say that everything is left to me. is their anything around this so I can stay in the house.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Wes on 11/29/2014

Hello, My dear mother just passed last week. She left me the house as the sole heir. But it has a Wells Fargo reverse mortgage with a balance of $44,500. I have $25,000 life insurance from mom. I have bad credit, but I must keep the home. It is my only residence. I'm single and disabled. How likely will it be that I can keep the house? I really only need $19,500 to pay the reverse off. Will Wells Fargo work with me? Can my attorney find ways to keep the home? I'm grieving and really worried about all of this. Thank you, Wes

Expert Answer

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?

Do you have a question? click here for an answer
Question From Donna on 10/06/2014

My mother got a reverse mortgage in Sept.2013 -- she and my brother passed away in the home in feb.2014 from a fire .Her insurance and taxes were up to date and a check to reverse mortgage has been ready to issue since March 2014..It can not be released ( the amt of the structure or the contents) 2 separate checks. because reverse mortgage refuses to tell us the dollar amount she received. their refusal to tell us the dollar amount due them is also holding up our contents check.why the secrecy and what do we do with the insurance check that has been ready to issue to them all this time?

Expert Answer

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

Do you have a question? click here for an answer
Question From Kathy on 9/19/2014

I have had a reverse mortgage in place for over 3 years. Now the bank wants to do another appraisal. Why?

Expert Answer

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".

Do you have a question? click here for an answer
Question From Karen on 9/15/2014

The reverse mortgage has been transferred from one servicer to a HUD servicer. After my father's death, my mother moved out of the Florida condo and can no longer afford the maintenance fees and special assessments. After 3 months on the market, there were no bids high enough to pay off the loan so a letter of intent was sent to the loan servicer advising her desire for a deed in lieu. We were advised the property would be inspected, the locks would be changed and the process would take 3-6 months to complete. It is now 3 months in and the inspection hasn't even happened. We need to know if my mother is responsible for the monthly maintenance fee, the monthly special assessment fee for building renovations, utilities and hazard insurance during this process?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Mary on 8/18/2014

My neighbor is not living in her house and has an apartment, but she has a reverse mortgage on this home, but lets her son live there rent free. what to do about this. they always are scamming someone what can I do?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Francine F. on 8/14/2014

My dad passed April 2012. He owned a condo and had a reverse mortgage. The bank immediately started foreclosure proceedings. Condo is empty. An attorney for the Condo Assoc. has been trying to get me to rent the condo, during the foreclosure proceedings, so the condo assoc. can recoup the maintenance fees for the past 2+years (I could also make money on the rent). I don't want to do it because the bank stops by to check the condo and I feel this is a problem. The condo is in New York

Expert Answer
Do you have a question? click here for an answer
Question From Robert P. on 8/06/2014

Will the bank buy a house for the equity left in it when a parent dies.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Melodye Whitaker on 5/21/2014

My mother's Reverse Mortgage company is threatening foreclosure stating that she does not have insurance coverage required on her condominium. The condominium is insured through the homeowner's association and has been continuously insured. The insurance company has faxed coverage information to the mortgage lender. The lender is claiming lack of insurance for the previous 6 months, which makes no sense, and is charging her in excess of $700.00 due and payable in 2 weeks or they will foreclose. Don't know what to do. She lives on Social Security and has no money for this.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Sue on 5/12/2014

My mother has a reverse mortgage and is dying. If she takes out the balance before she dies, does it have to be paid back at her death?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Wolfgang Muser on 4/29/2014

My stepfather left me with a reverse mortgage to repay if I want to keep the house. How do I obtain a complete record of the 10-year old account? The current servicer (Champion Mortgage of Seattle) is very unresponsive. My fear is they want to push the mortgage into foreclosure asap. Thanks.

Expert Answer

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.

Do you have a question? click here for an answer
Question From Sandra on 4/25/2014

My mother went into a nursing home three years ago and has dementia. She had a reverse mortgage, no one could pay off the mortgage so it went into foreclosure. The house was sold at a higher price so their is a refund. Did she relinquish her rights because of the loan and therefore not able to collect her refund?

Expert Answer

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.

Do you have a question? click here for an answer
Question From ALINDA snook on 3/02/2014

Your Question...need info.. Ok my aunt passed away couple months ago and she had a reverse mortgage on her place my question is I'm a married couple that wants to take over her place I've been very interested in it and want to keep it in the family I know the land has been bought and paid for by my uncle years ago I've go to her place on a weekly basis to see if it has been broken into I know the whole inside has been striped by squatters and things have been stolen such as electric box water heater gas line and so forth my family cleans up the yard and just do minor details like yard work they say its 24000 how would I go about making payments on what she owes monthly so we can take over

Expert Answer

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.

Do you have a question? click here for an answer
Question From Frank on 7/09/2012

In the situation of a reverse mortgaged condo with negative equity... An elderly widowed owner, who has no assets and only receives a minimal income from social security, but had a co-signer for the condo fees, has to move out of the condo permanently, (ie: to a nursing home - who would take the SS funds), and the condo is taken over by the mortgagor... Who would be responsible for the monthly condo fees? Would it be the elderly widow and the co-signer or would the responsibility be passed on to the mortgagor? Thank you, -Frank

Expert Answer

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.

Do you have a question? click here for an answer
Question From Tracey on 6/27/2012

I live with my Mother and she has a reverse mortgage. Can I put my name on the papers for me to stay after she passes?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Frank on 3/17/2012

My mother need to enter a rehabilitation center for at least 6 - 12 months. How does this affect her reverse mortgage?

Expert Answer

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.

Do you have a question? click here for an answer
Question From Debbie on 1/09/2012

Is it true that if an inheritor or owner of a reverse mortgage decides to sell the home, and asks less than the amount of the loan, that the reverse mortgage company holding the note cannot request more than the amount the seller asked?

Expert Answer

Thank you for your question. We've gone ahead and posted this in our "Ask the Expert Series" found here

Do you have a question? click here for an answer
Question From Marc on 4/15/2011

I was left my grandmother’s home who passed away in Sept 2009. The 12 months has clearly passed and I am still residing in the home as I lived here to take care of her. I was served foreclosure papers in Oct 2010. Currently there is no record of the foreclosure in the court system. The balance my grandmother owes on the reverse mortgage statement is approx. $262K and the property was recently appraised by a real estate agent @ $140K based on the local sales comps. I have a 3rd party buyer who is in the process of putting in an offer on the house.Here is my Major dilemma... I have a pending lawsuit for my grandfather’s estate in which I am the Executor. He predeceased my grandmother in 2006. The way the Will is written is that anything in his estate is to be transferred to my grandmother’s estate. Currently her estate is insolvent; however there is approx. $40K in her credit card debt which the creditors have made claim against even knowing there is no money in her estate. My question is can the lender (it is a HUD government reverse mortgage) make a claim against my grandmothers estate for any of the outstanding balance of her loan after the short sale? I'm extremely concerned because any funds I'm awarded in the lawsuit could be wiped out in her probate estate if the lender puts in a claim for the deficiency. PLEASE HELP!!

Expert Answer

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.

Do you have a question? click here for an answer
1
Additional information on our site:

Additional Resources:


Heirs and Maturity
(34 votes, average: 4.94 out of 5)
How do you rate this article?