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Reverse Mortgage Heirs & Loan Maturity Q&A - Ask ARLO™

Hello! I’m ARLO™, your personal guide to navigating the complexities of reverse mortgages, with a special focus on Heirs & Loan Maturity issues.

Start by entering your question into the search box below to discover if we’ve already provided answers.  If your query remains unanswered, feel free to submit it—I’m here to provide you with comprehensive, personalized information!

 

So far 2309 of your questions answered by ARLO™
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Expert Answers You Can Trust!

ARLO™ is moderated by All Reverse Mortgage, Inc. CEO & industry expert Michael G. Branson, with over 45 years of experience in the mortgage banking industry.

Important Resources for Heirs:

 

Debunking the Myth: How Reverse Mortgages Aren't a Burden on Heirs

 

Answered By Our Experts

Question From Carla on 10/21/2024
I am an heir to a property with a reverse mortgage. Apparently, HUD sold the loan to a new lender, and I am being told that the 95% appraised value payoff rule doesn’t apply since HUD no longer owns the mortgage. Is this true? I understood that since a reverse mortgage is nonrecourse, the payoff can’t be more than the home’s current value. The loan balance far exceeds what the home is worth, but the new lender is refusing to order an appraisal. Help!?
Expert Answer

Hello Carla,

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

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

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

Question From Carla M. on 10/18/2024
Hello,I am an heir trying to sell the home to pay off the reverse mortgage. I believe the current value of the home is less than the loan balance, and I want to know if I should expect the lender or servicer to order an appraisal to determine the current value and ensure the correct payoff amount.
Expert Answer

Hello Carla,

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

Question From Adrian on 10/01/2024
Hi, my Grandfather was the last surviving spouse on a home with a reverse mortgage. He passed in October of 2017. The bank sent me nothing until January of 2024, saying the house had been foreclosed on and I needed to leave. I know a condolence letter must be sent to the estate, but I never received one. They sent it to a different address, of which I have proof, and they know they sent it to the wrong address. Shouldn't I have had the option to buy, sell, or leave the property? I put a lot of money into remodeling that home, and they forced me out two months ago. What are my options now?
Expert Answer

Hello Adrian,

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

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

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

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

Question From Kaye on 9/13/2024
I am 80 and have a reverse mortgage that I shared with my late husband. After he passed, I was left with a large house. I live on our combined Social Security income (which isn’t much). I owed taxes when he died and needed to make repairs to sell the house. A friend lent me the money, and I promised to repay her once the house sold. It’s been on the market for 3 years, but with high interest rates, no one has bought it. Now, she wants me to sign papers to ensure she or her heirs get the money if I die, and she’s asking me to start paying her $1,000 per month, beginning in December 2024, with legal papers to that effect. Is it legal for me to take out a loan using the house as security, or any part of it, given I have a HUD loan? She wants me to sign the papers on Tuesday this week.
Expert Answer

Hello Kaye,

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

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

Question From Christopher S. on 9/10/2024
My mother passed away 14 months ago. She had a reverse mortgage on the house where we both lived. HUD contacted me for the first time last week, giving me 2 weeks to pay off the loan in full, or they would begin foreclosure. I was named Executor, but this wasn’t finalized until 11 months after her death. Probate was delayed because the lawyer forgot. I’ve also been hospitalized and recovering from major bowel surgery for the past 5 months while dealing with severe depression after my mother’s passing. What is the best way to request a 90-day extension to delay the foreclosure process so I can sell the house and access the remaining equity? The HUD-Compu Link system has been a nightmare so far. What kind of attorney should I contact to help me navigate this and get the extension? Can I make a small payment on the loan to buy more time to sell?
Expert Answer
Hello Christopher,
 
Any attorney with experience in foreclosure can assist you, and I suggest doing an internet search using the term "foreclosure specialist attorney." It may also help to contact a realtor and begin the process of listing the property. When you request the extension, having the home listed for sale could make HUD more willing to grant the extension.
 
I’m not sure why there haven’t been more notices, but keep in mind that it’s been 14 months since the loan became due. Even if they start the foreclosure process now, it will take another 6 months to complete. If you don’t act, it could be nearly 2 years since the loan became due before they finalize the foreclosure. Showing them that you’re actively trying to sell the home may increase your chances of securing an extension.
 
Question From Michael W. on 9/10/2024
What if the lender never communicated with an heir despite all documents being sent in triplicate to all departments, along with numerous documented calls with case numbers and times? Once most of the equity was used up, they finally got in touch. I tried to comply with all federal guidelines during the initial year. My question is: Are there any loopholes I can use in this situation? I’m not asking for legal advice, but for suggestions—perhaps even claiming squatter's rights since I’ve lived in the house for 30 years and didn’t enter into the loan agreement.
Expert Answer

Hello Michael,

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

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

Let me know if you need any additional clarification!

Question From Kristina P. on 9/06/2024
I am a single mother. My 2 year old daughter and I live with my grandmother, and I helped take care of her. Her passing was very unexpected, and I don't have a job. Are there any government or federal grants to help us out so we don't become homeless?
Expert Answer

Hello Kristina,

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

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

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

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

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

Question From Nicole on 9/03/2024
My dad passed away, and I’m the heir to his estate, which includes a home with a reverse mortgage. If I want to keep the house but already own a home, do I have to come up with a down payment and closing costs?
Expert Answer
Hello Nicole,
 
The reverse mortgage loan is now due and payable. You have several options, but the bottom line is that the loan must be paid off. How you choose to do that is up to you. If you want to keep the home, you would need to pay off the loan, either by using available funds or by refinancing with a new loan. HUD allows you to pay off the reverse mortgage at either the amount owed or 95% of the current market value, whichever is less. This means that if the loan balance exceeds the current value of the property, the lender or HUD will accept 95% of the home’s current value as full repayment, even if more is owed on the loan.
 
If you choose to refinance, the amount you need at closing would depend on the financing options available to you. I don’t know the exact balance remaining on the reverse mortgage or the current value of the home, so I can’t determine the loan-to-value ratio you would be seeking for a new forward mortgage. Additionally, I’m not sure what your plans are for both homes. For example, if you plan to rent out your father’s house, it would be considered a non-owner-occupied property, and financing for those types of homes tends to be more expensive and comes with stricter requirements. However, if you plan to move into your father’s house, you may qualify for better terms with an owner-occupied mortgage. I recommend speaking with a forward loan originator to explore your options.
 
You mentioned “if” you wanted to keep the home, which suggests you haven’t made a final decision yet. You always have the right to sell the home and keep any equity, or if the balance owed is greater than the home’s current value, you can walk away without owing anything further. The choice is yours.
Question From Maricela on 8/23/2024
Dear Michael, My best friend passed in January 2024, and she had a reverse mortgage. She left a will with six heirs, dividing her estate equally among them: three of her nieces, a church, a fire department, and me. Two of her nieces live in New Jersey, and one niece lives here in Florida. She appointed me as the executor of her will.When she passed, there was no money, so I paid her funeral expenses, all house bills, and the HOA fees of $665 every three months. I also filed her last income tax return, cleaned the whole house, and removed carpets that were in very bad condition. The house still smells a lot like urine. I’ve spent around $14,000 so far, and the expenses keep adding up each month. I opened several credit cards to cover everything because she didn’t have anyone else to handle this. I didn’t want to leave her in the funeral home frozen. After she passed, I asked her nieces, and they said they didn’t have any money.Now, the bank has sent me a foreclosure notice, giving me 30 days. I panicked because of all the money I’ve already spent. So, my husband and I withdrew $100,000 from his 401k, which means we have to pay $10,000 in taxes. The lawyer told me I would be paid back before anyone else. He mentioned that the house is worth $240,000. After paying me the $102,000 for the loan I covered, the remaining amount would be divided among the heirs, but now, the lawyer has received bills from creditors, including one from Medicaid for more than $132,000. It seems like the creditors will end up taking all the remaining money."
Expert Answer

Hello Maricela,

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

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

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

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

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

Question From Kristina P. on 6/15/2024
My grandmas house is under a reverse mortgage. I was living with her when she passed. Is there a grant to help me and my two-year-old daughter from being homeless?
Expert Answer

Hello Kristina,

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

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

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

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

Question From Randall H. on 6/05/2024
I'm the surviving son of my deceased mother, who had a reverse mortgage on this property. I am still living in the property, and my mom's name is still on the deed. To give you some history, my mom got the reverse mortgage in January 2006, and she passed away in April 2015. I went through all the necessary steps of probate and sent the required documents to Novad Management Consulting at that time. Currently, the servicer on the loan is Compu-Link (Celink).In March 2016, Novad sent me a form where I could select the option of Deed in Lieu of Foreclosure, which I did. I sent them the form via certified mail but did not receive any further instructions. It wasn't until October 2017 that I spoke with someone at Novad. They told me that once I vacate the property, I should let them know, and I would then be given further instructions on signing off the deed. They did not mention the need to get the deed in my name.Fast forward to May 24, 2024, I received a call from someone at Compu-Link, which was the first contact since 2017. They told me I had 30 days to vacate the property, with no indication that a certified letter would be sent. They stressed that the 30 days start from the date of the phone call. I suspect this could be a scam, although the phone number she called from is listed on the National Servicing Center page on the HUD website. Further research revealed that AARP joined a class action lawsuit against Compu-Link in December 2023 for unlawful practices, including unwarranted servicing fees on reverse mortgage balances.I consulted a lawyer friend who said the 30 days to vacate should start from the date of a certified letter, not a phone call. He advised me to wait for the certified letter, but I am unsure if or when it will arrive. I'm considering selling the property to pay off the loan balance. The person at Compu-Link also mentioned that I would need to vacate the property before listing it for sale. Is this true? Additionally, I read that a Deed in Lieu of Foreclosure can negatively impact my credit status for four years. Is this correct? This is one of the reasons I am considering selling the property.I need some advice. Thank you.
Expert Answer

Hello Randall,

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

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

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

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

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

Question From Eric M. on 5/24/2024
My late wife and I took out a reverse mortgage on the home I currently live in. I am remarried, and my will leaves my possessions to my new wife and 2 sons. Is my new wife or sons, whose names are not on the mortgage, responsible for anything?
Expert Answer

Hello Eric,

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

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

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

Question From Donna on 4/20/2024
I inherited the house with a reverse mortgage and am going through probate. I'm not on the loan. I'm the daughter and have been living in the house since the reverse was done. I was not 62 years old at that time. Now mom passed. The loan amount owed is less than the value of the house. So I could sell, pay the loan, and have some money left. Does the title have to be changed before I can do this? I have hired an attorney for the probate. The house is worth more than $200,000. I was told it had to go through probate. There isn't quite enough equity to get it refinanced, I would have to come up with about $60,000 to cover the costs. The attorney said I should be able to take over the reverse mortgage where my mother left off before passing. I would have to go through reverse mortgage consulting and qualify for the loan. I'm 66 years old now. So, asking a few questions. I would like some advice. Thank you.
Expert Answer

Hello Donna,

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

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

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

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

Question From Barney B. on 3/29/2024
My mother is living in a house by herself with a reverse mortgage. She does not have a will and no one else is listed as the house's owner. If she passes and owes money, am I obligated as the only living son to pay the outstanding loan? I would rather sell it but selling it might not recoup the entire outstanding loan. I just want to know as the only living child of my mother, do I have any obligation of repayment for that reverse mortgage if she passes.
Expert Answer

Hello Barney,

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

Question From Sowsan B. on 3/21/2024
I am the heir to my parents home which has a reverse mortgage. I live in the home with them and would like to make improvements to the home. If I make improvements, will I have to pay market value for the home, or will it be the loan amount?
Expert Answer

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

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

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

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

Question From Laura S. on 3/04/2024
Hello, my name is Laura. My father passed away in June of 2023. Before his passing, he made a will naming me as the sole executor and beneficiary of all his property. He had a reverse mortgage on the property, and I am currently refinancing to pay it off. I am seeking guidance on transferring the title into my name and avoiding the lengthy probate process. I have lived at the property for the past 11 years. The reverse mortgage balance is approximately $198,000, while the property's fair market value (FMV) is estimated at about $331,000. The property represents the only significant asset my father left behind. I aim to ensure the process is smooth and correct, bypassing the extended duration of probate.
Expert Answer

Hello Laura,

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

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

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

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

Question From Richard S. on 3/02/2024
Hi, we inherited a home that has a reverse mortgage, and we have a few questions about it. Once the loan was called "due and payable," we were told that it had to be paid off within 12 months. My question is what happens when its not paid off in 12 months. My obvious understanding is it goes to the foreclosure sale, but what happens to the loan while it is in the foreclosure process? What are lenders allowed to charge and add to the loan or can they entirely make it a new loan? Do you think $99k is excessive to charge while in the due and payable status and going thru the foreclosure process over say 36 months? Also if the note is sold while in the foreclosure process, are the new holders of the note accountable to "us" the heirs and current owners on title for all of the accounting and charges being added to the loan balance? And are they responsible for providing a statement of charges on the loan during the due and payable status period and in foreclosure? My last question is probably outside of your knowledge, and by no means will I construe any of the answers you give to be legal advice, I want to get someone with good knowledge of reverse mortgages to weigh in on what they may know so we know how to proceed, in other words, is it really going to be worth having an attorney involved, they are very expensive, but the question is involving a federal law that as I understand it states servicers are required to expedite timely transfer of the loan from servicer to servicer to avoid excess gaps in time for heirs to avoid foreclosure. This happens to us where it took almost 9 weeks for the new servicer to communicate with us when the previous servicer already had the knowledge and authorizations to deal with us in the matter and knew we held title to the property. Because it took them so long, we had to do an emergency bankruptcy to stop the foreclosure at the very last minute, and that caused the loan approval we had to refinance the property to go away. The lender "lender being the one that was going to make a new loan for us" would no longer deal with us because we took out bankruptcy. This has dragged on for years from the lender initially giving us time to covid to new servicer to multi bankruptcy and we finally got our credit back to good by using some very sharp finance guys but again, we are faced with the impending deadline, and the loan is still 2 to 3 weeks from a close, and the lender is saying the servicer isn't being cooperative leading us to a tough place again. By the way I thank you for your advice your able to give and this has also been our home for 27 years while taking care of our parents to their end. We have a a lot of equity at stake but live in an expensive area that would be difficult to find a replacement home even with the good equity plus it’s just home as you can imagine, and we don't want to go anywhere else.
Expert Answer

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

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

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

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

Question From Suzanne P. on 2/21/2024
Can I obtain a reverse mortgage without naming my heirs? While I have 2 adult children, they live in a different state than I do and would have no interest in living or owning my current home.
Expert Answer

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

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

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

Question From Robert G. on 2/21/2024
How does a mortgage work when you pass away?
Question From Sue on 2/20/2024
My mother-in-law had a reverse mortgage when she passed away. One of the heirs was my husband, but he passed away before her. She had another son, but no one knows where he is at now. My late husband and I used to live with our mother-in-law until she passed. I stayed at the place after both passed because the lender didn’t say anything even though I let them know the borrower had passed away. I have been paying the maintenance and electronic fees. Now I have decided to move out. Should I contact the lender? Property management office? If so, what should I say in the letter? I have no one to ask, and as an immigrant, I have no idea.
Expert Answer

Hello Sue,

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

Question From Donna on 2/20/2024
My mom passed away, and I've been living in the house since the reverse mortgage was taken out. At that time, I wasn't 62 years old. Now I'm 66. As the executor of the estate, I'm currently going through probate to get the title in my name. My attorney mentioned that I would be able to continue from where my mother left off and would need to go through the qualification process for the reverse mortgage. Is this accurate?
Expert Answer

Hello Donna,

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

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

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

Question From Kristina D. on 2/17/2024
I have a long-time partner with me. If I die, how long does he have before he has to vacate?
Expert Answer
If you took the loan as an unmarried individual and he is not also a borrower on the loan, the lender will begin the process of looking for the plans from your heirs for repayment of the loan as soon as they become aware that you are no longer living in the property (as is the case when you pass).
 
If your partner is your heir (he becomes the owner of the property), it will be up to him to communicate with the lender/HUD to determine if he is going to keep the home, sell it, or walk away from the property and let them take it back through a foreclosure action.
 
Each of those actions could occur in different time frames, but most cannot be completed in less than 6 to 8 months, considering there is usually some legal work to be done with any of them to change the title, sell or foreclose, and complete each process.
 
If your partner is not your heir, i.e., you have children who will inherit the property, then they would also have a say in his departure at that time.  Once they became the legal owner, they could extend that timeframe or seek to shorten it.
 
You may speak to an attorney to put your final wishes in writing so that there are no questions about your intent if you think there could be some contention or controversy between multiple parties or between the lender and your partner.
 
There are several things you can do to make your wishes known, ensure they are followed, and ensure the lender allows him to communicate with them about the loan if that is your desire.  It is certainly easier to do it now while you can still communicate your intent.
Question From Darlene S. on 2/17/2024
My mother is dying soon, and she did a quick claim on her house and transferred it to me. Can I do a reverse mortgage on the home if I have the title when she dies?
Expert Answer

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

Question From Bonnie M. on 2/13/2024
My dad has had a reverse mortgage should I put my name on the title now while he’s alive he’s 80 now
Expert Answer

Hello Bonnie,

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

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

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

Question From Ron on 2/05/2024
My mom had a reverse mortgage and died on October 31, 2023. I am the executor of her estate and asked the bank for a deed in lieu of foreclosure this past January. We just want to walk away from it. The bank told us it would take at least another 90 days before they begin the process. In the interim, taxes and home insurance are due, and my mom's estate has no money. Who is responsible to pay for property taxes and home insurance?
Expert Answer
Hello Ron,
 
As the heir, you are not responsible for the loan.  You have already notified the lender that you do not intend to try to pay off the loan and keep or sell the property and that you will not take possession or responsibility for the property.  The lender can only accept a Deed in Lieu of Foreclosure if the property is clear of all personal property and all liens (other than the reverse mortgage).  Furthermore, the property must be “broom clean” meaning it doesn’t need to be scrubbed and freshly painted but must be free of all debris and swept out.  
 
Otherwise, if there are any liens, personal property in the home or it is not completely empty, the lender must proceed with the foreclosure process so that they are covered under foreclosure laws when they remove any belongings or when other liens are dealt with during the foreclosure so that the lender does not become liable for those liens.  This takes a little while for the lender to research and requires title searches and appraisals/property inspections, and that’s why lenders cannot automatically accept a Deed in Lieu of Foreclosure before they can do the necessary research to determine if they can even accept a Deed in Lieu.
 
If taxes are due or insurance must be paid during this time and they go unpaid, the lender will advance funds and add that amount to the total loan balance. When the property sells, if the sale price is not high enough to cover these advanced costs, the lender will include them in their claim to HUD as part of the loss.
 
The one thing about which I cannot advise you, and I suggest you speak with your family attorney to discuss, is possible liability regarding accident or injury on the property until it is sold/foreclosed and maintenance of the property in the meantime.  The lender cannot look to your mom’s estate or any heir for repayment of the loan.  However, the coverage only covers the dwelling itself if the lender places insurance on the property due to nonpayment.  The insurance, known as “forced-coverage” does not include coverage of any contents or liability insurance.  If your mom’s estate has no assets anyway, perhaps that would not represent any risk if someone were to go onto the property and be injured.  There may also be issues caused by a property that is left un maintained that may or may not make the estate liable to other parties other than the lender.
 
I can’t advise you on those questions, they are of a legal nature. Your attorney may advise you to pay one additional insurance premium, ensure the property receives minimal maintenance, or say none of that is necessary.  I can’t say, but it’s worth asking about. 
Question From Deborah on 1/18/2024
Hello Arlo,I recently had the deed to my mom’s condo deeded over to me in December. She passed in July. It went through probate. I have not told the reverse mortgage company that I am solely on the deed now. They have given me extensions right now until April. How do they find out the property changed names now? Will it change anything? Thank you.
Expert Answer

Hello Deborah,

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

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

Question From Peggy on 12/11/2023
Hi Arlo, Is an "Heir Payoff" 5% of what is owed on the Reverse Mortgage balance or 5% off the appraised value? Thank you.
Expert Answer

Hi Peggy,

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

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

Question From Jack on 11/29/2023
My last surviving inlaw passed away. She had a reverse mortgage on her home. The retained attorney of the executor has advised the executor not to notify the lender of her death until after probate so protected from lender. It’s been over a month since her death, and probate will likely take 3 months and has not even been filed yet. The heirs think they can just keep living at property and there is no risk. This is at odds with what reverse mortgage articles say about “immediately notifying" the lender, since all subsequent events are triggered by this notification. What are the risks to the executor/estate based on typical reverse mortgage terms by not immediately notifying the lender? How will the lender ever find out if not notified that borrower has passed? When the lender does find out, what if any retroactive consequences could occur?
Expert Answer

Hello Jack,

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

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

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

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

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

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

Question From Julie on 4/07/2023
Hi Arlo, My father passed away in February 2023, in California. We received a letter from Compu-Link that we had 30 days to buy, sell or possibly do a Deed-In-Lieu of Foreclosure. The house has no equity since the loan amount due is more than we would get selling it. There is also no money in the estate to keep up the property, i.e., pay taxes and continue paying HOA dues and insurance. Based on this, we decided to do a Deed-In-Lieu of Foreclosure. Unfortunately, there is no way to contact Compu-Link directly; you must call the Service Center, then they will "escalate your call," and then Compu-Link has 5 business days to call you back. Every time I have tried to call Compu-Link, I have told the person I've spoken with that there's no money in the estate. I also sent them an email stating the same thing. When I finally talked with someone at Compu-Link to start a Deed-In-Lieu, I was given a list of documents to send, which I did. It wasn't until a week later, when I confirmed they received the documents, that I was told it would take a "minimum of 90 days from the time a complete document package was submitted to their attorneys" to complete the Deed-In-Lieu. I have continued to call to speak with someone about this since there is no money in the estate to continue paying the taxes, HOA dues, and insurance while the Deed-In-Liew process proceeds. I'm told the house must be free of liens for a Deed-In-Lieu to proceed, and I keep getting the same answer that it takes a minimum of 90 days. The house is in my parent's Revocable Living Trust. My question is, do the trustees of the Trust or the heirs have any responsibility for this home, or can we walk away? And, if we walk away, will there be any effect on us or our credit in any way? Thank you.
Expert Answer
Hello Julie,
 
The loan was to your father, so any foreclosure filed (and Deed in lieu as well) will be in his name or his trust.  The loan is a non-recourse loan, and the lender cannot look to you, any other heir, or even the estate’s other assets (if it had any) to repay the loan.  You most certainly can inform the lender that you have no further interest in the property, have removed all personal property, that the property is vacant, and that they need to secure it and foreclose at their earliest opportunity because you will no longer be involved in its disposition.  
 
I can’t give you legal advice, so check with an attorney if you are concerned about any possible liability if there is no insurance on the property.  But as far as the loan is concerned, you are not required to continue to work with the servicer and can walk away at any time. 
Question From Elicia R. on 3/09/2023
Hello Arlo, My grandfather just inherited my great grandmother’s home, and it has a reverse mortgage on it. The home is still worth well more than the reverse mortgage. My grandparents are too old to refinance and do not have the cash to repay out of pocket. Are my husband and I able to assume the loan and refinance it in our name if we have permission from my grandfather? Or can only an heir refinance to pay back the reverse mortgage? This home has been in the family for over 100 years so we are doing what we can to keep it that way. Any advice would be helpful.
Expert Answer

Hello Elicia,

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

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

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

Question From Lori on 2/21/2023
Hello Arlo, My late aunt had a reverse mortgage. She passed away in October of 2022. I am third party authorization for my aunt; therefore, I may speak on her behalf. Novad had been the servicer until December 12, 2022. Effective December 12, 2022, the servicing was transferred to Compu-Link. Days before the transfer of servicing to Compu-Link, the family had decided on the Deed-in-Lieu of Foreclosure process. We were advised that all personal items would have to be removed from the property before the Deed-in-Lieu of Foreclosure process could begin. To date, we have removed most of the personal items, but we are not finished. I had been dealing with a Novad representative, in the Loss Mitigation Department, via e-mail, before the transfer of servicing to Compu-Link. The Novad representative indicated that Compu-Link would be in contact with me. To date, there has been no contact from Compu-Link. I have been trying to contact them for weeks. I even sent a letter, via Fed Ex, to the CEO, hoping it would receive attention, but no one has contacted me. Most recently, I called the HUD customer service line. Instead of referring my call to Compu-Link, they referred me to a local HUD Housing Office that is 25 miles away. I was told the local HUD Housing Office would contact me. To date, there has been no contact. Here is the problem... My aunt left funds to cover the cost of taxes, insurance, utilities, etc. for several months. However, there are insufficient funds to cover the cost to probate the will. If we pay an attorney to handle the probate, the funds will be totally depleted. Have you ever heard of a Deed-in-Lieu of Foreclosure being done without the will being probated? My sister is the executrix of the will. Our state allows do-it-yourself probate, but it is very involved and not an easy job. This may be our only option. It was suggested that perhaps Compu-Link's attorneys would handle the probate for us. Have you ever heard of this being done? I am not optimistic about Compu-Link assisting us. The servicing transfer to Compu-Link has been a real problem. It seems as though they don't have enough knowledgeable staff. They are unreachable. Thank you for your time.
Expert Answer

Hello Lori,

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

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

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

Question From Karen on 1/15/2023
Can I apply as a non-occupant co-borrower for a reverse mortgage with my father’s widow who lives in the house? We want to buy out heirs, so she can stay. She is 75 I am 63. Her inheritance share is 33% we have 92% equity to borrow on the home and she need 67%. She needs, one of us four heirs with 16.67 to qualify for that amount.
Expert Answer
Hello Karen,
 
The loan will be on 100% of the property.  There can be no fractional ownership so your father’s widow would need to own the property so that the loan covered 100% of the property (you can own it with her, but it could not be her with 33% she would just be on title as would you).  
 
If you are on title but do not live in the home, you can also be included in the process as a person on title, but you would not co-borrower on the loan.  You would be considered an ineligible, non-occupant co-owner.  The loan would still become due and payable when your father’s widow permanently left the home (as in passed away or had to move to assisted living).  
 
As an owner of the property, there would be some participation you would need to take in the loan (attend the mandated HUD counseling and some forms to sign that would indicate that you were aware of the loan, it’s ramifications and what happens when the occupant owner passes, etc.) but you would never have access to the loan or proceeds.  
 
When your father’s widow passed or left the home, the loan would become due and payable and you would need to determine how to repay the loan at that time under this scenario (refinance it with another loan, sell the property) or you could walk away and owe nothing. 
Question From Joe Z. on 1/11/2023
My father has a reverse mortgage on the house, and he passed away 2 months ago. I got to arrest mortgage paper on his son, and it says his $13,000 line of credit is available. Am I allowed to take these funds?
Expert Answer

Hello Joe,

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

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

Question From Alex on 7/28/2022
Hello Arlo, My father-in-law recently passed away in January and has the house in a reverse mortgage. He has a trust so that both my wife and her brother would have a split 50/50 on his assets however, her brother is adamant on receiving 150k and is currently keeping some of the money that is owed to my wife from one of their dad's bank accounts. I'm the only provider for a family of 4 and make about 50k or so yearly whereas my wife is a homemaker for our children, one of which is on the autism spectrum. Shes also pursuing home schooling to work alongside our sons current special needs services. Would it be best to inquire on a CalHFA Forgivable Equity Builder Loan in order to pay off the reverse mortgage and potentially buy out my brother-in-law? in need of assistance as Any help would be greatly appreciated
Expert Answer

Hello Alex, 

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

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

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

Question From Mary T. on 7/05/2022
My mother just passed away and has a reverse mortgage serviced by HUD/Novad. Is there anyway to sell the home? It was left to me in the will. Do I have to send them a copy of the will or just the death certificate?
Expert Answer

Hello Mary,

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

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

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

Question From Tina on 6/27/2022
Mom died, I'm in the house trying to figure out what I need to do next. Found I have to have the property appraised in 60 days. I can't afford it. Mom died broke, in debt from elder abuse. MOUNTAIN of debt and a big rev mort. Who's supposed to pay for it? I am wondering how a declared homestead I filed just before she passed would help protect what little equity the house recently gained against abstract judgments? And if I could apply it to a NEW rev mort?
Expert Answer

Hello Tina,

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

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

Question From Jeremiah W. on 6/27/2022
My mother passed away last December and she had a reverse mortgage and I want to buy the house and keep it in the family but my brother has decided that I have to pay him $25k before I can buy the house back, he has no way to pay the reverse mortgage off and can't get a loan. Can he make me do that?
Expert Answer

Hello Jeremiah,

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

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

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

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

Question From Kathy on 6/24/2022
Hi Arlo,My father has a reverse mortgage and owes $110,000. My son lives with him. My father’s home will sell for $500,000 or higher. He wants to be able to rent to own with my son or pay off reverse mortgage and refinance to a conventional loan with my son and then live down in Florida and then back here in Utah. He needs a big sum to buy a house in Florida but still have enough to add to his income. He wants the grandson to be able to own the home and he will still stay there when he’s in Utah. Please help!
Expert Answer

Hello Kathy,

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

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

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

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

Question From Jennifer B. on 6/20/2022
My landlady inherited a house with a reverse mortgage, and rented it to me about a year and a half ago, she has since taken out another loan on the house to pay off the reverse mortgage, but the house is still in her mother’s name, is that all legal?
Expert Answer

Hello Jennifer,

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

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

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

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

Question From Wendy S. on 5/22/2022
My parents took out a reverse mortgage in 2010, my dad passed away several months later. My mom continues to live in the house. She used the majority of the reverse mortgage money for house repairs both inside and out and to pay her homeowners insurance, property tax, and school taxes over the years. She has now exhausted the reverse mortgage money and can no longer afford to pay the above taxes as her monthly income from my dad's pension and social security is just a little over $2,000 a month which basically goes for other household utility bills,food, medical insurance and prescription drug insurance leaving her very little for anything else. Would she be able to just walk away from the house?
Expert Answer

Hello Wendy,

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

Question From Randy Y. on 4/04/2022
My father had a reverse mortgage he passed away over 3 years ago. We surrendered the home to the lender but the lender has not transferred title or paid property taxes....
Expert Answer

Hello Randy,

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

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

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

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

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

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

Question From Linda B. on 3/18/2022
My mom died July 1,2021 she has a reverse mortgage. We are in probate, can I get a reverse mortgage to keep house? I’m 73.
Expert Answer

Hello Linda,

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

Question From Aurelio R. on 2/06/2022
Can a reverse hecm loan be paid off by the owner using the appraised value of the property?
Expert Answer

Hello Aurelio,

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

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

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

Question From Craig G. on 1/31/2022
My dad has a reverse mortgage. I've lived with him and care for him. Now my brother wants to sell the house. How long can I live in the house before I get evicted?
Expert Answer

Hi Craig,

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

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

Question From Brianna on 1/30/2022
Hello Arlo,Hello my grandma passed in February last year she and I had lived in her home together all my life. She was the one who raised me. With her passing my sister her caretaker has left her home I have been staying here still, my mother has been under probate with a reverse mortgage attached to my grandma's name and is trying to be hush hush. I would like to step in and take over the loan, can you help me please?
Expert Answer

Hello Brianna,

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

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

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

Question From Rosemary on 1/30/2022
When does the interest and other fees stop accruing after the borrower of a reverse mortgage dies?
Expert Answer

Hello Rosemary,

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

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

Question From Rebecca on 1/22/2022
My boyfriend lives in his grandparents’ home and moved his girlfriend in now too. The home was built by grandpa but he had refinanced home so he had made mortgage payments to them and there out of state. Prior to girlfriend & her kids moving in like 3 yrs ago now his grandpa had passed away and grandson remained in home and paperwork been served for foreclosure on home due to no pymts made to lender. Now girlfriend refuses to leave home due fact she made it her & her kids there home. No family that fighting for it so she said she going to use squatters rights to stay and hope work it out in time. There been no one around home for almost 2 Yrs now so how long do she and kids have left to live there?
Expert Answer

Hello Rebecca,

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

Question From Christina on 1/21/2022
Does the cares act protect the rights of reverse mortgage beneficiaries in California?
Expert Answer

Hello Christina,

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

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

Question From Ellen B. on 1/12/2022
My mother died in November 2021, last survivor with a reverse mortgage. She had been in a nursing home for 6 months. My adult son was her caregiver & has been living in the house. He wants to move out but Mom's personal property is still in the house. I am Mom's only surviving heir (child). I live in Alaska, Mom's house is in Florida. It's already mid-January 2022. I am contemplating going to Florida to deal with Mom's personal (valuable) property. How long can I stay in her home, until things are dealt with? Thank you for your answer.
Expert Answer

Hello Ellen,

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

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

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

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

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

Question From William H. on 12/27/2021
My father had a reverse mortgage and passed. He had a $192k debt and I am 61, made administer of his property, but having issues with mortgage lenders to pay off his reverse mortgage. What do you suggest? I keep current the taxes and homeowners.
Expert Answer

Hello William,

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

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

Question From Jack on 12/12/2021
I have a LOC reverse mortgage with approx. 40% of the available credit line used. Can I request the remaining 60% of the available credit line and then, in a short amount of time, hand over the deed in a deed in lieu of foreclosure type transaction? This would allow me extract value from the house without having to sell it. Thanks
Expert Answer

Hello Jack,

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

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

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

Question From Oliver J. on 12/01/2021
My mother had a reverse mortgage. No one is able to take out a loan to repay it. My brother currently lives there with 5 young children. How long after her death can they stay in the home before an eviction? Seeking time to find another home for them. She passed from cancer this past April 18th, 2021. Are there any COVID-19 protections or any course of actions we can purse?
Expert Answer

Hello Oliver,

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

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

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

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

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

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

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

Question From Jason D. on 11/26/2021
Do I have any options to save the home I live in if it was in my grandmother's name and she had a reverse mortgage and passed away in July of 2019? The heir/beneficiary is my aunt and she said its involved in bankruptcy and now is going to be on an online auction December, 2021 (2 weeks).
Expert Answer

Hello Jason,

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

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

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

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

Question From Adonis L. on 11/26/2021
My mom passed away I living with her as her caregiver l her. I have two brothers . my mom left a trust stating that I can remain in the home. my two brothers are disagreeing with her terms. I can refinance her by myself. but my two brothers are blocking me from doing so what can Ido.
Expert Answer

Hello Adonis,

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

Question From Debbie C. on 11/18/2021
My mother-in-law passed away. The home and deed are in her name only including all utilities. Her boyfriend for 16 years lived with her. Never married and name never changed. She apparently Willed him the house. Question can you Will a reverse mortgage to a boyfriend? The next of kin on the death certificate is her son who is also listed on the current recorded will with the county. The boyfriend has not probated his Will if there's is one.
Expert Answer

Hello Debbie,

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

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

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

Question From Terry on 10/28/2021
I have a signed contract on house that has a reserve mortgage, owner is still living, but no longer in the house. The mortgage company had started the foreclosure process, but I was told that it had been placed on hold until mid next year. I’m now ready to close on my side, but I heard that the reverse mortgage plus sellers closing costs are slightly more than than our signed contract. It seems the seller is not able to bring the additional money need to close. Are there options for the seller to negotiate reserve mortgage payout? The house appraisal is $50K below my offer so it seems the reserve mortgage company would be better to allow the sale than to force the seller to hold the property until they foreclose next year as the seller is no longer paying taxes and the house is empty with broken windows. Any suggestions or possible next steps to allow the seller to complete the sale would be appreciated.
Expert Answer

Hello Terry,

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

Question From Rebecca C. on 10/15/2021
My husband, my name and my husbands daughters name are on the deed. If he borrows from the home equity and dies, who pays it back?
Expert Answer

Hello Rebecca,

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

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

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

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

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

Question From Nehemiah Y. on 10/04/2021
My mother passed away with a reverse mortgage and we tried to sale the home. Bad market conditions. House was given back to lender "in lieu of foreclosure" two years later sold for more than amount owed, are the heirs entitled to any of the proceeds?
Expert Answer

Hello Nehemiah,

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

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

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

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

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

Question From Dave on 9/28/2021
My aunt passed and left me her house. Her partner of 15 years lived there with her. If I pass power to him by will, can he stay there with the reverse mortgage? His name isn't on the title and they were not married. Thanks!
Expert Answer
Hello Dave,
 
For your aunt’s partner to qualify for a reverse mortgage, he must own the home and be on title and must occupy the property as his primary residence.  If he is not on title, he cannot apply for a loan on the property.  The existing loan is now due and payable and must be repaid either by refinancing the loan or by selling the property.  
 
He cannot remain in the home under the old loan if he was not a borrower on the loan or an eligible non-borrowing spouse and no one can be added to an existing loan.
Question From Jeanne on 7/27/2021
There’s a disabled person living in the home that his mother took a reverse mortgage on, the mother is now deceased. He doesn't know where any other paperwork is. How can he be helped?
Expert Answer

Hello Jeanne,

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

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

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

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

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

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

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

Question From Anthony G. on 7/22/2021
My grandmother has a reverse mortgage and I'm her heir. I live in the home with her. We've been talking a lot about what I will need to do when she passes and to find a way to deal with it before that happens. I was wondering if I could take out a loan and buy the home from her? Would I be eligible for a first-time home buyer program if I was buying my grandmother's reverse mortgaged home?
Expert Answer

Hello Anthony,

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

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

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

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

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

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

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

Question From Peggy on 7/20/2021
How do I go about buying my mom’s house that has a reverse mortgage? My mom is still alive, and I want to buy the home so it can remain in the family. Can I do that and what is my first step?
Expert Answer

Hello Peggy,

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

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

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

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

Question From Marnie L. on 7/19/2021
My husband and me have our house on a reverse mortgage. Since we cannot afford our monthly mortgage anymore. we continue to pay every month the reverse mortgage bank every month. we never took cash money from it. According to our monthly statement our current total loan balance is $175,299.10. Our house now has a market value of $450,000.00. We are not sure if we will be able to pay off our balance since both of us are age 74 yrs old. Our question is are we doing right by continuing our monthly payment for the house? We really want to leave this house to our 2 sons.
Expert Answer

Hello Marnie,

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

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

Question From Trish on 7/19/2021
How long does it take fore Hud to foreclose on the property of my mothers, she passed away in March this year.
Expert Answer

Hello Trish,

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

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

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

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

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

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

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

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

Question From Mellissia C. on 7/04/2021
If a reverse mortgage will not work with you after the death of the owner and you're on the deed, can they renew the reverse mortgage without your permission or contacting you?
Expert Answer
Hello Melissa,
 
I am not sure what you mean by “renew” the loan.  If you qualify as a non-borrowing spouse the lender would not call the loan due and payable and would allow you to continue to live in the home under the terms of the existing reverse mortgage but no, the lender will not renew anything or start any new loans. 
 
If you do qualify as an eligible non-borrowing spouse but no longer want the loan, you are free to repay the loan at any time with no prepayment penalty.  You could do so with funds available to you, with a refinance loan of another kind or by selling the home.
Question From Barbara on 7/01/2021
If a person has funeral expenses and can't pay them, they usually are taken out of that person’s estate. What happens if that person cannot pay for funeral expenses and has a Reverse mortgage that no one wants in any way. Who is liable to pay for funeral expenses?
Expert Answer

Hello Barbara,

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

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

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

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

Question From Kim R. on 6/08/2021
My aunt has a reverse mortgage, and she didn't owe on her condo. I her niece POA hired a lawyer to find out what happens when my aunt had to go into a nursing home because of dementia. The lawyer said to let the condo go into foreclosure. I thought that the reverse mortgage company would take over the condo since she couldn't live in it anymore. The reverse mortgage company told me to let it go into foreclosure too. This was 2018 and sent the reverse mortgage company a letter saying that my aunt is surrendering the condo to them but they said let it go. Don't know anything about reverse mortgages. What can I do at this point that my attorney didn't help? I think I should have sold her condo to pay off her reverse mortgage. Don't know if I can get the condo back at this point even though it hasn't gone into foreclosure yet. She hasn't paid taxes or maintenance fees since 2018. Her attorney is stopping the foreclosure at this point but has an attorneys name on the title.. what a mess. That's why I got an attorney in the first place. Please give me some advice
Expert Answer

Hello Kim,

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

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

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

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

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

Question From G. Randall on 6/06/2021
My parents took out a Reverse Mortgage in 2002 in Texas. They were led to believe that the surviving spouse would have "Soul Survival Rights" to sell the home without any concerns or issues with heirship. They were told that if any of the children wanted to purchase the home, they would be able to do that if they were able to pay off the loan. Now the Soul Surviving Spouse is being told she needs to clear heirship with the stepchildren. Is this true?
Expert Answer

Good Afternoon,

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

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

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

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

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

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

Question From C.B. on 5/28/2021
My adult brother and I are trustees, Mom passed in Sept. 2020. At first I was going along with my brother' wishes to sell the house (1 and only) which has a Reverse Mortgage. So, I contacted a real estate agent in that area. He helped us find an appraiser and that worked out. Then, at some point i decided to keep the property (brother not interested). The real estate agent said he would reduce his fee to 3% instead of 6%(when it was to be sold).We sent a real estate agreement to my brother but he would not sign it. I had signed it. This is more complicated but I'm trying to make it short. My brother took issue with everything from that point on. So finally, I was able to speak to him on the phone and he insisted I call my estate attorney to draw up papers to remove him from the Trust(asset). This process and change of title are being handled by the lawyer. I have two questions: Am I responsible to keep the real estate agent? He is telling me that changes need to be made to the R.E. agreement and that it is important that he is in touch with the Rev. Mort. Co. for the payoff. My next question is who takes care of (escrow) and title if not handled by a R.E. agent.? Thank you.
Expert Answer

Good Afternoon,

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

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

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

Question From Kim on 5/12/2021
When a homeowner dies and the reverse mortgage value is less than the value of the property, if the heirs execute a deed in lieu of foreclosure to the lender, who gets the equity that is over and above the amount required to pay off the reverse mortgage? In other words, if there is equity in excess of the reverse mortgage owed in a property, what process do the heirs have to use to retain the equity remaining in the home? None of the heirs are interested in living in the home.
Expert Answer

Hello Kim,

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

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

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

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

Question From Mel on 4/23/2021
Hello, this is Mel again, you answered a question from me on 4/12. I have additional information.First, my apologies for being unclear. I meant "the best they could get" ***as long as it was*** a minimum of the loan amount due, or 95% of the appraisal. My error in presentation caused you to think you had to explain basics that were already covered on the site. Sorry about that.My questions have changed. The lender is possibly in violation of HUD requirements. The heirs have not been receiving proper written documentation of what is owed. The balance due at time of filing was a little over 98k. The lender is now claiming they need $ 227k to settle the bill. This was a verbal statement over the phone. There is no way this loan incurred $ 129k in interest and attorney's fees in 15 months on a balance of 98k. The heirs suspect the lender is lying to them to scare them into signing the deed in lieu of foreclosure, because the property is two lots, and apparently in this phone call, the lender representative commented that they can get even more at a foreclosure sale. (they can't, they clearly don't know the local market, but that is neither here nor there...except that it implies a reason why the lender may not be interested in properly informing the heirs.)The heirs do not have the funds for an attorney and local free foreclosure help is backed up for weeks. How can I help the heirs get written documentation of the loan interest accrued, and attorney's fees? They don't want a general statement listing an aggregate amount, they want to see the actual amount of interest levied each month, as that will show if the lender is adhering to the terms stipulated in the note.They also want a copy of the appraisal that an FHA approved appraiser was supposed to have done on the home. The 227K amount is laughable, as the two lots together aren't even 1/4 of an acre, and the houses have been vandalized extensively, and stripped of even the copper wire. The two structures are essentially shells that need to be rebuilt from the ground up, and the land is only worth about 70k total.Who can be contacted at HUD or FHA to complain about a lender not adhering to the rules? I've been all over the website and it's unclear what to do in a situation where you suspect a lender is not following HUD's required procedures.This loan is still going through the foreclosure process. The heirs do have someone interested in purchasing the home so they can pay off the lender, but it depends on the amount the lender wants for interest and attorney's fees. We are assuming, since the loan has gone past the 1 year mark since the owner's death, and is in active foreclosure, that the lender no longer has to allow a sale at the original outstanding amount plus accrued interest, but instead can tack on attorney's fees as well.Thanks again for your help.
Expert Answer

Hello Mel,

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

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

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

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

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

Question From Sharna on 4/23/2021
My grandma passed and has a reverse mortgage. Can I refinance the home?
Expert Answer

Hi Sharna,

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

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

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

Question From Margie E. on 4/20/2021
My mother passed away three months ago, and I have been trying to resolve her reverse mortgage which is now held by HUD. She left no assets, so I am forced to pay for maintenance of the home. Initially I planned to offer the deed in lieu of foreclosure but after realizing how long this would take my lawyer recommended that I sell the home as selling would allow me to be compensated for out of pocket expenses if I keep detailed records along with receipts. I have tried many times to contact HUD but have not had any luck. I have notified them in writing, sent email notification through answers@hud.gov and called them several times. I wait on hold for an hour or more each time only to reach what seems like a call center that cannot provide any information or guidance. How can I reach someone at HUD to start a dialog and make sure I am taking the appropriate steps? Would I be more likely to reach a living person if I work with the regional office? My worry is that I’ll find a buyer and be unable to get the payoff amount or (even worse) I’ll find a buyer and HUD will foreclose before we can close as they don’t seem to acknowledge my efforts to resolve the issue. As I am sure you can imagine this is becoming very frustrating and expensive.
Expert Answer

Hello Margie,

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

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

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

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

Question From Nathan on 4/17/2021
My wife and I have lived and taken care of her grandparents until their final days for the last 17 years and raised 4 kids as well. Grandma was last one to pass away and Their property has a reverse mortgage, and we don't know what our options are. What can we do? We feel like we were left in the dark about this important matter and are scared and worried about what comes next. We are low income and have no credit history and unemployed. Do we have ANY options?
Expert Answer

Hello Nathan,

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

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

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

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

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

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

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

Question From Kelly J. on 4/17/2021
My dad died left a house with reverse mortgage the house has a lot of damage including foundations. A real estate agent said we could it get what the payoff was. So, since none of the heirs want the house and we live in a different state, can we walk away with no recourse to the estate?
Expert Answer

Hello Kelly,

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

Question From Mel on 4/12/2021
I am attempting to help a friend we'll call John. John's grandmother had a reverse mortgage outstanding when she died in mid 2019. There are four heirs. Unfortunately, all four have had multiple struggles in life, and none is truly financially stable. They are all currently renting, and they cannot afford to buy and fix the home, even were they to pool resources. They were not aware of the reverse mortgage until they received notice of the foreclosure, and unfortunately, they did not make attempts to find a lawyer or anyone to help steer them through the process. As a result, they made several self-defeating errors. First, they initiated probate proceedings. Once the probate proceedings finalized (mid 2020) they immediately listed the home for sale. They only finally did the probate several months after her death to sell the home to get out from under the foreclosure. (I don't think they were aware the estate could have sold the home. It seems they thought it had to be in their names.) None of the four heirs took care of the property; it was terribly vandalized after it became vacant. It needs massive work - gut to the studs and rebuild everything including the roof. They set the price at an amount that would pay off the mortgage and walk away with several thousand apiece. But they were unable to sell the home at their asking price, which was too high for its condition, given the required investment to get it habitable. At this point, I think the only reason they have not done a deed-in-lieu is because they have been unable to locate one of the heirs. He's moved around quite a bit. Because of the various special attributes of a reverse mortgage, I am aware that before the estate was closed, they could have sold the property to a 3rd party for the best they could get, turned the proceeds over to the lender, and walked away unscathed. No dings on their credit, no deficiency judgments, etc. However, they went through probate, and now they are the legal, titled owners of the property. Does the non-recourse nature of the loan still apply? Can they still sell the home for "the best they can get" and walk away with no fear of deficiency judgments? Or do they now have full liability for the mortgage, and need to get bank permission for a short sale? If they cannot sell, will a foreclosure now go on their credit reports since they are no longer heirs but have taken title to the property? I am aware that the 4th heir needs to be found to sell or to do a deed-in-lieu. My next question is, if they cannot find him and want to sell, can they do a quiet title to extinguish the 4th heir's rights in order to erase that potential liability and worry for a potential buyer? I know someone who would be interested in investing in this property. John's mother, though not dying, has chronic medical issues, and their current rental is unsafe. Their landlord is a real slumlord. The investor is willing to rent the place to John and his mom upon completion. Win-win on both ends, IF the deal can be done. John and gets peace of mind for him and his mom, and my other friend gets a reliable tenant plus instant equity in an asset that will appreciate. Before any money is spent on nailing things down with an attorney, though, I need to know IF the heirs can legally sell the home for less than the outstanding mortgage (assuming the hurdle of the 4th heir can be jumped cleanly.) We don't want the heirs getting caught short or hurt in the process. If it is in their best interest to allow the foreclosure to proceed, that's what I will recommend.
Expert Answer

Hello Mel,

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

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

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

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

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

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

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

Question From Amy on 3/22/2021
I am living in my grandparent's house and have been for years. The house has a reverse mortgage, and my grandfather has moved out over a year ago I'm paying all the bills. Now my aunt wants to sell the house on me and kick me out. Do I have any rights in this? She is just greedy, and I wanted to buy the house, but she did it without me knowing and now me and my daughter will be homeless. What can I do or how long does it take before I must leave?
Expert Answer

Hello Amy,

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

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

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

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

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

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

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

Question From Roseann B. on 3/18/2021
My dad passed & mom will be permanently placed in memory care. They have a reverse mortgage, but the value is less than the loan who pays for the difference? Also, who sells the home & if we do who is responsible for repairs etc., we live in NJ
Expert Answer

Hello Roseann,

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

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

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

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

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

Question From Margie on 3/16/2021
My mom passed with a reverse mortgage and no equity in the home. She has no assets and no will. I want to offer the deed in lieu of foreclosure but it appears that this is a lengthy process. I cannot afford to pay utilities, insurance and property taxes while this is being resolved. Am I responsible for these expenses since she does not have assets?
Expert Answer

Hi Margie,

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

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

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

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

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

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

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

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

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

Question From Linda S. on 3/12/2021
Can my 84 year old mom be kicked out of her reversed mortgaged home by HUD?
Expert Answer

Hello Linda,

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

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

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

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

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

Question From Tristan M. on 3/08/2021
My mom died and my dads name is on the mortgage they are divorced and I still live in the home and I'm making payments so how do I get put on the mortgage
Expert Answer

Hello Tristan,

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

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

Question From Nick H. on 3/04/2021
Hello Arlo. I am an heir on a property with a reverse mortgage in New York City and last year the house had a fire, destroying the contents inside. My grandmother, the original loan holder passed away days later. We have been in limbo with establishing her estate, but the reverse mortgage company is requesting the principal balance. Any advice on how to move forward?
Expert Answer

Hello Nick,

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

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

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

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

Question From Terri on 3/02/2021
Our dad passed last October and had a reverse mortgage on his condo (in California). The amount owed is more than the current value... consequently, we have notified the lender of our intent to walk away. Our dad had no other assets. As his heirs, are we responsible for taxes and HOA dues until the lender takes possession?
Expert Answer

Hello Terri,

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

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

Question From Karen on 2/27/2021
Can I just leave the house with the storage upstairs and basement full of junk? No estate, no one on reverse mortgage. My mom died and I cannot afford to clean out house.
Expert Answer

Hello Karen,

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

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

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

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

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

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

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

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

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

Question From Charmaine T. on 2/25/2021
Hi, so the owner (mother) had a reverse mortgage and passed away but the heir (son) of the trust is over 62 and the house is his primary resident so can he get a new reverse mortgage on the property that would pay off the old reverse mortgage? So basically, getting a new contract with the same amount not pulling out additional money. The value of the home is $900k the existing reverse mortgage is $300k
Expert Answer

Hello Charmaine,

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

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

Question From Peggy on 2/24/2021
My sister lives in Texas. She married a man with a reverse mortgage and he just passed away. What are her options? She wants to sell the house.
Expert Answer

Hello Peggy,

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

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

Question From Brenda R. on 2/24/2021
I lived with my Uncle all my life and cared for him. I was living here when he took out the reverse mortgage. He died 1/12/2021. His biological daughter is trying to evict me. There is no will and has not been in probate. Do I have any legal rights to buy this house? How can I find out if he listed me as heir on the property?
Expert Answer

Hello Brenda,

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

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

Question From Jeff W. on 2/22/2021
Hi there. My father passed last fall and due to his home being on a reverse mortgage with a negative balance, I (as executor) have decided to file a deed-in-lieu of foreclosure. The law firm handling this has now asked for my social security number. They said something about the need to confirm whether I had military service. That makes absolutely no sense to me. They said they needed SS #s from all the would-be heirs. My desire is to have my social security number as far away from this transaction as possible. Does it seem reasonable to make this request, and can I decline to provide it?
Expert Answer

Hello Jeff,

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

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

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

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

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

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

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

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

Question From Nancy on 2/21/2021
I have seen several references to a requirement that a house be "broom clean" before the lender will accept it as payment of a reverse mortgage. What if I die while still occupying the house and have no relatives to clean it out after my death?
Expert Answer

Hi Nancy,

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

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

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

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

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

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

Question From Viola D. on 2/20/2021
My mother-in-law is in hospice care and will pass away within days. Her 63-year-old son has been living with her and caring for her for 17 years. He is disabled and has no real money to live on nor can he qualify for any kind of loans. He will be executor of her estate when she passes. My concern is that he has nowhere to go and live. How much time does he have to surrender the property after she passes? I am in North Carolina. She has a RM on the home. It is about the value of the home and maybe a little higher. If it goes to foreclosure, will he be able to remain there for a while? I live in a small rental and cannot have him here- I am trying to qualify for a house myself, and then he can move in with us- but like everything- we need time for this. It may take me 6 or 8 months to get to homeowner status. My income is not the best, but I do have a good job. Please guide me on an approximate time frame on this issue. Thanks!
Expert Answer

Hello Viola,

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

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

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

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

Question From Brandi on 2/20/2021
My grandmother passed one month ago, and she had a reverse mortgage. My mother is listed as the heir (the only heir listed) but has no interest in the property. I do have interest, as the property was my childhood home. My mother wants me to make it my home. Can we do this without using real estate agents or attorneys? What would our steps be? This would be for Pennsylvania.
Expert Answer

Hello Brandi,

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

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

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

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

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

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

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

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

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

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

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

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

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

Question From David G. on 2/15/2021
My mother lives alone, and has a reverse mortgage on her home. The payoff of the loan is hefty (over 150k). If she were to pass (God forbid), and children are not interested in purchasing the house, what happens? Can the children empty all personal items and walk away? Is anyone responsible for the payoff if no other names are on the deed?
Expert Answer

Hello David,

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

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

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

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

Question From Jeff A. on 2/14/2021
Are the heirs responsible for past or current property taxes on a Non Recourse Reverse Mortgage Loan by HUD if HUD now owes the property via a Deed in Lieu Of Foreclosure completed in October 2020. Background: My father had a reverse mortgage on his house and moved out in 2019. A HUD management company paid the property taxes due in 2018 in 2019. My father passed in May of 2020. All heirs were not interested in his house which is part of a Non Revocable Trust.
Expert Answer

Hello Jeff,

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

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

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

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

Question From Jim J. on 1/30/2021
My father is currently residing in his home with a reverse mortgage loan. He has had the loan since 2009. He built the house years ago on 9 acres. Since his decline in health, he has failed to keep the house in good repair (not horrible but needs work). His loan is currently in the mid $300k and possibly underwater with the needed upkeep. The land, on the other hand could be of high value due to the area and land values. My question is at his death, if we decide to sell the house and cannot after 6months can we walk away or deed the property back to the lender without being liable for the loan amount.
Expert Answer

Hello Jim,

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

Question From Linda on 1/30/2021
I have a friend whose mother passed away almost a year ago with a reverse mortgage. My friend lives in the mother’s home and is aware that the bank will take possession on or about the anniversary of the mother’s death. The question is willing the moratorium on evictions due to COVID-19 prevent them from being evicted? Also See: Timeframe to Vacate Home After Reverse Mortgage
Expert Answer

Hello Linda,

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

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

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

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

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

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

Also See: Timeframe to Vacate Home After Reverse Mortgage

Question From Tim E. on 1/29/2021
My mother died and left a will, and I am the executer. I was living with her and the house is under a reverse mortgage. What are the downsides to waiting for the mortgage company to contact me about her death rather than me notifying them? Want time to think things through about what happens next and them contacting me would give me more time.
Expert Answer

Hello Tim,

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

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

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

Question From AJ on 1/25/2021
Which is a better way to communicate to a reverse mortgage lender when the borrower dies to avoid foreclosure, via email, certified mail, or phone call?
Expert Answer

Hello AJ,

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

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

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

Question From Sherry on 1/13/2021
Hello, my boyfriend and I have rented a room for the last 9 years from a man that recently passed away and has a reverse mortgage. Do we have any rights to stay in the home or can we pay the loan back. His daughter does not want to sell or pay the loan.
Expert Answer

Hello Sherry,

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

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

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

Question From Raychelle G. on 1/11/2021
I am in the process of going through probate court in California to become executor of the estate so that I can buy my deceased mom's house out of reverse mortgage. Will the bank that holds the reverse mortgage give me an extension if it takes more than 12 months?
Expert Answer
Hello Raychelle,
 
I cannot answer this with 100% certainty.  
 
However, if you continue to give them regular updates and keep them informed, you should find that they are willing to work with you on the process.  
 
Most probate proceedings do not take anywhere near 12 months though from what I have seen, and I do not know why you anticipate a longer process so my advice to you is to have your plans fully ready to execute once the probate is complete and show that to the lender as well.  
 
For instance, if you plan to use other funds already available to you, give the lender verification of funds available or if you plan to use a new loan, make sure you have gotten pre-approved for the new financing and send that preapproval to the lender so that they know you are ready to move when the probate is completed.  
 
The lender will need to weigh the risk of waiting against the most probable outcome and if they can see that the most probable outcome is that the loan will be repaid and that you are actively working toward that end, I think your odds of receiving additional extensions is much better.
 
Question From Robert K. on 1/10/2021
A relative has a reverse mortgage that will exceed the value of the house. The heirs will want to simply turn over title to the bank. Do the heirs have to clean out the house and remove old furniture and appliances?
Expert Answer

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

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

Question From Deeya on 12/29/2020
Can my brother sell my dad's house that is on a reverse mortgage even though my dad is alive and living with me? My dad was the original owner. My brother forced him and his wife out of the house and has now told his friend that he could buy it for the amount owed on the reverse mortgage and that he would rent from his friend. Can he do this if my dad is still alive?
Expert Answer

Hello Deeya,

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

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

Question From Carmen on 11/17/2020
Can the daughter of the owner who had the reverse mortgage who is dead rent out an apartment in that home?
Expert Answer

Hello Carmen,

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

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

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

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

Question From Richard G. on 11/11/2020
I understand that if the balance owed on a reverse mortgage is greater than the value, the heirs can purchase the property for 95% of the appraised value. Is the same true for beneficiaries? Any exceptions for California?
Expert Answer

Hello Richard,

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

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

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

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

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

Question From Angela T. on 10/22/2020
My parents had a a reverse mortgage. Dad passed in 2016 and Mom passed in August 2020. There are seven surviving children. None of my siblings want the house. I am the administrator for the estate and want to purchase the home. I tried to refinance the loan with my bank but was denied due to occupancy. This was not explained to me. I am working to have my siblings relinquish their rights to the property and file this with the Register of Wills. Can I retitle the deed before paying off the loan? I think I might be approved for a loan if the property is in my name only. Please advise.
Expert Answer

Hello Angela,

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

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

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

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

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

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

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

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

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

Question From Robert M. on 10/16/2020
I am an heir to a reverse mortgage home. There are three heirs. Can I give my 1/3 ownership and deed it back to the bank?
Expert Answer

Hello Robert,

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

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

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

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

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

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

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

Question From Miles on 10/13/2020
My parents are deceased 4 siblings are on the house. I stay in the house paying lights gas taxes it needs some work done on it and I need to get a loan can I get a loan for the house.
Expert Answer

Hello Miles,

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

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

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

Question From Ana E. on 10/09/2020
My parents passed away in the past year. I took care of them for more than 25 years. My father did not leave a will. I am in the house still but there seems to be an undercurrent with siblings for me to leave. How long can I stay here?
Expert Answer

Hello Ana,

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

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

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

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

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

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

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

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

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

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

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

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

Question From Karen R. on 10/06/2020
My Dad passed away and he had a reverse mortgage on his house. In his will he left the house for me and my brother, what are his wife rights in South Carolina?
Expert Answer

Hello Karen Sue,

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

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

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

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

Question From Kim on 10/06/2020
Mother had a reverse mortgage but did a transfer on death deed to grandson before dying. After death grandson wanted to refinance the home but cannot get title insurance for the refinance due to the TOD deed. What can he do?
Expert Answer

Hello Kim,

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

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

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

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

Question From Heidi M. on 9/27/2020
My mom has a reverse mortgage, my brother lives with her, how long does bank give him to move out after my mom dies?
Expert Answer

Hello Heidi,

There is not a straightforward answer to that question. 

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

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

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

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

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

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

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

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

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

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

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

Question From Lisa C. on 9/24/2020
Hi ARLO, the owner of the house that has a reverse mortgage has died. His heirs do not want the house as there is no equity in it. The owner has a girlfriend (over 65) who has been living there with him for years and has rented out rooms to handicapped people to help pay the utility bills. Can the bank evict her and her roommates out since they are elderly and handicapped?
Expert Answer

Hello Lisa,

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

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

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

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

Question From Monica S. on 9/19/2020
A home is in reverse mortgage and the last borrower has passed. The person living with them will not leave and has no means to make any type of payment. What happens next?
Expert Answer

Hello Monica,

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

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

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

Question From Anna H. on 9/14/2020
Hello ARLO, My mother has a Reverse Mortgage, I have been living with her as a caregiver. After her death how long can I remain in the home before I must leave? My brother and I are heirs but do not wish to sell the home and we will give the deed to the lender OR foreclose. Please let me know the amount of time I must move out.
Expert Answer

Hello Anna,

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

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

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

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

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

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

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

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

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

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

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

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

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

Question From Max on 9/08/2020
How do you put heirs on your property title?
Expert Answer

Hello Max,

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

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

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

Question From Constant F. on 9/04/2020
Is there a reason for the reverse mortgage company asking for a death certificate?
Expert Answer

Good Morning,

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

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

Question From Brena F. on 8/23/2020
My father just died yesterday June 22 he made my brother power of attorney but I’m not sure if it was legal or not I do not think they went to court or anything well my dad has over $150,000 left in the bank and there’s three of us kids but there are two step children well now that my brother is power of attorney and my father has passed away is my brother still power of attorney and does S other siblings get part of that money if my dad owes nothing and if my brother was to leave me out and get the other sibling something, what can I do?
Expert Answer

Hello Brena,

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

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

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

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

Question From West W. on 8/20/2020
I want to pay off a reverse mortgage but the reverse mortgage company says HUD requires them to do an appraisal that I pay for before I can pay it off. Is this true?
Expert Answer

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

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

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

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

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

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

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

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

Question From Rosa on 8/19/2020
Am I entitled to a copy of the appraisal ordered by the reverse mortgage company in order for us to buy the house back?
Expert Answer

Hello Rosa,

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

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

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

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

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

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

Question From Lindee on 8/19/2020
My father passed away and my brother and I are planning to pay off the reverse mortgage loan with cash on hand. The company is saying we have to have an appraisal done that we pay for but they get the appraisal done. This company has tried to do other things they aren’t correct so I’m curios why we need an appraisal when we have the money to pay off the loan. And if it is required why we have to let them get the appraiser instead of us.
Expert Answer

Hello Lindee,

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

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

Question From Enrique on 8/14/2020
My mother has passed I am on Social Security and I'm one of the beneficiaries on the home my brother is so like to sell it, but I would like to keep the home. Is there any way I can keep the home or get state or government help for me to keep the home? I do have $25,000 that I can put down or and I might exempt from.
Expert Answer

Hello Enrique,

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

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

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

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

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

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

Question From Toni on 8/13/2020
After the last borrower dies can the reverse mortgage company offer a lower payout amount to pay off or buy home?
Expert Answer

Hello Toni,

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

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

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

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

Question From Derrick M. on 8/13/2020
I find myself in completely unfamiliar territory. My grandmother died December of last year with a reverse mortgage on her home. The lender is allowing us to either do a short-sale or heir payoff. I am interested in taking over the property to rent it out or live in it myself. The home has already been appraised and the lender agreed to allow me to do a payoff. The home was only appraised at $55,000 and after inspection will need several upgrades and minor repairs. Am I able to negotiate with the lender on the payoff price?Or is that hard price? Will results of an inspection sway them on price at all?
Expert Answer

Hello Derrick,

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

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

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

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

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

Question From Jonathan P. on 8/10/2020
As the son of my father who owns a home with a reverse mortgage on it how long can i stay in once he passes he is 90 yrs old
Expert Answer

Hello Jonathan,

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

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

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

Question From Mila on 8/09/2020
My grandmother has a reverse mortgage on her home, my cousin came and took her from her home knowing the stipulations of the reverse mortgage. I had no clue until 2 days ago & my grandmother left me & my son's the home. 2 days ago, I received a letter in a green envelope from the reverse mortgage company that states we have 31 days to vacate. I have nowhere else to go, is there anything I can do to?
Expert Answer

Hello Mila,

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

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

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

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

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

Question From Paul S. on 8/04/2020
How will a lender on a reverse mortgage know that the borrower has died, if no one contacts them?
Expert Answer

Hello Paul,

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

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

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

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

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

Question From Lisa B. on 7/30/2020
My grandmother had a reverse mortgage, the property went to the reverse mortgage holder at her death. Her heirs and reverse mortgage have been sued by HOA to foreclose on their HOA fees lien. The heirs have no claim on the property since it is owned by the Reverse mortgage company. How would they answer the complaint in this situation?
Expert Answer

Hello Lisa,

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

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

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

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

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

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

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

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

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

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

Question From Leah on 7/26/2020
The landlord died and we found out he had a reverse mortgage. What does that do to the tenants?
Expert Answer

Hi Leah,

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

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

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

Question From Elizabeth M. on 7/22/2020
My mom died with a reverse mortgage, but she has a pending lawsuit from nursing home. Can the lawsuit be used to pay off the reverse mortgage if she left the house to me in her will?
Expert Answer

Hello Elizabeth,

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

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

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

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

Question From Sherry F. on 7/14/2020
My in laws have a reverse mortgage. We believe they do not have an established will. Do they need one even though they have assets within the range of a small estate? They are in AZ. Just not sure how the process works once they pass but we feel the value will not exceed the loan amount, several repairs would be necessary.
Expert Answer

Hello Sherry,

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

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

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

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

Question From Edward M. on 6/23/2020
My parents executed a reverse mortgage years ago. My father has died, and I now live in the house caring for my mother who is 90 years old. I have been living here for 2 years. What happens to me if: 1. My mother goes into a nursing home. 2 She dies. Thank you for your help.
Expert Answer

Hello Edward,

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

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

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

Question From Eneida P. on 6/23/2020
My neighbor owns a home with his mother. She signed a reverse mortgage at age 62. She is 96 years old. Do I have to move out when she dies?
Expert Answer

Hello Eneida,

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

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

Question From Mike on 6/19/2020
My mother has a reverse mortgage on her home in Las Vegas NV and she paid $175k down and the reverse mortgage paid $149k. My mother Then added me to the deed on her home after she purchased it. I’m currently 53 and she is 75. If she were to pass away, would I be able to stay in the home under the reverse mortgage terms? Would I be able to buy the home and If not, and I sell the house do I get the money back she put as a down payment? I am just not sure what my options would be, Thank you
Expert Answer

Hello Mike,

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

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

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

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

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

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

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

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

Question From Vanessa on 6/12/2020
My father passed away a couple years ago and my stepmother lived in this house that has been hers. i got a call yesterday from her family I guess she put a reverse mortgage out with my father, and she has up and moved from this house. They need me to sign papers because i am the only close person for my father and he is no longer around to sign. Legally can they make me sign these papers?
Expert Answer

Hello Vanessa,

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

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

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

Question From Lisa S on 5/28/2020
My mom died in NC. She had no assets other than her house and car. She did not have a will, but it appears in NC the property would not have to go into probate and would automatically go to me and my one sibling. My spouse (who is over 62) and I want to use a HECM for the house to pay off my siblings’ part of the house. Would my sibling and I have to get the home officially put into our names in advance, of proceeding or closing of the loan? A loan officer told me that my sibling would probably have to attend the counseling session if the house was in both of our names, but I do not understand that because he’s not on the loan in any way. Can the ownership just be transferred during closing when I pay off my sibling?
Expert Answer

Hello Lisa,

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

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

Question From Don L. on 5/22/2020
Who is responsible for utilities, taxes and insurance, after death, during the deed-in-lieu of foreclosure process?
Expert Answer

Hi Don,

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

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

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

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

Question From Polly K. on 5/22/2020
Several questions:1. Are there specific types of real estate agents that handle reverse mortgage sales?2. Can the costs associated with listing and selling a home with a reverse mortgage be deducted from the sale proceeds that are going to the lender?
Expert Answer

Hello Polly,

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

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

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

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

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

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

Question From Lynn R. on 5/22/2020
Hello ARLO, My mother has just received a reverse mortgage about 6 months ago. I found the paperwork and saw what the house was appraised for. I am uncertain, as I have not contacted the mortgage company yet what at this time the loan balance payoff is. Now, sticky situation ahead…It appears that my mom was a hoarder and the property is reflective as such. The property was obviously appraised, and this was taken into consideration. Now, she is ill, and we are going to want to sell the home once she passes, as it will become mine as dictated by her trust. I do not know how to go about selling a hoarding house with a reverse mortgage. Any information you could share on this subject?
Expert Answer

Hello Lynn,

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

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

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

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

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

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

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

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

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

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

Question From Mike H. on 5/11/2020
What does the owner of house and property do when he has dementia and no longer can live there? and no one wants or can afford a mortgage. In other words, he must deed it to the mortgage company. What steps need to be taken?
Expert Answer

Hello Mike,

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

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

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

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

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

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

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

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

Also See: 

Steps for Heirs – How to Repay Reverse Mortgage

Question From Shelly S. on 5/05/2020
My father has a RM and I would like to take ownership of the home and continue to have my father live in it until his passing. Can he somehow gift it to me so I can keep his property taxes? and instead of getting a loan/mortgage to pay off the RM can we somehow take over the RM due to my husband’s qualify age of 63?
Expert Answer

Hello Shelly, 

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

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

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

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

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

Question From Bianca on 4/20/2020
If the borrower of a reversed mortgage passes and does not leave a will appointing an heir(s), who inherits the home?
Expert Answer

Hello Bianca,

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

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

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

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

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

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

Question From Nick on 4/08/2020
My mom had a reverse mortgage and passed away in December. I am the heir to the house via will. I do not want it and am choosing to walk away. Property taxes are current as is homeowners insurance. I know I am not responsible for paying back the loan. Are there any additional taxes, fees, or costs that they can charge me with?
Expert Answer

Hello Nick,

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

Question From Nicole P. on 3/06/2020
Hello,My question is my mom had a reverse mortgage and passed, I hired an attorney for probate and the bank started foreclosure process before I could get through probate .Placing fees in a Corporate account .My question is can they make me responsible for those fees by wrapping them into the cost of the mortgage?I was not the borrower, and got a new refinance in my name. Also, shouldnt my attorney have protected me from the foreclosure happening? Thank you for your time.
Expert Answer

Hello Nicole,

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

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

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

Question From Renea W. on 3/04/2020
If I live in a home that my mom had a reverse mortgage on and the house was auctioned and sold after her death. Will I qualify for moving assistance if I did not pay rent but had a legal right to be in the home.
Expert Answer

Hello Renea,

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

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

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

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

Question From Erica T. on 2/28/2020
My mom passed away I am now executor of her estate my name is on the house and the reverse mortgage is due. She left a will and I sent all the information ask she died in January 25th; can they refuse to sell me the property? Thanks
Expert Answer

Hello Erica,

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

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

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

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

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

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

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

Question From Steve on 2/17/2020
Hi, Reverse mortgage on parents’ condo is being foreclosed. I checked and no equity exists. Do banks ever pay key money to have me vacate after foreclosure?
Expert Answer

HimSteve,

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

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

Question From Judy H. on 2/07/2020
I paid my Mom reverse loan off. I’m the only name on deed and the mortgage. Is that legal?
Expert Answer

Hello Judy,

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

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

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

Question From Patricia on 2/04/2020
I lived in house 9 years taking care of mom who passed with reverse mortgage. I am 62 and no will. We had heirship done with my two sisters and brother. Now I would like to refinance the house and pay off the reverse loan. One sister refuses to sign to be removed from title so we can refinance. The others will. What can I do because home will be foreclosed if time runs out shortly?
Expert Answer

Hello Patricia,

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

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

Question From Julette E. on 1/31/2020
My mother died and I am the administrator, there are four heirs. My brother owed child support and the title company put a lien against the estate. How can I get this removed so I can go ahead and close on the sale of the house?
Expert Answer

Hello Jullette,

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

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

Question From John on 1/25/2020
If two unmarried people have a reverse mortgage and one dies before the other, are the heirs of that person entitled to any of the equity in the property when the second person dies?
Expert Answer

Hello John,

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

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

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

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

Question From Herb B. on 1/25/2020
My mom passed away and she had a home with a joint reverse mortgage. If the other owner decides to sell, am I entitled to half of the proceeds after the sale?
Expert Answer

Hello Herb,

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

Question From Darrell D. on 1/22/2020
My mother passed and had a reverse mortgage. My brother who lived with my mom refuses to leave the property after her death. The bank is now giving our family time to sell the home, but he refuses to leave. What procedure to take to remove him?
Expert Answer

Hello Darrell,

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

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

Question From Brenda on 1/02/2020
Can I take heating system out of my dad’s house before reverse mortgage people take it over?
Expert Answer

Hello Brenda,

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

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

Question From Arleen on 12/18/2019
If my name is on the original reverse mortgage contract along with the owner what are my options when the owner dies?
Expert Answer

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

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

Question From Kathleen A. on 12/12/2019
Will giving the house to HUD pay of my loan? How will this affect my children?
Expert Answer

Hello Kathleen,

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

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

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

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

Question From Rachel on 12/11/2019
Can a former homeowner of a reverse mortgage foreclosure estate sold in court auction purchase the home at the 95% from the bank
Expert Answer

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

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

Question From Carlos F. on 11/24/2019
My mom took out a reverse mortgage, she is the only one that signed my dad did not. my mom passed away. So does the house belong to the bank. So can he still put the house on a will?
Expert Answer

Hello Carlos,

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

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

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

Question From Janet R. on 11/22/2019
After a reverse mortgage is assigned to HUD, will the homeowner be allowed to stay in the home?
Expert Answer

Hello Janet,

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

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

Question From Tommy J. on 11/08/2019
My father past I took care of him. My sister steps in & takes the house to probate court. The house is worth $60,000 there is 3 heirs $20,000 each. If I do a reverse mortgage will I get enough to pay my half-sisters off. Of not, do you have any ideas, know any good & cheap lawyers. Thank You!!
Expert Answer

Hello Tommy,

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

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

Question From Lita on 9/29/2019
Hello - My father's house is due and payable because of his death in October. I am on my second extension and the servicer is reviewing the short sale package. They sent their appraiser out last week, but my realtor has not heard anything back yet. Can my realtor request a copy of the appraisal? The 12-month mark ends on October 10th, and I don't know if it will be approved or not. The package was submitted the first week of august for a close date of 10/7/19. At this point, it will need to be extended, as the buyer doesn't have the ability to close escrow in a couple of weeks. Will the servicer allow an extension to complete the sale?Also, he may need to amend the purchase agreement to include his wife on the purchase. Will that require to start the whole process all over again?
Expert Answer

Hello Lita,

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

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

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

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

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

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

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

Question From Connie on 9/25/2019
Can I as the heir of a HUD reverse mortgage property in VA which is in the foreclosure pricess do a quick deed to a realtor without HUD who holds the deed?
Expert Answer

Hello Connie,

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

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

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

Question From Samara C. on 9/25/2019
My father is 77 years old and is fixing to lose his house due to a reverse mortgage it's been in the family over 50 years. He supposed to come up with $40,000 and he could still stay in the home. Is there any way that he could still stay there and get some help paying the mortgage reverse mortgage company? Is too elderly to move out and then home is so full of belongings I don't know how he can do get it all out. There's got to be help for an elderly man 77 years old.
Expert Answer

Hello Samara,

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

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

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

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

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

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

Question From Gregorio on 9/21/2019
We are inter in buying a house but the agent helping us says that the house has a reverse mortgage foreclosure what does this mean?
Expert Answer

Hello Gregorio,

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

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

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

Question From Kari on 8/19/2019
My Mother and father took out a RM 2 years ago when my father seemed in good health, but my mother was declining due to Alzheimer’s. My mother died 2 months ago, and my Father has now been given less than 6 months to live. Perhaps less. He has only taken a small amount of equity from the line of credit, perhaps $10,000. There is considerable equity in his home, perhaps close to $400,000. My sister has been their caretaker for the last two years but has no means to buy the home or to move. Would it be a bad idea for my father to take as much money out of the home equity as possible and put it in an account? Some of that money could go to my sister finding a new place to live after he passes, or towards expenses in getting the house ready to sell. Or would taking out this money cost more money in the end when it's time to sell? In other words, is it financially better to take out the money in cash now? Or leave it till we have the equity after the sale?
Expert Answer

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

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

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

Question From Jocelynn W. on 8/19/2019
Borrower is too old to maintain the house; he will go to live with family. Heirs do not want the house. What happens? Can borrower say take the house? The house is worth much less than the loan already!
Expert Answer

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

Question From James T. on 8/01/2019
I applied for a RM and was not on title, my mother was. The reverse mortgage company was going to put my name on title at closing and they had the closing in CA NOT IN OK. We were not there and did not put the title in my name. I lost the house. Is there anything I can do? My mother did not apply for loan. She died 6 months after loan and did not get all the money the was not finish.
Expert Answer

Hello James,

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

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

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

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

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

Question From Curt on 7/29/2019
My mother in law just died and had a reverse mortgage in which she was upside down by about $30,000. The home was foreclosed a week ago and will be sold at auction in about a month. In the meantime we have received a tax bill addressed to the heirs. My question is, who is responsible for this bill?
Expert Answer

Hello Curt,

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

Question From Cheryl J. on 7/28/2019
My grandmother was the last survivor of a reverse mortgage. Her adult children are not interested in the home. I would like to purchase the home. The adult children support my purchase and will sign legal documents for me to serve as an heir. I'm working with an attorney to probate so that my name is on the title and the attorney has provided documentation for them to sign. My family is onboard and very cooperative.The RM lender had appraised the house at 200k. My grandmother owes more so I'm interested in purchasing at 95% appraised value. I'm paying the attorney, flood insurance, upkeep of the house, while saving for down payment and closing costs. I'm also trying to pay off credit card debt to improve my creditworthiness and debt to income ratio. I believe I need to pay off more of my debt before even applying for a mortgage. Grandma passed in May and I will be ready to apply for mortgage in December. Can RM lender foreclose on the property before probate process completed and before I'm ready to apply for mortgage. I'm in Florida where probate court is backlogged, and foreclosures are judicial. I don’t want to lose this house. Please advise.
Expert Answer

Hello Cheryl,

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

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

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

Question From Muriel A. on 7/03/2019
When is the maturity of a reverse mortgage loan?
Expert Answer

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

Question From Alec on 6/23/2019
Is there a way to check if I’m the next of kin if I’m the heir if I pay off the reverse mortgage?
Expert Answer

Good Morning,

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

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

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

Question From Susan on 6/17/2019
My husband is 64 I am 61 and my son is on the deed he is 32. Can my husband get a reverse morgage or him and I when I turn 62 and leave my son on the dee or title?
Expert Answer

Hello Susan,

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

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

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

Question From Randy B. on 5/06/2019
I have your application package and would like to proceed, but my heirs (my four sons) will not sign the necessary release document. Is there a legal way (if a lawyer is involved) to bypass this requirement?
Expert Answer

Good Morning,

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

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

Question From Larae R. on 4/15/2019
A family member gifted me a home now her daughter is trying to take my home. She had her mom file a affidavit to revert. Can she do this if the house is already in my name?
Expert Answer

Hello Larae,

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

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

Question From James D. on 4/11/2019
Need help my mom has a reverse mortgage on her home. I would like to purchase her home, but my credit is not good. My mom is 87 years of age and I don't know where to go, for advice. Are there programs to help me or free money out there for this kind of problem?
Expert Answer

Hello James,

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

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

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

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

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

Question From Nate C. on 3/17/2019
When the last borrower has died, can some family members continue to live in that home?
Expert Answer

Hello Nate,

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

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

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

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

Question From Ruh on 3/14/2019
My aunt had a reverse mortgage and died. I was her caretaker. I am 66 years old. The pay off of the loan is $400k. The value of the property is a little over one million. The house is under a trust and I am the heir but the loan was in her name only. I have been living here for 12 years. Can I get a reverse mortgage to pay off the original mortgage and stay in the house with my own reverse mortgage?
Expert Answer

Good Morning,

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

Question From Stacey on 3/13/2019
Are the heirs on the property responsible for the condition the it was left in?
Expert Answer

Hello Stacy,

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

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

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

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

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

Question From Elliot on 3/10/2019
Dad had a reverse mortgage and passed away. No equity in condo and Dad had no assets. Bank just filed a lis pendens. live in Fort Lauderdale. What is an approximate timeline between filing and actual foreclosure notice? Also, what is the timeline for bank to take property back? have been paying condo HOA fees but running short on monies. Will the HOA act quicker than bank? Asking as I am trying to stay in condo until October of this year if possible. With my thanks, Elliot
Expert Answer

Hello Elliott,

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

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

Question From Carla on 3/07/2019
My mom passed away this year and I don’t know how much she borrowed from her reverse mortgage. She didn’t leave a will so what’s my options? I would like to keep the house in the family. Also am I allowed to make monthly payments on the loan if we must pay off? Home is in Indiana.
Expert Answer

Hello Carla,

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

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

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

Question From Sullivan on 3/07/2019
I had quick claim deed on my mom’s house that is fully paid. I just found out she had a reverse mortgage which she took loan to pay closing cost etc. it was around $22,000 now it’s up to $35,000 from 2007. Will they lower the amount owed because I would like to keep her condo, this is a big shock.
Expert Answer

Good morning,

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

Question From Kahari on 3/07/2019
My mother had a reverse mortgage and passed in Nov. the house is now in her 4 children’s name. one doesn’t live in the U.S. and is unwilling to sign over his share of the deed for a sale. If we default on the loan, will it affect our credit ratings?
Expert Answer

Hello Kahari,

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

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

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

Question From Myra W. on 3/06/2019
My mother recently passed away. She had a reverse mortgage, no will, and is survived by 5 children. I would like to keep the home in the family, but am not sure I have a claim since I am the 4th of the remaining 5 children. Do all 5 of us have equal rights to the home, or does default to order of birth?
Expert Answer

Hello Myra,

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

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

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

Question From Denise on 2/26/2019
What instruction should I use to place my name on a deed that has reverse mtg to have some claim to the house I reside with dad who is ill and has reverse mortgage?
Expert Answer

Hello Denise,

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

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

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

Question From Mary Beth on 2/21/2019
If my house is "underwater", I hand over the keys to my lender (an HECM), who is responsible for the taxes?
Expert Answer

Good Afternoon,

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

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

Question From Linda on 2/21/2019
Our parents had a reverse mortgage and recently passed away. Before passing, my father completed and filed a simple revocable transfer on death deed (TOD). Will that have any bearing on the heir’s ability to surrender the home using a deed-in-lieu of foreclosure?
Expert Answer

Hello Linda,

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

Question From Callie on 2/20/2019
My 78 & 80 year old parents remain in a reverse mortgage home that is very underwater. It is in disrepair, taxes have been unpaid for over a year, the mortgage amount including the accrued interest (they withdrew the funds in one lump sum 16 years ago) now exceeds the home’s value by $25k. And they are many months behind on utility bills. When can we expect the bank to begin foreclosure proceedings?
Expert Answer

Hello Callie,

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

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

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

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

Question From Ran S. on 2/20/2019
After death of reverse mortgage holder, when will the son who was living in the property as a care taker be evicted?
Expert Answer

Hello Ran,

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

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

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

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

Question From Letisia on 2/18/2019
My father got reversed mortgage on his home who he shared with my Down syndrome brother 44 years old and didn’t list him on paper work my father died and now I fear my brother might lose his home can any law protect him?
Expert Answer

Hello Letisia,

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

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

Question From Laura C. on 2/18/2019
What happens to the rest of the equity if your parents only took the first lump sum payment and didn't take the rest of the money they could have taken before they passed?
Expert Answer

Hello Laura,

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

Question From Candice R. on 2/16/2019
Hi, I’m a 62 years old woman whose disabled with health problems and I’m been living with the same man for almost 44 years but not married but I’m on SSI. He's 60 years old and working as a taxi driver. There was a will and power of the attorney by his mother after she died in October of 1997. He's the executor of her estate to him but he never had a up to date deed. I want to help him in a reverse mortgage, but we are wondering how to apply for a up to date deed with both of our names on it. The only thing that he has is the will and the old deed that's in both of deceased parents' names. Can you help us in any way to this situation?
Expert Answer

Hi Candice,

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

Question From Bernard on 2/11/2019
My mom had a reverse mortgage and no will died in June 2016, my sister who lived in the house died of cancer 3 weeks later. I have lived out-of-state for over 35 years and was told to MYOB several years before she took out the reverse mortgage. The house is vacant and worth less than what is owed, the creditor took over and has not foreclosed on the property yet. Its 2019, I received a civil suit "COMPLAINT IN MORTGAGE FORECLOSURE) by a debt collector (with UPS addresses all over country) saying we (wife, kids, sister) owe them the entire debt + interest. I have no interest in the property! The cover sheet from the court is missing a case number, parcel ID, illegible stamp with no date initials etc. There is a copy of intention to foreclose...says it is a in rem action only against the mortgaged premises. Plaintiff is not seeking judgement of personal liability against the Defendants or Defendant's estate but reserves its right to do so in a separate legal action if such right exists. Wherefore Plaintiff demands judgement, in rem, against the Defendants herein for the sum of..........plus interest, costs and attorney fees as more fully set forth in the Complaint, and for foreclosure and the sale of the mortgaged premises. Do I ignore this since it I have no interest or do I have to respond?
Expert Answer

Hello Bernard,

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

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

Question From Jim F. on 2/11/2019
My father passed away at beginning of December 2018 and had one-time payout from Reverse Mortgage. He now owes $190,000... however the home was built in 1962 and has major repair issues and will appraise for less than what is owed. I'm interested to purchase the home thru a short sale w/ the Reverse Mortgage company Champion Mortgage, but I need to sell my home before I could complete the purchase. How can I come to agreement w/ mortgage company knowing I've got to sell my home 1st as I'm concerned about them simply foreclosing and catching me off guard and very vulnerable? My father's home needs $30k new roof, $5k new a/c & heat pump, $8k interior ceiling damage. Lastly, is there any reason probate court would be needed? The house is underwater and there is no money in bank and no investments and no vehicle. My brother & sister have signed and notarized disclaimer forms waiving all rights to the property in the hope I may keep the home in the family.
Expert Answer

Hello Jim,

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

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

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

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

Question From Pat on 2/11/2019
I have a reverse mortgage and plan to sell my house. Why does the servicer require a letter of "intent to sell"?
Expert Answer

Hi Pat,

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

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

Question From Elliot on 2/08/2019
Parents died in the summer. Had reverse mortgage on condo. No equity exists. They didn’t leave a will so no probate being filed. Should I keep paying HOA fees, I have been doing that as well as paying insurance as a family member is staying there until bank forecloses.Many thanks, Elliot
Expert Answer

Hello Elliott,

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

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

Question From Lori R. on 2/07/2019
Two women over 62 years of age with both being on house title. They get a reverse mortgage and take out lump sum of money. One passes away, the children now want 1/2 of that money. Are they allowed to have the money?
Expert Answer

Hi Lori,

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

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

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

Question From Colleen N. on 2/06/2019
Hi, my father is passed away last week. My parents have a reverse mortgage and my mom is so confused. The reverse mortgage checks have my father’s name on them. She signs the annual documents as the co-borrower. Can she sign her name on the checks until they change them into her name? She is so confused and upset and I am clueless. Thank you
Expert Answer

Hello Colleen,

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

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

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

Question From Jeff W. on 2/05/2019
My aunt has become disabled and is having to leave her reverse mortgage home. She sent them a letter to turn the house over to the mortgage company, how long should she leave the utilities on? She hasn’t heard back from the mortgage company as of yet and it’s been 3 weeks.
Expert Answer

Hi Jeff,

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

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

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

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

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

Question From Guinevere H. on 2/02/2019
My mom has a reverse mortgage that her and my dad took out 15 years ago. He died and she left the home. She would like to donate it to a church. Is she able to do that without it forcing her at 77 to declare bankruptcy or worse?
Expert Answer

Hello Guinevere,

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

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

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

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

Question From Leslie on 2/01/2019
Hello Arlo, Parents passed and the home is free and clear. The executor was allowed to live in the home for 5 years and then has to buy or sell so the remaining siblings get their share. If after year 5 can all siblings do a quit claim deed passing ownership to them and then take out a reverse mortgage to pay everyone their fair share of the estate?
Question From Sally on 1/31/2019
I have a trust and I reside in the home my mother did the reverse mortgage on I have been granted the successful trustee from the courts my lawyer have processed the papers for the house to be turned back into the trust because it’s in my mom name and now I'm getting letter to call reverse mortgage there saying I have 30 days before they will file foreclosure, I thought heirs can stay for 1 year?
Expert Answer

Hi Sally,

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

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

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

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

Question From Irene L. on 1/31/2019
My father past away he has a reverse mortgage I’m his daughter and living here, I and my wife want to buy it back. The appraiser is coming Monday what do I do I looked at the market value I think it’s going for $186,000 it was built in 1962 nothing has been done to it to upgrade. The manor is a nice place to live. I think it’s worth $150,000. Any suggestions?
Expert Answer

Hello Irene,

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

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

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

Question From Diana on 1/30/2019
I'm an heir to my mom's reverse mortgage. After her death the lender was notified of her death. I have no means to pay off the loan, so I put the house up for sale. What happens if the home doesn't sell within 6 months/2-90 day extensions?
Expert Answer

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

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

Question From Laurie B. on 1/29/2019
My mother took out a reverse mortgage but can no longer manage her home. I would like her to move in with me. The value of her home is not much more than the original loan amount so if she were to sell the house and repay the loan, she would have no assets. Could she take the lump sum from the reverse mortgage and simply turn over the house to the bank? That way, she would at least have some money for living expenses.
Expert Answer

Hi Laurie,

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

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

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

Question From Kathy on 1/27/2019
My mom passed away some time ago and the mortgage company has moved forward with a foreclosure. We are five heirs to the house and one is currently living in the house with the reverse mortgage. The heir that lives in the house has decided to buy the house. My question is, are the other four heirs responsible for the reverse mortgage since that heir should be buying us out and will be gaining a house and property for future sales?
Expert Answer

Hello Kathy,

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

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

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

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

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

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

Question From J. Clay on 1/27/2019
My Dad passed in 2014 and my Mom this past October 2018. They took out a reverse mortgage. I lived at the house all my life. The last 20 plus years I was mostly taking care of them. Now that they gone, I have been troubled about my options. I would love to stay at the house, (it's the only place I know) but I am unable to pay off the loan in one full payment. I informed the mortgage people my intentions of just walking away, (being that is my only alternative) but am I responsible for totally cleaning out the house? It's very time consuming and very emotional. It was my parents’ home for over 60 years. I am at my wits end on what to do.
Expert Answer

Good Morning,

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

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

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

Question From Larry W. on 1/26/2019
I live in New York state my mother passed away the home was sold at auction by the reverse mortgage holder how long can I stay in a property once it's been sold?
Expert Answer

Hello Larry,

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

Question From Elliot on 1/25/2019
Dad had a reverse mortgage a and passed away without a will. Contacted local realtors and no equity exists. I am not filing probate as no assets were left, I am not filing probate. How can I turn the condo back to the bank?
Expert Answer

Hello Elliott,

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

Question From JoAnn M on 1/25/2019
I am the remainderman on the deed but NOT on the reverse mtg. I was served with papers from the law firm representing the borrower. The caption is the mortgagor vs ME. Why am I responsible for this loan?
Expert Answer

Hello Joann,

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

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

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

Question From Samantha P. on 1/25/2019
My grandfather passed away, no will and no estate were made. In the final process of the foreclosure had filled out an estate on the home at the local court house. I have also gotten in contact with HUD. From what I understood doing those two things should have put the foreclosure at a holt. Well it didn’t and they finalized the foreclosure. The property was left just as I left it a few years back and my attorney told me to occupy the residence again. Witch I did. Currently still in the home and they are now telling me they will be evicting me. Is it too late?? What do I do now? I don’t want to let this property go.
Expert Answer

Hello Samantha,

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

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

Question From Karen Enderson on 1/24/2019
My mother passed with a reverse mortgage. We contacted the service provider to inform them of her passing and our desire to sell the home. We received some wrong information from the service provider regarding how to proceed with the sell and now we are about 60 days away from the passing of my mom. All taxes, insurance, etc are current and the house is now for sale for approx. $50,000 OVER the loan balance but the service provider told us that they are still proceeding with the foreclosure because the loan is now in default. So I have 2 questions: 1. IF we sell the house within 60 days, can the service provider prevent the close of escrow and 2. Should we just let them reassignment the loan to HUD & contact HUD to let them know the house is for sale?
Expert Answer

Hi Karen,

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

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

Question From Vanessa on 1/24/2019
My father, whom I live with, has a 10 year Reverse Mortgage on our home, lump si we taken. The deed is in his name and he is the sole borrower as my mother passed some time ago. We recently learned that he is ill and I am fearing the worst... If my father passes, I understand that I will either have to repay the loan or vacate the home, which I do not want to do as this has been our family home my entire life. 🙁 My question is : is there anything we can do NOW while my Dad is still mentally and physically able bodied to prepare and or assist with me staying in the home? Again, if or when he passes, I want to try and do everything I can to keep our home.
Expert Answer

Hello Vanessa,

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

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

Question From on 1/24/2019
My mom has passed on she left a will naming me her executor of estate she has a reverse mortgage on the home what do I need to do to secure this?
Expert Answer

Hello,

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

Question From William T. on 1/19/2019
When the last borrower dies, how is the home sold? Does the lender arrange for it to be sold through a realtor, or is all the responsibility on the heirs? What about real estate commission, etc? Thank y'all very much.
Expert Answer

Hi William,

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

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

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

Question From Kristian B. on 1/19/2019
My mom has a reverse mortgage and I live with her in her home as she is terminally ill. What happens when she dies? Will I get kicked out ASAP?
Expert Answer

Hello Kristian,

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

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

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

Question From Anthony H. on 1/17/2019
My father died he had a reverse mortgage and he was also in bankruptcy I live at the resident. I have 3 siblings 2 which don't want anything to do with the home and one who live out of state and don't have the funds to pursue the transaction. What can I do to continue the purchase of this property? And how does bankruptcy affect the sale.
Expert Answer

Hello Anthony,

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

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

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

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

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

Question From Rand on 1/15/2019
When the last borrower dies and as a relative you have already told the lender that you have selected foreclosure, who pays the property taxes and homeowners insurance on the home?
Expert Answer

Hello Rand,

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

Question From Aaron on 1/15/2019
My father did a reverse mortgage on the home but didn't include my mom. He recently passed away. My mom is on the deed but not the reverse mortgage contract. Does she have to move out now or is the reverse mortgage void?
Expert Answer

Hello Aaron,

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

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

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

Question From Carly on 1/11/2019
Hello, my step dad passed away with a reverse mortgage and named my mom as the heir. She requested an appraisal and found out that the balance on the loan exceeds the market value of the home. She wants to keep the home but doesn’t qualify for a loan. If she were to add me to the title, would I then have the option to pay 95% of the market value even though I am not the heir? If she were to sell me the property, would the same apply or would it have to be sold to a non-relative in order to qualify for the 95% purchase option? Thank you in advance.
Expert Answer

Hello Carly,

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

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

Question From Dan on 1/11/2019
Hello Arlo,My brother, who is 75, lives with his significant other, aged 70. They have been together for over 25 years. Although they never married, they believe they are in a common-law marriage in Texas. The house they live in was inherited from her mother. It has no liens or mortgages, and the deed is solely in her name (my brother's name is not on it). In 2012, she took out a reverse mortgage when the house was appraised at $93,000, primarily due to many needed repairs. Currently, comparable homes in their neighborhood are valued in the $200,000 range or higher. Her reverse mortgage was for around $45,000, of which a large sum was used to replace the carpeting, tile flooring, and for other things. They received their final payment this month and have letters from the reverse mortgage company suggesting they might consider another loan.This leads to my questions:I believe that if she were to pass away and be the only name on the reverse mortgage, my brother would be in a difficult situation unless he could prove their common-law marriage status is valid and that he inherited the home in her will. She has no living family members or children and has a handwritten holographic will, leaving everything to my brother. Even then, I expect that if he inherited the house, he would have to pay off the existing reverse mortgage along with probate and court fees, possibly by obtaining another reverse mortgage. I'm unsure about the required paperwork, but it would likely be substantial. I have warned him that he might be homeless if she passes and he has no legal right to continue living in the house. I also raised the issue of him getting a second reverse mortgage to pay off the first one if the "five times rule" I read about in an earlier post is not valid. He cannot afford a conventional loan as he only receives about $1,100 per month in SSA benefits, and taxes, insurance, and utilities would consume most of that.I told them that they would not have to repay any of the reverse mortgages they have now until either she passes away or sells the house. If this happens, is there an estimated timeframe for taking care of this if she passes? Would they try to force my brother out of the house? How do the appraisals requested by a reverse mortgage company like yours reflect the house's value? Does it consider comps in the area and then deduct any obvious repairs that need to be made, or how does it work? My reasoning is that their house is now "appraised by the CAD" at around $180,000, but I believe it is worth more if fixed up.Thank you for your help.
Question From Angela on 1/10/2019
My brother and I (both over 62) inherited our moms home where he now resides. Can he apply for a reverse mortgage or must I be included?
Expert Answer

Hello Angela,

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

Question From Jim Fike on 1/09/2019
Dad passes away w/ home in his name only... has a Reverse Mortgage owed of $190k and the house is appraised at $200k. I'm one of the heirs (with sister & brother willing to sign disclaimers) giving me the title of Personal Representative thru the Probate process. The home is 60 years old w/ Cast Iron Pipes in the foundation needing replacement & roof work of $10-15k to fix leaks. How can I present professional quotes & estimates on needed repairs that will get the Reverse Mortgage Company to reduce their price? I don't want to pay full price and then have to put in another $50k in repairs. What is the possibility or percentage chance the Reverse Mortgage Company will work with me? I can present video proof of the decayed piping & roof estimates if they will listen... Probate will cost me $5,000-$7,000 just to speak to the Reverse Mortgage company and I must sell my home in order to pay off the reverse mortgage. I've heard all BAD about reverse mortgage companies.... attorneys will not offer advice on this (only answer probate issues).
Expert Answer

Hello Jim,

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

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

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

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

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

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

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

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

Question From Patty J. on 1/06/2019
Hello, my name is patty, my stepdad owns a home and put it on RM about 7 yrs. before he passed away, in December 2015 which leaves my mother in the home on RM. She is now 83 and the house is not accessible for her age and health, I call the bank regards to purchasing the home so I could remodel it for safety reasons, and they wanted 3 times what it’s worth, so I purchased a single story house with attached two car garage, no stairs and full house alarm system, and handicap accessible. And moving her in with me to take care of her. What happens to the house and am I allowed to do that, and the bank not bother her?
Expert Answer

Hello Patty,

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

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

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

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

Question From Bonnie E. on 1/05/2019
My 82 year old mother did a reverse mortgage on her NH home many years ago. She has 3 of my older disabled siblings living with her now, aged 62, 61, & 53. Can she do anything to assure they will be able to remain in her home after she passes away?
Expert Answer

Hello Bonnie,

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

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

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

Question From Kim L. on 1/03/2019
My mother in law recently passed Dec. 17, 2018. Her spouse passed in Feb. 2018. She did not have a will, nor mentioned anything about what would happen with the reverse mortgage. My husband and his brother still don’t have a death certificate, she lives in Brevard county, in Melbourne, Fl. So, they are saying they can’t hire a lawyer until they have the death certificate and didn’t notify the reverse mortgage lender of her death.Somehow the lender now knows she’s dead and posted a notice on the garage door that says. Reverse mortgage servicing Dept. please call us ASAP the question is, can they hire a lawyer yet, and what does the reverse mortgage lender want? The guys plan on selling the house to repay the loan and have listed the property already. We don’t want to have bad blood before they even start the process to pay the loan off.
Expert Answer

Hello Kim,

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

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

Question From Jerry R. on 1/02/2019
Will we or our children be responsible for any shortfall if we leave the home with a reverse mortgage?
Question From Val on 1/02/2019
My mom has a reverse mortgage on her house we lived with her she has passed away we have no place to live
Expert Answer

Hello Val,

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

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

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

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

Question From Bear J. on 1/02/2019
My mother died we had been taking care of her for 13 years my wife elderly mother-in-law and I live there and now the bank wants the house by Jan 15 it has been less than 1 month and we are having a hard time finding a house to rent...what do I do?
Question From Sharon B. on 12/31/2018
My mother has reverse mortgage can she put me on her mortgage so l can stay and just pay the taxes?
Expert Answer

Hello Sharon,

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

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

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

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

Question From Rhonda on 12/27/2018
If I live with my parents and they have a reverse mortgage and pass can I remain in the house?
Expert Answer

Hi Rhonda,

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

Question From Barbara G. on 12/27/2018
Can my son get a reverse mortgage from a different co. to pay my reverse mortgage off and keep house after I'm gone?
Expert Answer

Hi Barbara,

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

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

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

Question From Julie T. on 12/15/2018
My Mother, who now has onset of dementia, meaning used to service to do a reverse mortgage loan on her home several years ago. How do I find out the name of the company she used she does not remember and I cannot find any of the paperwork?
Expert Answer

Hello Julie,

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

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

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

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

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

Question From CeeCee on 12/12/2018
My parents are thinking about doing a reverse mortgage, and they live in Florida. They have been married for 40 years and retired in Florida in 2002. Is it a good idea for them to put my name on the deed of the home prior to doing the reverse mortgage? The reason for the question is in the case of something happening to both parents, we want to be able to refinance the loan and keep the home. Or is this more trouble due to them losing out on homestead taxes and anything else they are qualified for while still alive? I don't live in Florida. I live in another state, and I have been helping them out financially, but since they have equity in the home, I think they should enjoy what they have worked for all these years.
Question From Chris D. on 12/12/2018
What requires the bank to sell the heir the property at what is owed on the loan and more importantly at 95% of the fair market value?
Expert Answer

Hi Chris,

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

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

If you wait until the bank takes the property back through a foreclosure action, they are not required to sell it back to an heir, or anyone else for that matter at that point.  At that time, it becomes property of the lender or HUD and is liquidated by sale through a real estate agent and you must place an offer for purchase on the home, just as any other purchaser.  You may get the home for 95% or even less at that point if they accepted a lower offer but you can also be outbid by other purchasers on the open market.

Question From Mike on 12/07/2018
My mom passed away she had a reverse mortgage do you have to be served court paperwork before they can start in eviction?
Expert Answer

Hello Mike,

If you are referring to yourself or other family member as the “you” in this case being evicted and the “they” party being the lender, the lender can’t evict anyone until they own the property.  They do not own the property until it has gone through the foreclosure process and they become the owner of the home.  Until that time, they don’t have the right to evict anyone from a house they don’t own.

But let me lay out some alternatives for you.  Firstly, I recommend that you contact a real estate sales professional and compare a most likely selling price (not their assessment of value but what it would really sell for today for a quick sale) and compare that to the amount owed on the loan. 

 If there is still equity in the property, you may be much better off selling now and leaving the property with money than staying and waiting to be evicted with nothing.  If there is no equity, I would suggest you contact the servicer and ask about the cash for keys program.  You may be eligible to receive money to leave the home and again, you might be better off getting some cash now rather than being forced to leave later.

Whatever your choice though, the lender must secure title to the property before it can evict any owners, heirs or other occupants.  That process depends on the requirements in the area/state where you live and for that information, you really need to speak with a licensed attorney in that state.

Question From Jane on 12/06/2018
My dad died in June 2018 , his reverse mortgage is more than the house is worth . if we short sell is the estate responsible for the difference in price? if we hand over title in lieu of foreclosure, is the estate responsible for any fees? Also it is a HECM LOAN . I cannot get anyone to send an appraiser to the home. the “Management Company that sends me monthly letters say they will send an appraiser & it doesn’t happen. the estate is running out of funds for the upkeep of the house! please advise!
Expert Answer

Hello Jane,

The reverse mortgage is a non-recourse loan, so you and the estate can never be made to pay for any shortfall on the loan.  You do need the lender’s/HUD’s approval for a short sale though, so I would suggest you check with them before you attempt anything like that. 

As far as any other expenses, I cannot advise you of what other third parties may still be able to seek compensation from the estate.  One thing that comes to mind is that the estate still owns the property and if you fail to keep the home insured, the lender might have to force-place coverage, but it only covers the dwelling, it does not cover contents or liability if anyone were to go onto the property and get hurt. 

To determine any possible liability, before you stop paying for services or other property charges, I would suggest that you contact an attorney in the area where the property is located to make sure that you don’t cause yourself more problems than you want or know of by letting things go. 

There are several things the servicer must do before it can accept a Deed in Lieu of Foreclosure including title work.  If there is anything in the title that prevents it from accepting a Deed in Lieu of Foreclosure, then it would start the foreclosure process, but it certainly has had time to get the appraisal done by now.  My suggestion is to keep pressure on the servicer and don’t let up!

Question From Steve on 12/06/2018
Dad died without a will in Broward county Florida. First HUD extension just denied as bank says I have no standing on loan and property. What would be a best guess of timeframe for bank foreclosure and my sister having to leave property. Haven't been served with any legal papers yet. With many thanks
Expert Answer

Hello Steve,

Have you started any probate on the property?  As the heirs, you and your sister should have started the probate to move the title from your father to you and at that time you would have standing in the property.  I would also check with a local realtor and determine a value of the home.  Compare the value of the home to the balance owed on the reverse mortgage

It’s just possible that there is a lot of equity left, or it could be that your father owed more on the loan than the property is worth and then you may not want to even bother with the effort to probate the property.  If you do not take the steps to transfer the title, the lender begin foreclosure and I honestly can’t give you an exact timeframe for when your sister would be displaced from the home as a result. 

An uncontested foreclosure takes about 180 – 200 days from the date of filing and there are several things the lender must do to meet HUD requirements before filing the foreclosure.  I can’t say where the lender is in that process. If you find that the property still has adequate equity and you wish to contest the foreclosure to delay it, you can, but you have to remember that even then, the loan will still need to be paid off and you, your sister or both of you would need to either have the cash or be able to replace the loan with new financing I you want to keep the home. 

If that is not possible but there is still equity in the home, I would advise that you investigate possible sale of the home before the foreclosure can take place IF you can also obtain the title because you obviously can’t sell a property you don’t own. 

It all comes down to the value versus the amount owed and what makes sense to do.  Once you talk to a real estate professional and determine the likely sales price, you may decide that it is in your best interest to also speak with a licensed attorney to see what steps you can take to get the time you need to transfer the title so you can sell or finance the home. 

Or you would at least know that the only option is to leave the property and let the lender take it back without any recourse to either of you, but you would have the information needed to make informed decisions.

Question From Connie F. on 12/01/2018
My father passed and had. A Reverse Mortgage. The bank locked the house and changed the lock on the garage. Will any family member be able to buy home first? And how long does it usually take once all paper work has been given to bank? Thank You
Expert Answer

Hi Connie,

Unless the home has already gone through a foreclosure and is now owned by a new entity (whether that is the bank or someone else who bought it at foreclosure sale), the lender should not have entered onto the property and secure the home.  The home belongs to the borrower or the borrower’s heirs until such time as the lender retains title through a default and foreclosure action. 

If the property is still owned by the borrower or his estate, you don’ have to “buy” the home, you already own it.  It would just be a matter of paying off the loan though.  I think you need to speak with the lender or the servicer.  It sounds like you may have waited too long, and title has already passed to the lender.  If that is the case, you are still able to purchase the home, but at that point it would be a purchase because dad and the heirs no longer own it and subject to whatever terms you were able to negotiate.

Question From Calvin on 11/30/2018
I’m on deed father did reverse mortgage I had no clue I bought home with him before he did I was on the deed before he did it.
Expert Answer

Hello Calvin,

I do not see a question here, but I do want to comment on your statement.  This is extremely unusual, and you may want to verify the title on the property.  A lender should not be able to place a mortgage lien on the home without the consent of all property owners. 

That is why the reverse mortgage requires that all owners of the property be eligible for the loan – because all owners must sign accepting the terms of the loan.  If you also held title to the property, your father should not have been able to obtain the reverse mortgage until after you agreed to Deed the property to your dad and if that was never done, that loan could be seriously flawed.

Question From Marie G. on 11/30/2018
My Dad has a reverse mortgage on his home in California. The home has not been maintained and he is a hoarder, with excessive junk inside and outside of the house. Upon his passing, his children do not want to keep the house, and it would require too much expense/work to sell it. Are we responsible for cleaning it out? If so, what happens if we don't and just walk away?
Expert Answer

Hello Marie,

Have you checked alternatives yet?  Before you just walk away, I think it is worth your time just to make a few calls.  I recently helped a family who felt the same as you and I put them in touch with a senior real estate professional who looked at the home and at their family member’s latest reverse mortgage statement and determined that they would be walking away from a good chunk of cash and they would not have to do any work themselves to keep some cash. 

The senior real estate specialist set up an appointment first with a company that was a junk removal specialist and they came out and cleared all the trash and garbage from the home in a day.  When they found that there was enough “good stuff” left to have an estate sale, the agent obtained the family’s authority to contract with an estate sale company who for a percentage of the sale, sold everything they could and donated the remainder and obtained receipts for all donations which helped the family with final taxes.  Once the home was clear, they sold it “as is” and after all costs and commissions were paid, they walked away with over $75,000.

This family walked away without having to do anything themselves but sign the papers and before they investigated it, they were ready to give it all up because they didn’t think it would be worth the hassle.   I don’t know if this would be possible in your case, but have you checked?  A quick online search will probably net you more than one senior real estate specialist in your father’s area and they can tell you quickly what the home should sell for, in poor condition or not and it doesn’t cost you anything to find out. 

Cleaning out all the junk is not as daunting as it seems in most cases when you have a third-party professional do it and if there is money to be had, why not keep it in the family?  If you do check into it and there is no benefit to selling the home yourselves, you don’t have to do anything and can let the lender take the property through a foreclosure action and you’ve lost nothing but a little bit of time by making some calls.

Question From Renee on 11/29/2018
Hi Arlo, my father's house is in reverse mortgage and he left a will leaving his wife executor; however, she is not on the reverse loan. She sent his heirs a letter relinquishing all her rights to the property, but she will not sign over the waiver qualification to the next on the will to handle his estate. The heirs sent a letter of intent to the reverse mortgage company letting them know that they want to take over the house and get it out of reverse mortgage. How can we move forward without his wife being the hold up?
Expert Answer

Hello Renee,

You must get title to the property.  If the current title holder is his wife and she is not interested in retaining the home, the easiest way is to have her execute a Grant Deed so that you can move forward with your plans.  If she refuses to transfer the title, she would effectively keep you from proceeding because the reverse mortgage lender cannot work with you if you under those circumstances. 

 I do not know if a letter to you relinquishing her rights to the property will get you what you need as it is not a legal document that can be used to transfer title.  We can’t give you legal advice, it would probably be best that you contact an attorney to determine what steps, if any can be taken to pass the title if she doesn’t want the property and is unwilling or unable to cooperate in the title transfer. 

In that case, it would probably take some sort of a court order, if it can be changed under the circumstances at all, and for that you need the help of an attorney in the area where the property is located. 

Question From Carletta M. on 11/29/2018
My father got a reverse mortgage with his name only on the deed of house and my stepmother was on reverse mortgage. My brother and I inherited the home. Does she have the right to stay in home or can we sell it?
Expert Answer

Hello Carletta,

Your stepmother could not have been on the loan if she was not also on title to the property, so you really need to have someone review the title.  If she was not eligible at the time (not old enough, etc.), she could have been an eligible non-borrowing spouse which would allow her to stay in the home under the terms of the loan, and that would be a whole different situation. 

But her rights under the loan to stay in the property after your father passes is not a legal decision regarding rights of property ownership and heirship between her and you and your brother.  The loan does not determine who owns the home and at what time, the terms of the loan determine when it becomes due and payable but your legal rights to ownership may or may not come at an earlier date. 

If so, you just need to know that once you take ownership to the home the loan will be due, and you will have to refinance the loan, pay it off with other funds available to you or sell the property to pay the loan off.  To determine your ownership rights, you really need to seek the help of an attorney so that he/she can review the title of the property, the heirship rights in the state in which it is located and any wills, trusts, etc.  We are not attorneys and could not advise you in this area.

Question From Rhonda M. on 11/28/2018
I am a renter in a reverse mortgage home and am being forced to move out in 30 days. I need more time!!! Help!
Expert Answer

Hi Rhonda,

I’m afraid I can’t be of any help here.  I’m not even sure what the reason is that you are being evicted but if the reverse mortgage borrower does not live there with you, the reverse mortgage borrower never should have rented the home in the first place. 

I don’t know if the owner has passed and the heirs have given you the eviction or if it is the lender or who, and even if I had the information, that would be a legal question for an attorney in the area where the home is located. 

Unfortunately, I can’t give you legal advice and would not know where to begin in your case.  I’m sorry, but in this instance, we are not able to be of any assistance other than to let you know you should seek legal advice to determine if you have a grievance against the owner or any other party.

Question From Susan on 11/27/2018
My mother got a reverse mortgage. She has passed, and now it's my headache. I found out that there is a second lien on the house. Was she supposed to get that reverse mortgage? Because they did not find it in the title search. Or so they say.
Question From Steve on 11/21/2018
Dad died in June. HUD denied first extension as Dad died intestate in Florida. Haven't filed probate yet due to a conflict with family members. In your experience how long until foreclosure proceedings will start. As a side note HOA fees, insurance taxes all current.
Expert Answer

Hello Steve,

Wish we could give you a solid answer here, but every servicer is different, and every situation is different.  We have heard of loans going to foreclosure after just 6 months if they feel that there is not enough effort being made to pay off the debt and we have seen blog questions where people are still dealing with servicers that have not started a foreclosure action from 2014.  There are several things the lender or their servicer must complete before they can proceed and that is not always a smooth process. 

The lender won’t wait forever though, especially if the probate is not moving forward and it does not appear that the steps are being taken to retire the debt.  The fact that they have the taxes and insurance current are a good step. 

You may want to seek legal advice to determine what legal steps may be taken to temporarily delay any foreclosure action to give you time to complete the probation but here again, that would not give you an endless deadline so I would strongly suggest that you work toward ending the family issues that are impeding the probate as quickly as possible.  After all, none of the family will benefit if the home is lost to foreclosure while the family is locked in conflict.

Question From Amy V. on 11/17/2018
Son wants to remain in deceased parents home that has a reverse mortgage would pocket listing be an acceptable way to show intent to the loan servicer ? Thus allowing him more time to find monies/financing to repay the reverse mortgage?
Expert Answer

Hello Amy,

I am a little hesitant to give you a solid answer on this one way or the other.  Servicers can allow heirs a lot of latitude to sell or obtain financing when they see progress being made toward that end.  On the other hand, if they feel that the heir is engaged to deceive, it could bring an immediate foreclosure action.  By doing a pocket listing that is obviously intended for no one to see, it might buy you some time, but it also might cause the servicer to accelerate the due provision. 

HUD’s desire is for the borrower or in this case, the borrower’s heir to pay the loan off.  The last thing they want is to own a property.  But they also must balance that with the fact that the longer they leave the loan outstanding, the more interest accrues and the higher the claim to HUD if the loan is not repaid. 

I think if the son can procure his financing quickly, he would be fine, but I don’t see this as a solution that would work for a longer period since the servicers typically review progress every 90 days.  I am concerned that if the servicer sees a pocket listing with no activity as an attempt to deceive, they may speed up their efforts to foreclose. 

Question From Manny T. on 11/15/2018
I have no life insurance. How can I pay off mortgage when I die?
Expert Answer

Hi Manny,

After you pass, you won’t be paying anything off, whoever you leave the home to will have to decide if they want to pay off the loan and keep or sell the home, or just walk away and owe nothing.  They have several choices.  They can use other funds available to them, they can refinance the home with another loan, or they can sell the property and pay off the loan with the sale proceeds. 

If they choose either of the first two options and keep the home, they can pay off the loan at the amount owed on the loan or 95% of the current market value, whichever is less.  So, if they want the house, they would never have to pay off more than the house is worth to keep it, no matter how much you borrow or how much interest accrues.

Or if you live a long life and use all the equity in your home and they don’t want to keep the home or worry about selling it, they can walk away from the home and owe nothing.  The loan is a non-recourse loan so your estate or your heirs can never owe anything more than the property on the loan.  So, in that case, you and your heirs still don’t have to pay off anything if you choose not to, your house would pay off the loan.

Question From Linda on 11/14/2018
My mother passed away in 2014. She had a reverse mortgage on her home. None of my siblings or I want the property. Can I sign over this property to any buyer for $2500. Do I have to pay back anything on the reverse mortgage. There was no will and no executor to this property. The house is in foreclosure.
Expert Answer

Hello Linda,

I am not sure how you would do this.  If I am understanding you correctly, there was no will or executor and it sounds like you have never gone through probate on the property.  Is that correct?  Because if this is correct, you have not taken the steps to change the title from your mom to you.  If you don’t own the home, there is no way to legally transfer title, or sell it, to someone else – it’s still in mom’s name. 

If you did do the probate and the title is in your name now, then yes, you can sell a home that belongs to you even if it is in foreclosure if you have a buyer willing to purchase it as such.  If there is equity in the property, you and your siblings should really have been trying to sell the home since 2014 instead of waiting until after the home was placed into foreclosure but there may still be time if the title is in your name and the buyer has the ability to move quickly enough to resolve the debt before the foreclosure sale.

Question From Robert on 11/14/2018
In California my Mother it's in foreclosure due to getting behind in hey property taxes will bankruptcy help?
Expert Answer

Hello Robert,

You really need to consult with an attorney for this because it involves legal advice.  I think you will find that bankruptcy will not help a tax defaulted borrower and may just add to her expenses with legal fees but I cannot tell you for sure.  I would suggest that you seek free legal aid in mom’s case to determine what options might be available for her if she is unable to pay the taxes.

I might also suggest that you contact the lender to determine the amount of back taxes owed.  I encourage families to see if they are able to assist parents and other family members, especially in areas like California where the taxes are not crushing due to measures that keep existing taxes low for long-time owners.  If the family can help her become current, you can at least make the decision whether or not she can make the payments in the future or whether or not a sale is needed at this time rather than a foreclosure of the property.

Question From Nell G. on 11/10/2018
I rent a room in a house where the owner was my roommate and just passed away and he has a reverse mortgage, what are my options and how long can I stay? We live in California.
Expert Answer

Hi Nell,

I think it all depends on the heirs and what their plans are now.  They will receive title to the property, will have a loan that is due and payable, and they will have to decide if they want to sell the home, keep it or let the lender foreclose. 

Each of these options would require them to do something different and might call for a different time frame but would most likely require them to take different actions.  I would strongly suggest that you speak with the owner’s heirs if you have that information and can contact them to see what their plans are.

Question From Christine S. on 11/07/2018
My mom did a reverse mortgage & she has now passed away. My question is, I want to give the condo back to the bank through a Deed in Lieu, but since my brother, who has been living in the condo for the past 15 years, will not move out, the bank is telling me I have to evict him. Now my mom's insurance carrier is saying they are non-renewing her condo insurance. Am I responsible for the condo insurance and condo fees and anything that goes on in the condo? My brother has now moved in with his girlfriend, our cousin, and her boyfriend. It's turning into a nightmare, as I was told we could walk away from it. The bank stopped the Deed in Lieu, saying they would not start the process since they are living in the condo. So, I need to know what I am responsible for. If someone gets hurt & I don't keep the insurance, and if I stop paying the condo fees & taxes, what will happen? Thanks!
Question From Tracy on 11/05/2018
My father passed in March 2018 and through his will I am the executor and sole heir. I contacted the mortgage servicer and as instructed submitted a letter of intent to purchase the property and pay off the balance. They approved the intent to purchase agreement and stated to keep submitting extension requests every 90 days if more time is needed. I have everything going through the probate process (California) so that I can eventually get the title transfer to then secure a loan. I have always kept up communication with the Servicer, however although I submitted a timely 2nd extension request and had a phone approval that it was approved I am now being told that they hadn't received sufficient documentation and that my 2nd extension wasn't approved (nothing was in writing from Servicer) and that the property is now in foreclosure process. We are being told the soonest a foreclosure sale date can be done would be January 12, 2019, however being that I have to wait for the probate process to finish could be after the January sale date. Is there a way to stop this sale date from happening and seeing the house pulled right from under me? I've been remodeling the house ($30K), payed the 1st property tax installment, paid the insurance each month and clearly shown my intent to purchase the property - what can I do since I don't have title yet??
Expert Answer

Hi Tracy,

I would strongly suggest that you contact a licensed attorney to determine your options.  I am not licensed to give legal advice and therefore can’t advise you but your attorney can.  I find it interesting that when you showed them that the probation was underway and that you were taking positive steps to obtain title so that you could obtain your own loan that they proceeded anyway.  That clearly is not HUD’s intent. 

I do not know who the servicer is but have you tried contacting someone further up the chain of command there?  We work closely with CELINK and they are very good about explaining things to people and letting them know what is happening and why.  I think you should at least try to reach someone in management to see if you can get a better explanation of the status and then check with an attorney soon to see what options you have to delay a sale if you don’t feel you are getting anywhere.

Question From Dee on 11/04/2018
My dad passed away a couple of weeks ago and I immediately notified his reverse mortgage lender. Though I was given a verbal deadline to provide a "letter of intent" about 60 days from now, I just received a letter in the mail demanding full payment of the 300k loan balance within 30 days or they will begin foreclosure proceedings now that my dad, the last borrower, has passed away. This is in California. His estate must go through probate because of the value of the property and some other assets and there are 3 of us inheriting the house. There was no will. We want to keep the house which has about 300k in equity. How can we refinance it if our names aren't on the title (since it will be in probate)? And yet we can't obtain said title since we must first pay off the loan with that very same financing????? And if probate typically takes months or even years, how can the reverse mortgage lender give us 30 days knowing that it must go through probate??? Thanks!
Expert Answer

Hello Dee,

The lender has to do certain things to be in compliance with HUD requirements.  They may send you a notice but that does not mean that they have to live by the timeframe outlined in the notice itself.  They can always grant additional time if warranted by the fact that you are making positive strides toward the repayment of the loan.  They can’t go back and restart the process if they never start it though.  I suggest that you contact the lender again and give them an update on where you stand on your efforts and let them know of the anticipated completion of the probate.

Give them a timeline of your actions taken, what still needs to be completed and when you expect to have that done.  If you do not feel that you are getting the cooperation you need to complete your actions in the most expedient manner available, I would suggest that you contact competent legal counsel to determine your rights and what actions he can take to delay any enforcement until the probate is completed.

Question From Kim on 11/02/2018
When a person died and they have a reverse mortgage can anyone buy the home under a short sell or the family have the right first?
Expert Answer

Hi Kim,

The heirs have a right to pay off the loan at less than the full amount owed under the terms of the loan, but the lender cannot sell the property to anyone, they don’t own it.  If you want to buy the house on a short sale, for an amount less than is owed on it, you must negotiate the purchase with the individual who owns the property and then you need the approval of the lender to accept less than the full amount owed as payment in full for the debt. 

The lender has no say in to whom the property is sold as long as it is owned by the borrower or an heir of the borrower but the lender can accept or reject an offer for payment of less than the full amount owed.  If the offer is close to current market value, the lender and HUD are inclined to accept the offer whether it is close to the amount owed or not because they would not be able to do better in an open sale even if they took the property back by foreclosure.  If the offer to pay off is well-below what is owed and well-below current market, then lender and HUD will not approve the short payoff as they would not benefit from such an arrangement.

Question From Kate on 11/02/2018
My mother had a home with a reverse mortgage. In Nov 2017, my mother passed away. In April, 2018 we obtained a buyer and by July, HUD had approved the sale. However, the buyers had to seek an FHA loan after the VA loan fell through so we missed closing within the 45 days alotted by the HUD approval for the sale. After getting approval for the FHA loan, we resubmitted to the Servicer the paperwork necessary to get another HUD approval but the servicer did not submit it to HUD in time for the second closing date. Now the buyer is considering not buying the property and we are considering turning the property over to the servicer via DIL. Since we have prepaid the taxes until July 2019 - is the servicer required to reimburse us for those prepaid taxes that we would not have had to pay ?
Expert Answer

Hello Kate,

I cannot tell you how that would ultimately be resolved.  If you sign the property over by Grant Deed at this time, (in Lieu of Foreclosure or in any other instance) since it is not a sale with prorations, etc for taxes, I honestly do not know what the legal requirements would be for reimbursement of any assessments you had already paid.  This would probably be a question for the lender themselves to see what they were willing to do or for legal counsel if you were not satisfied with their response.

However, I would encourage you not to give up too quickly on the sale.  It sounds like the buyer has gone through a lot and does want the house, so are you sure that is no longer possible?  I would contact HUD directly if it were me and let them know that the sale was about to go south which would cause them to almost surely have to pay a claim if the servicer doesn’t perform very quickly. 

Brian Montgomery of HUD recently addressed the National Reverse Mortgage Lenders Association (NRMLA) and stated that HUD has not seen the drop in the losses to the HECM reverse mortgage program they had hoped to see with all the recent cuts and changes to the program and yet we still keep hearing stories of loans not clearing the system at the conclusion in a timely manner just such as this.  I would think that if you bring this to their attention, letting them know that they have the opportunity to have this property sold and off their books soon if they could just move a bit more quickly, they may be willing to expedite the process.  It’s worth a try especially since with a sale, those taxes would be prorated between buyer and seller.

Question From Wendi K. on 11/01/2018
Hello, my son was to inherit my my Mom's house in a 2010 will but after that she took out a reverse mortgage. The executor is telling me the mortgage makes that part of the will null and void and any heir that pays off the loan gets the house. Is this true? Doesn't he at least get first chance since he was named beneficiary?
Expert Answer

Hi Wendi,

I wish I could help you here but this really has nothing to do with a reverse mortgage whatsoever.  This entire question pertains to the legal rights of heirs and the binding effect of the will versus the actions of the executor of the will.  Wills can be challenged and we hear from people all the time that those charged with administering the final actions of the estate do not always follow the wishes of the creators of the will. 

The reverse mortgage is the financing on the property at this time and unless there was a new will or an amendment done after the 2010 will you speak of, I don’t see how the loan itself would have any effect on the existing will but then again, there may be some provision in the will that the executor is talking about and not necessarily the fact that it is a reverse mortgage.

I have no way of knowing this but even so, I am not an attorney and I cannot give you legal advice.  I would strongly suggest that you seek the counsel of an estate attorney in the area where the property is located who can review the will and determine the rights of any heirs pursuant to the owner’s stated wishes and the local laws.  He or she can then counsel you on the best actions to take, if any should be taken, to protect your son’s rights as an heir to the property.

Question From Scott on 10/31/2018
I'm an heir of reverse mortgage and my second extension from HUD just expired. Suits financial physical and emotional circumstances how can I extend my stay here until next May where I hand over the keys gladly. No foreclosure notice yet...
Expert Answer

Hello Scott,

There really is no magic formula to obtain additional extensions.  HUD allows lenders to work with heirs to sell the property and will grant extensions typically as long as they see progress being made in the effort to pay off the loan whether that be from the sale of the property or the refinance of the obligation.  I don’t know what part of the country you are in, but a foreclosure action typically takes a minimum of 4 – 6 months to complete after the notice of foreclosure has been filed.  If May is a hard date for you, I would suggest that you contact the lender and give them a timeframe for when you would be willing to complete the Deed in Lieu of Foreclosure and that might or might not work for them. 

Lenders cannot always accept a Deed in Lieu of Foreclosure for a number of reasons.  Firstly, title to the property would have to be yours and the probate would have to be completed or you don’t have the legal right to Grant Deed anything.  Secondly, if there are any other liens on the property, the lender would be forced to take the property in a foreclosure action in order to be certain they did not incur those liabilities.

In a foreclosure, any junior lienholders would have the option to protect their lien positions but if they chose not to do so, their liens would be removed when the lender gained the property by foreclosure sale.  Or another party may outbid the lender at the foreclosure sale (the lender’s bid can only be the amount owed plus any foreclosure costs) and then the additional lienholder may be paid off some or all of their lien but the lender would not be liable for any portion of that lien whereas if the lender just accepted the Deed in Lieu of Foreclosure, it would also inherit any other liabilities.

Your best option would have been to show them that you were making positive strides to sell the home.  Have you done anything to perfect your title to the property or market the home for sale?  Do you know if there is any equity still in the home?  My suggestion is that if you have not, to contact a real estate professional as soon as possible and determine if there is any equity remaining and see of you can sell the home quickly to retain some or all of the equity before you walk away.  Also, the lender and HUD will be much more willing to offer additional extensions if they see an effort being made to pay off the loan via sale of the property.

Also See: Steps for Heirs to Repay Reverse Mortgage After Death

Question From Cassandra on 10/28/2018
Can my mother be added back in the title of her primary residence and seek a reverse mortgage?
Expert Answer

Hello Cassandra,

I would really need to know all the information as to why she was removed from title in the first place, where she has been living and if there are any other specific reasons an underwriter might think she is not or may not live in the home as her primary residence to tell you for sure, but there is no reason she cannot get the loan if she did own the property and was removed from title for a good reason and now wants to be added back.

Every once in a while we see instances where family members think it’s best to take mom off title for one reason or another, not realizing what that does if she decides she does want a reverse mortgage later and typically with a good letter of explanation and supporting documentation, the loan can still be closed.  I would have to see all the circumstances but if it all makes sense, then there should be no problems.

Question From Susan D. on 10/28/2018
Both parents have recently passed. My Mom took out a reversed Mortgage years ago, and another equity loan on the house. I am still living in the home, because i took care of her towards the end when she was ill. There is no equity in the home. I do not plan on getting a loan to repay the reversed mortgage, or selling the home. How long before the bank can start foreclosure proceedings? And an estimated timed after that in Illinois , to be able to stay in her home? It has been 3 months since she passed.
Expert Answer

Hello Susan,

They can call the loan due and payable and begin foreclosure at any time.  There are a number of things they must complete first though to fulfill their obligations to HUD.  And even once they begin foreclosure, that process normally takes 4 – 6 months from filing until it is complete.  If you really need to know that information, your best bet is to contact a local real estate attorney once you receive any legal notification that they have officially begun the process and the attorney can tell you for certain which way the lender has elected to proceed and what the most likely time tables will be.

Question From Irma S. on 10/27/2018
If the reverse mortgage was done under my mother's name on the title only at the time and is stated on the reverse mortgage contract. Can my sister that is not living there and is not 62, be put on the deed without my mother having to lose her home?
Expert Answer

Hello Irma,

Your mom can add anyone to title she wishes without any issues with her loan.  As long as she is also still on title and still lives in the property, mom can add your sister, you, and all your aunts and uncles if she wishes.  The loan will still become due and payable when she no longer lives in the property as her primary residence but a lot of borrowers do like to have the title resolved in advance and this is perfectly fine and even spelled out as ok in her loan documentation.

Question From Ray on 10/25/2018
My mom who recently passed away and has a HECM and I’m the administrator of the estate. Brother has been living there and hasn’t paid mom any rent for past 30+ years. He is trying to get a loan to own property. But recently found out he’s currently renting rooms. Can he do that? Will this put in in foreclosure and not able to attempt to get a loan? He has also changed the locks where the other heirs do not have access to the property. Is that illegal?
Expert Answer

Hello Ray,

Let me start from the end and work my way forward.  With regard to your brother’s actions against the other heirs, I’m sorry, I can’t advise you there.  From what you are telling me, you are the administrator of the estate but did mom leave the home to your brother exclusively or as part of the estate to be divided?  I am not an attorney and cannot give you legal advice. There is, or more importantly can be, a difference between the person who has the charge for managing the duties of the estate and distributing the assets and those who will be the beneficiaries or the recipients of the estate.

As the Administrator, you could also be someone receiving the property or a portion of the property or just the individual charged with managing the estate during the probate process.  And then there is the fact that your brother has been living in the property.  This may or may not give him additional rights as a tenant of the property until all is settled.  The only one who can tell you this for sure would be a licensed attorney and possibly the courts in your area.  I would not want to venture a guess as to whether or not your brother’s actions are justifiable under the law let alone legal.

With regard to renting out rooms, the reverse mortgage does not prohibit your mom from renting out rooms and collecting boarder income.  Now that mom has passed, the loan will become due and payable.  If your brother is renting out rooms now though and is not the owner of the property, then that would be another question for your attorney as there would be a few questions.

For example, if your brother is not the owner of the property, does he have the legal right to enter into a rental contract on the property?  And if he does not own the property and it has not been left solely to him, is that his income or income of the estate and therefore should be collected and split by all heirs?  I would certainly also discuss this with a licensed attorney in the area where the property is located as well.  I wish I could be of more help but these are not issues relating to the mortgage but rather your rights as heirs and for that you really need competent legal counsel.

Question From Lynn on 10/23/2018
My mother in law recently passed away and she owes more on the home than it is worth, so we are having it go into fireclusure. How long do you suggest the heirs pay HOA fees, homeowners insurance and property taxes?
Expert Answer

Hello Lynn,

I can’t really advise you on this.  The lender can only look to the home as security for the loan but I can’t tell you that if you don’t pay the HOA fees, insurance, etc. that others may not have other recourse.  If you are concerned about the ramifications of ceasing payments to other parties or any other possible liabilities, you should contact a local real estate attorney and find out what the rights, liability and obligations of the estate are and what the rights of the various creditors are.  The attorney can also let you know if your mother-in-law’s estate or any heirs (especially if the title passed to them before the foreclosure was completed) would bear any liability from others if something happened and the property did not contain adequate insurance while it was still owned by them.  That’s a legal question that we just can’t answer.

Question From Julie on 10/19/2018
My parents have a reverse mortgage. After reading the details of a reverse mortgage, does the heirs names have to be stayed on the paperwork or do the lenders just know they have to contract any heirs?
Expert Answer

Hi Julie,

You have that a little backwards. Your lender has a lien on the property and so when the borrowers pass, the new owners (heirs) have to contact the lender to make arrangements for the payoff of the loan either through a new loan or the sale of the property or they could choose to just walk away with no liability but it is not up to the lender to start looking for the next of kin.

The lender may not even know who the heirs are.  The heirs will however find out that they own a property and it will be their responsibility to contact the lender on the home to make arrangements.  This is the same as with any other loan.  If the heirs never do contact the lender (as happens when there are no heirs), eventually the lender would have to begin a foreclosure action to protect their lien position if the courts did not produce an heir during the probate action. 

Since you know your parents have the reverse mortgage and presumably have access to their records, you should be able to contact the lender when the time comes and hopefully you will have discussed this with your parents and made plans well in advance so that when that time does come, you won’t have to add the stress of trying to figure out what you want/need to do to add to the grief of losing your loved ones.  Your plans will have all been made well in advance and you can just execute the plan.

Question From Steve on 10/19/2018
My father passed away in June.He died intestate in Fla.No probate has been filed as yet.Mortgage servicer has been very nice to date.Sister was dads caretaker and is living in home.She is battling a serious pancreatic challenge.Her goal is to stay in residence as long as possible.HOA fees taxes and insurance are all current.Trying to get HUD extension.Can I explain sisters situation and that probate will be filed in early 2019 in anticipation of trying to arrange purchase pr sale or a waste of time? with my thanks
Expert Answer

Hi Steve,

Nothing is a waste of time.  Communication is key and as long as the servicer and HUD feel that you are still working toward the ultimate payoff of the loan, they will work with you as long as they can.  I think you are doing the right thing and I would only caution that you not let things just sit or stop paying any of the taxes, insurance, HOA etc. or that would definitely cause them to feel like they had to make a move sooner than later.

Question From Veronica J. on 10/15/2018
Hello my father had a reverse mortgage on his home. It is my understanding that the mortgage company has thirty days to perform an appraisal on the home. If this does not happen in a timely matter what is the ramifications to the mortgage company for their delay.
Expert Answer

Hello Veronica,

I’m not entirely sure what your question refers to but I am going to guess that dad has passed and you are questioning the timeframe for the servicer to perform the appraisal to determine what your options as the heir are at this time.  Is that correct?  If so, HUD spells out the time requirements for the procurement of an appraisal in their Mortgagee Letter 2015-10   and it is as stated below you can find the entire Mortgagee Letter on HUD’s site HERE):

As you can see, the Lenders requirement to perform an appraisal depends on if there is going to be a foreclosure, if there will be a claim to HUD and if the heirs are going to sell the property and the heir requests it (presumably due to the fact that there may be a basis for lowering the payoff amount).  Then HUD requires the lender/servicer to perform the appraisal within 30 days from the last event shown above.

Further in the Mortgagee Letter, HUD outlines the only real penalty for non-compliance with the time requirement and that appears to be curtailment of interest accrual.  This is from HUD to the lender/servicer though.  If you feel that you have been injured by a lender due to their inability to perform and their reason was because of their need to get an appraisal on the property, then I would have to advise you to contact an attorney in your area to determine your legal rights above and beyond the curtailment of interest accrual, if any.

Question From Karyn D. on 10/13/2018
My mother who is 93 got a reverse mortgage loan all by herself and did not require my signature. Now she’s been moved to a nursing home. Why is my signature required on letters of intent to sell house? She didn’t need my signature to get the loan and now it’s fallen in my lap to sell and be charged interest if I don’t sell in time! I didn’t sign anything to say this is ok with me.
Expert Answer

Hi Karyn,

I can’t see what they are asking you to sign but I assume it is just because you are your mother’s heir.  The loan is a non-recourse loan and the only thing the lender can use to repay the obligation is the property itself, they cannot go after you or mom’s other assets or estate.  If you are concerned about the nature of the paperwork, I would suggest that you have an attorney review them but you are correct, you did not agree to be bound for any liability for the loan and cannot be made to pay for any of the reverse mortgage debt.  But as I stated, I would suggest you have an attorney review any paperwork with which you are not comfortable.

Question From Linda C. on 10/12/2018
If not heir. At lest not on paper. If they served papers to appear in county level if u want property and have become heir. But if u do not show up. How long do u have to vacate the property?
Expert Answer

Hello Linda,

I’m sorry but this is a question you will need to ask of a licensed attorney in the area where the property is located.  This is not a question of the loan itself but of the rights of a tenant at that point and it will depend on the lender’s ability to take possession and the laws of the area regarding the lender requiring you to leave and on that, we cannot advise.

Question From Jacqueline C on 10/10/2018
If a step daughter and this father take out a reverse mortgage together and he passes, can she still remain in the home, even though she is only 55?
Expert Answer

Hello Jacqueline,

The only allowance that HUD makes for someone who is under the age of 62 to be able to stay in the home with a reverse mortgage after the death of the borrower is for an eligible non-borrowing spouse.  To be eligible, anyone under the age of 62 must be the spouse of an eligible borrower, living in the home and on title at the time the loan is closed and then still in the house when the borrower passes and must meet all the other eligibility requirements of the ongoing reverse mortgage borrower (pay property taxes and insurance on time, any special assessments and maintain the home in a reasonable manner).

Any other family members, children, brothers, sisters, etc. would not meet this definition and to be eligible to remain must also be a minimum of 62 at the time the loan is closed, must also be on title and be part of the original transaction.  Your example of a 55 year old step-daughter would not qualify to remain in the home after the borrower passed.

Question From Raymichael A. on 10/10/2018
My grandparents are owner and co owner of their home.my grandpa recently moved away to live in Washington. My grandma and my family now live in the home. My question is does my grandma now become primary owner and can she make me a co owner since my grandpa vacated the home?
Expert Answer

Hello Raymichael,

The reverse mortgage allows your grandparents to add anyone to title they want as long as at least one of them remains on title and still lives in the home as their primary residence.  I am afraid you will not be so lucky with the actual title though.  As long as your grandfather is still alive and he has not signed away his portion of the property, just because he is not living there, he has not lost his legal interest in the property.  And depending on how the title is vested, your grandmother may or may not be able to grant deed you a portion of the property. 

Most married couples take title as joint tenants which is a manner taking title that gives one individual right of survivorship.  That means that one of the two cannot grant the title of the property to anyone else without the other spouse as well because that would affect their interest in the property.  But I do not know and cannot advise you on the legal aspects of your individual title situation.

I would suggest that you contact your grandfather.  If he is willing to sign a Grant Deed that signs the property solely to your grandmother, then she can sign a subsequent deed to add you to title without affecting the reverse mortgage. If your grandfather is unwilling to sign the Deed, then your grandmother probably does not have the ability to add you to title but as with every question that involves any type of legal issue though, I would highly encourage you to check with an attorney in your area to see how the title is vested and to see what you can and cannot do.   All I can advise you for certain is what the mortgage allows and the loan is ok as long as one of the original borrowers still lives in the home and is still on title.

Question From Steve on 10/06/2018
My dad had a reverse mortgage on a condo in Florida. He passed away in July and left no will or assets so no probate is being filed.There is negative equity in condo.Currently I pay the association fees,taxes and insurance.M sister was his caregiver and is staying there.Bank has not started foreclosure proceedings as of yet. When they do was is an approximate time frame in Broward county Fla.for the foreclosure process to take. With my thanks
Expert Answer

Hello Steve,

Florida is one of the states that allows both Deed of Trust and Mortgages but the common instrument is the Mortgage for the HUD reverse mortgage loan there.  It usually takes about 180 to 200 days for an uncontested foreclosure in Florida and if you don’t have title to the property, you can’t give the lender title in lieu of Foreclosure – it has to go through the process.  The timeframe can be affected by court’s schedule, any issues that come up or it can go smoothly without delay.  You just never know.

There are a number of steps the lender has to take before they can begin foreclosure under the HUD requirements but you may want to contact them to see if there is anything you can do to help them move things along if you do not intend to contest the foreclosure and if you are interested in speeding the process.  However, your sister may be happier if it took even longer if she is still living there and perhaps would rather pay the HOA, taxes and insurance rather than rent or a house payment elsewhere.  But that would be a conversation for you and your sister.

Question From Nissim C. on 10/05/2018
If I have a reverse mortgage me and my mother on the deed and I am 68 years old and my mother passes away does medicaid will come after the property?
Expert Answer

Hello Nissim,

This is something you really need to discuss with a licensed attorney who handles such matters. The reverse mortgage is not the issue, it is just a loan like any other loan. The issue is what your rights are as a homeowner who had their mother on title to the property when she was on Medicaid if Medicaid tried to assess a lien on the property.

That’s what you want to discuss with the attorney, what actions Medicaid actually can take, and that might be putting a lien on the property even if not taking the home outright but the attorney will have to tell you that. If you feel that the services of an attorney are not within your budget at this time, I would suggest that you look online for free legal aid services in your area.

Also see:

https://reverse.mortgage/medicaid-ssi

Question From Kay S. on 10/01/2018
What happens to the reverse mortgage if their are no heirs?
Expert Answer

Hello Kay,

Nothing happens to the reverse mortgage, it’s really a matter of what provisions the borrower makes for the property.  Just like any borrower who passes with a loan or lien on the property, if there are no heirs and the borrower did not leave the property to any other person or any other entity (a charity, etc.), the lender would eventually have to foreclose on the lien to protect their interest.  The property would go to foreclosure sale and if no one bids against the lender’s opening bid which consists of the amount owed to the lender, then the lender would own the property in order to repay the obligation.

If another purchaser bid higher than the lender’s opening bid, the lender cannot continue to bid and the next highest bidder (if there is more than one) would own the property and the proceeds would go to the owner’s estate.  If the owner has no heirs to claim the estate, then the proceeds would be distributed pursuant to the laws when individuals pass with no heirs and no one has any claims on the estate.

If the borrower did leave the property to someone or some group, they would have the same options as any other heir – they could decide if they wanted to sell the home, keep it and pay off the loan or simply walk away and let the lender take the home back if they did not feel the equity was strong enough.  That decision is the owner’s though.  Owners should make those decisions in advance and can set up provisions that their final wishes can be carried out when that time comes.

Question From Robin B. on 10/01/2018
My mom and step dad have a reverse mortgage my step passed two years ago.. does everything just fall into my mothers name?
Expert Answer

Hi Robin,

I’m not sure what you mean by everything “falling” to your mother’s name.  The loan is still fine as long as at least one of the original borrower’s is still living in the property as their primary residence.  As far as assets go and their estate, that all depends on how they have planned for that eventuality, how they took title to things, what the local laws are and how things were bought, etc.

I would strongly recommend that if mom and dad had no trust or will in place or if mom does not have one at this time, that you consider talking to mom about seeking out the assistance of a good estate attorney before the time comes that the attorney is absolutely required to settle all of mom’s affairs.  It is so much easier to have all of mom’s affairs in order while she is still here and able to convey her wishes than to wait until after her passing or an event that might make her unable to direct her affairs.

Question From Eric on 9/30/2018
My in-laws took a reverse mortgage on their home. My FIL passed away. The reverse mortgage co. sent my MIL a letter requesting the death certificate and offered to pay her $100 for us to send it in within 30 days. It seems kinda weird. Why are they offering to pay her for this document? What happens if they don't get the death certificate within 30 days? The offer of money for a doc that she'd gladly send anyway made me curious about this? Do they get some kind of penalty if they don't have it in 30 days? Thanks.
Expert Answer

Hello Eric,

I honestly can't answer this. I have not heard of this and don't know why.  Perhaps they have been unable to obtain a copy through normal avenues and are willing to pay to obtain a copy of the document from the family because it would cost them more money if they had to go through other channels. They may be thinking this is a money saving action, not an unnecessary expense.

Question From Mason on 9/24/2018
I’m still living at my grandma’s house in which she had a reverse mortgage and now she has passed. Now that my uncle(my grandma’s son) is name executor, do I get a chance to purchase the house if I want to or whatever my uncle decides, it goes?
Expert Answer

Hello Mason,

The reverse mortgage is just a loan on the property.  Your grandmother decided what the disposition of the property would be when she passed and made those wishes known when she appointed your uncle as her executor.  The loan has no bearing on that fact.  If you would like to purchase the home, you really need to speak with your uncle to determine what the plans are for the property. 

By being the executor, that may not necessarily mean he is to inherit the property.  Your grandmother’s will or trust or both may lay out the provisions for the ownership of the home upon her passing.  The executor is the individual who is placed in charge to see that your grandmother’s wishes are followed.  Her property may go to your uncle or to a number of people which may require a sale to split the proceeds.  At any rate, since your uncle is the one who will be responsible to be sure your grandmother’s wishes are carried out, you should start by talking to your uncle and let him know you would like to be considered eligible to purchase the home if possible.  It could be that others in the family with more claim to the home also want it, it could be that none do and you need to let them know of your interest. 

At any rate, it certainly doesn’t hurt to let everyone know that if it is possible, you would like to purchase the home.  If he was going to put it on the market for sale, perhaps you could arrange to purchase it for the sales price minus any commissions he would have had to pay a real estate sales person.  Would certainly be a win/win for all.

Question From Carolyn on 9/21/2018
Can a reverse mortgage company withhold that the viewer had already died. To the mortgage company they sell the loan to?
Expert Answer

Hello Carolyn,

I am not sure I know what you mean by the viewer had died so I am going to assume you are saying borrower.  The company selling a loan has an obligation to reveal material facts to the company purchasing the loan and if there is not another borrower on the loan, I would be willing to bet the company that just purchased a loan that is now due and payable will require the selling company to buy it back.  If there is a second borrower, the loan is still valid and it would not be a problem.

Question From Deborah on 9/16/2018
If my parents took out a reverse mortgage and one dies the my mom puts me on the seeds what happens if she dies and I'm on the seeds what can I do to keep the house do I have to move out
Expert Answer

Hi Deborah,

Your mom can Deed you on to the title as long as she adds you and does not come off of the title herself.  That will prevent you from having to worry about changing the title later after mom passes but that does not stop the loan from becoming due and payable after the last original borrower is no longer living in the home.  After mom passes (and by reading this I am assuming dad has already passed), the loan will become due and payable.

You will own the property but will have to refinance the loan at that time if you wish to remain in the home.  As the heir, HUD will allow you to pay off the loan at the lesser of the current balance of the loan or 95% of the current market value.  In other words, if your parents got their loan at the peak of the market values, they took all of the money they could and stayed in the home for many years without having to make a payment and now the balance of the loan is higher than the current value of the property, you can still pay off the balance at 95% of the current value of the home even if that is less than the balance owed.  This allows you to be able to get a loan in your name (credit and income willing) and retain the property even if the balance is very high. 

Question From Rebecca R. on 9/15/2018
I live with my elderly mom who has a reverse mortgage. When she passes am I allowed to continue living here? If not is there assistance that can help my daughter and I to relocate? What about a squatters fee?
Expert Answer

Hi Rebecca,

We get this question often.  Do you even know if mom has equity in the home?  The first thing you should do is check to see if the house is worth more than is owed on it.  If you are mom’s heirs, then you can sell the home and keep the equity in the property.  You should discuss this with mom now and take steps to clear the title to the home so that either by adding you to title now or by will or trust, the title will be transferred to you before or upon mom’s passing.

Then talk to local real estate professionals and find out the most probable selling price for the home.  If you compare that to the amount owed on the reverse mortgage and mom has equity in the home, you can put the home up for sale and possibly walk away with a lot more money than some small relocation assistance that HUD may or may not offer at that time.

If there is no equity, then you can contact the servicer and ask what programs HUD has available at the time.  There is no guarantee that there will be any program or benefits available, but you never know until you ask.

Question From Anthony C. on 8/29/2018
I have a 5 year lease agreement at a House with a reverse mortgage. The home owner recently passed away, do I have to leave the house eventhoug we have a signed lease? Does my lease have to be bought out?
Expert Answer

Hello Anthony,

I am afraid I cannot give you legal advice.  The loan will be called due and payable and if the owner had heirs that wish to keep the property, they can do so by paying off the loan.  I don’t know how their new ownership would affect your lease.  If the heirs do not wish to keep the property, the lender would be forced to take the property back through a foreclosure action and there again, I cannot tell you how that affects your existing lease.

It would seem that since the reverse mortgage was entered into before the lease, the reverse mortgage would have priority over any subsequent agreements regarding the property so I do not know what rights you, as a lessee, have.  If you prepaid the lease, there may be rights you have against the owner’s estate that you would present at the probate but I just don’t know.  That might also change based on local real estate law.  I would strongly suggest that you contact a licensed attorney in the area where the property is located to determine your rights, especially if you have prepaid the lease.

Question From Carl D. on 8/27/2018
My home supposedly has been foreclosed, and i recently received an unlawful subpoena... all because i got the lender to pay property tax for one year...is there anything i can do to stay in and keep my house?
Expert Answer

Hello Carl,

You really need to speak with a reputable real estate attorney for advice like this.  The time to have this counsel was before the lender foreclosed but I would absolutely advise you to seek advice soon to protect any rights you may still have to the property. 

Question From Diane C. on 8/24/2018
My brother has a reverse mortgage. Can he sign a quit claim deed and add his brother & wife to property?
Expert Answer

Hello Diane,

He can add anyone he wishes using the Deed of his choice in accordance with local requirements (Quit Claim Deed, Grant Deed, Etc) and that is perfectly acceptable as long as he remains on title as well and continues to occupy the property.  So as long as he is adding his brother and his brother’s wife and not replacing himself with those two individual’s, that would be fine.

Now having said that, please remember that by adding these two people to title, you are not adding them to the loan.  The loan will still become due and payable when the last original borrower on the loan is no longer living in the property as his/her primary residence.  Adding these individuals now might help later if the plan is that they dispose of the property or take title after the owner passes, but it does not keep the lender from calling the Note due and payable once the owner no longer lives in the home.

I’m not advising against it and I agree that it is easier to make plans for the transfer of the title while the owner is still living than to wait until after the owner passes if this is your goal.  I just want to make sure that you are not thinking that this would allow these new individuals to continue to live in the property under the terms of the original reverse mortgage afterwards because it would not achieve that purpose.

Question From Lashaunda on 8/24/2018
Can my grandparents give me the equity in their home to purchase the house back from reverse mortgage?
Expert Answer

Hi Lashaunda,

I am not sure I understand the question.  The home currently belongs to your grandparents and always has.  They can do whatever they want with the house or the equity in the home.  The reverse mortgage is a loan against the home, it’s not title to the house.  Just like any other loan, they still own the property and do not have to “buy the house back” – it’s theirs with a lien due to the loan. 

If you want to pay off the loan with another loan (refinance it) or sell the house and pay off the loan and use the equity for other purposes, they can certainly do so.  There is no need to “buy” anything back because they still own it now.  If they wish to pay off the loan, it would just be a matter of refinancing the loan or paying off the loan with other funds available to them as would be the case with the payoff of any loan against the property. 

If your grandparents wish to gift you the home so that you can obtain that refinance in your name, they can certainly do so but I do want to issue a caution.  They can add you to title now with no issues or negative repercussions to the reverse mortgage loan as long as they remain on title as well.  If they were to Deed the property to you entirely and come off of title, that action would trigger the due and payable clause in the documents.

For this reason, you would not want them to transfer 100% of their title in the property to you unless you were certain that you were ready to pay off the loan.  Otherwise, the reverse mortgage could be placed into foreclosure due to that transfer of title before you could complete the financing and that would create unnecessary costs at the least  and could endanger your grandparents’ home if the financing did not go through for some reason and the foreclosure proceeded.

Question From Jenifer on 8/23/2018
Can my mom take out a reverse mortgage on my property for me to prevent foreclosure?
Expert Answer

Hi Jennifer,

If mom has been living in the home and is on title as well, then you could deed your interest to her in order for her to qualify for the loan.  However, if mom has not been the owner all along and living in the property as her primary residence and you wish to transfer the home to her now to get the loan, this is considered a bail out situation and is not allowed by HUD. 

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.

Question From Wynter on 8/13/2018
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.

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.

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.

Question From Tyneah C. on 8/09/2018
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. 

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. 

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.

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. 

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.

Question From Ron on 7/31/2018
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.

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.

Question From Ron on 7/25/2018
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. 

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.

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.

Question From Sandra H on 7/23/2018
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.

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.

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.

Question From Betty F. on 7/19/2018
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.

Question From Jeff on 7/17/2018
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.

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!

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.

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.

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.

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. 

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. 

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.

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.

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.

Question From ESTELLE L. on 7/06/2018
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.

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.

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.

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.

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.

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. 

Question From Adams on 6/25/2018
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.

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.

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.

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.

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.

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.

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.

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.

Question From Betty S. on 5/28/2018
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.

Question From Mark on 5/28/2018
The owner of the house that we rent from has recently died and he has a reverse mortgage. We have 4 other roommates that live and rent out rooms. We have never had a lease or receipt s for the rent we paid. We are wondering what rights we have to stay in the house and how long can we stay when they are notified that owner has died.
Expert Answer

Hello Mark,

This is a legal question that you really need to ask of a competent attorney.  The loan will now be due and payable and I don't know what the legal rights would be for others in the home or if the owner has heirs who will want the property.

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.

Question From Butch C. on 5/23/2018
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.

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.

Question From Cathy M. on 5/20/2018
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. 

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.

Question From Brooke on 5/17/2018
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.

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.

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.

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.

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!

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.

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.

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.

Question From Daniel H. on 4/30/2018
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.

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.

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.

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. 

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.

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.

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?

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. 

Question From C Russo on 4/06/2018
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. 

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.

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).

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.

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.

Question From Carol D. on 3/27/2018
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. 

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.

Question From Corina on 3/24/2018
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. 

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.

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!

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.

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.

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.

Question From Denyse H. on 3/17/2018
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.

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.

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.

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.

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. 

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.

Question From Celeste on 3/06/2018
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.

Question From Elaine on 3/02/2018
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. 

Question From Marissa on 3/01/2018
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. 

Question From GREGORY H. on 3/01/2018
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.

Question From Steve on 2/27/2018
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.

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.

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.

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. 

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.

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. 

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.

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).

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.

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.

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.

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.

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.

Question From Amber on 12/21/2017
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.

Question From Anthony on 12/16/2017
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.

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.

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.

Question From Valerie M. on 12/10/2017
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.

Question From Erin on 12/07/2017
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.  

Question From Sophie T. on 12/06/2017
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).

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.  

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.

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.

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.

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.  

Question From Sara on 10/30/2017
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.  

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.

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.

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.

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.

Question From Kim G. on 10/02/2017
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.

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).

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.

Question From Karen C. on 8/08/2017
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.

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.

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.

Question From Robert K. on 7/13/2017
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.

Question From KAREN K. on 7/11/2017
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.

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.

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.

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.

Question From Shannon Y. on 6/07/2017
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.

Question From R Franklin on 6/06/2017
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.

Question From Gail on 6/06/2017
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!

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.
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.  

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? 

Question From David M. on 5/17/2017
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.

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. 

Question From MT on 4/26/2017
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.

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.

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!

Question From David M on 3/17/2017
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. 

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.

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.

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.

Question From Larry on 2/18/2017
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.

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.

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.

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.

Question From Tammy H. on 1/31/2017
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.

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.

Question From Stanley K. on 1/22/2017
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.

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.

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.

Question From Michelle on 12/08/2016
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.

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.

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.

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 term