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Reverse Mortgage Occupancy
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Question From J. Barthel on 6/22/2019
I’m 47 and I rent a room on a month to month basis from a man who is widowed and 89 years old. I was just informed by a friend that his he has a reverse mortgage. What would happen to me if he dies?
I think this is a valid concern for any person renting from an individual whose health or longevity may be in question. It does not matter if that individual has a reverse mortgage, a forward loan or no loan at all, no one knows what the future will bring if that owner should pass.
There is no guarantee that the heirs of the property would keep the home, that they would not want to sell the property or that in the case of mortgaged homes that the lender would not foreclose if no heir stepped in the pay the debt. There is no assurance I can give you that you will be able to remain in the home even after an owner with a reverse mortgage passes, but this is true in any circumstance.
It doesn’t matter if the owner is older or younger, has a reverse mortgage or any other loan. If the owner were to pass, you could be forced to look for a new place to live in any event.
Can you rent part of House when you have a reverse mortgage?
You can absolutely rent out some of your rooms or a second unit if you like if you have a reverse mortgage. The only thing that is not allowed is transient use of the property which is hotel or air bnb type usage. Otherwise, as long as you are still living there as your primary residence, there is no reason you cannot rent part of the home to make some extra money.
I have a developedly mentally son living with me. Can he remain in the home after my passing?
If your son is 62 or over and you place him on title and on the loan, then yes, he can also stay in the home for life under the terms of the reverse mortgage. If he is not at least 62 years of age (the minimum age for a reverse mortgage), then he would not be on the loan and when you were no longer living in the home, the loan would become due and payable. If he is not 62 or over and it is your desire to be sure he can remain living in the home after you pass, unless he has the income to be able to refinance the loan with a new loan at that time, the reverse mortgage may not be a good option for you.
I have a reverse mortgage in my name only, the deed is in my name only also, in Maryland. The reverse mortgage was taken out in 2012, my spouse was under 62 at the time and signed the papers. We are now going through a divorce. I moved out of the house five months ago, to give the spouse time to find a suitable place to live. The reverse mortgage company has found out I am not living in the home. They have told me I must be living in the home according to the first Deed of Trust. I have maintained the insurance and taxes on the home. In order to prevent the home going into foreclosure, can I have the spouse evicted, so I can move back into the home? If so, what would be the proper course of action to take? Thank You!
I cannot advise you regarding evictions, that is a legal matter and you would need to contact an attorney to discuss that process. I don’t know if it is possible or what the timeframe would be to complete an eviction under the circumstances even if it is. We are not licensed to provide legal advice and I would not want to even try to guess at what your actions might be or the probability of success.
The lender is correct though that you must be living in the home under the terms of the reverse mortgage or they can call the loan due and payable and if neither of you can pay the loan off at that point, the property must be sold before they can foreclose or the house would be a total loss to both of you. If she is living in the home and you are the only one on title, that might also create some difficulties with listing and selling the home without cooperation on both your parts.
My suggestion, especially if you are on good terms, is that the two of you devise a plan that would allow you to live in the home at least until you can sell it and then you can agree between yourselves on what to do with the equity. She cannot remain in the home under the terms of the existing reverse mortgage under any circumstances without you so there is no reason to let it go to foreclosure and you both walk away with nothing. This of course assumes that there is equity still in the home but with any appreciation, there should be.
It’s entirely your call but I would think that a compromise with both of you coming out with something instead of an attempted eviction with neither of you coming away with anything would be a win/win for all. It might still be a good idea to consult with an attorney so that both of your interests are protected, but I would hate to see you lose the home while fighting between yourselves over who can and can’t occupy while the lender forecloses.
What specific things must you do to have a place where you live declared your primary home? I have my driver’s license, car registration and insurance addressed there, my bank accounts are addressed there, I have paid utilities since 2006 there. I have moved my business there. We have used the house as a second home for 13 years staying there a week a month or so because my two sons live where the primary house is now. Due to my wife’s lung conditions and need to be under oxygen every night, we have decided to live near the boys permanently. Except for the doctor’s recommendation to go to Florida for a month in the winter due to breathing too cold air and spending some time in the summer at a beach, we will have the second home as our principal home. Right now, we live in the downstairs of the house and have renters upstairs and a student in a bedroom down stairs (I was a faculty member at very nearby Univ. and agreed to keep a student until this august). We will send in our Tax return with the new permanent address next month. I need money to fix the house with special HVAC for my wife and she cannot move in until all remodeling is done due to the saw dust etc. I am told this is not enough to qualify as my permanent residence. What shall I do? What are the specific criteria used to determine it is primary? Thank you.
You must be residing in the home at the time you apply. I realize you are in a bit of a catch 22 here, you need the loan to make the home habitable for your circumstances, but HUD will not grant the loan until you live in the property. Getting ready for the move by changing all your addresses, etc. is a great first step, but the HUD rule is that you live in the home as your primary residence, not that you will live in the home as your primary residence.
There are several ways to achieve your goals, but you must be careful because they come with downsides. You can take out temporary financing and use the reverse mortgage to repay the financing, but HUD only allows you to pay off the loan with the reverse mortgage if you stay below 60% of your Principal Limit with the payoff or you would be required to wait until the loan has at least 12 months’ seasoning.
You can also use a loan against your current residence rather than the new home, but you must be able to meet the HUD residual income requirements and I do not know what your income and rental history will show. If you have no rental history on your current home, HUD will look at the income from the rental of this property differently than they would a property with a 2-year proven history of rental income. If your income does not support both houses and all property charges, you may have difficulty qualifying for the new reverse mortgage.
I would invite you to contact our office and speak directly to a DE (Direct Endorsement) underwriter. We have people on staff who know what questions to ask and will be completely honest with you. If there is a way to structure the transaction so that it meets HUD requirements, we will show you that way and if we can’t do it the way you are hoping to get it done, we will be completely honest with you before we require you to spend any money just to find out.
Can a person with a reverse mortgage on a home in one state, rent or lease a property in another state?
If you are asking me if you can rent or lease a property in another state and go live in it and leave your reverse mortgaged property as non-owner occupied, the answer is no. The lender would call the loan due and payable as soon as they learned of the arrangement and if you were unable to repay the loan, they would begin foreclosure. If you decide you no longer wish to live in a property encumbered by a reverse mortgage, you should decide to either pay off the loan with other financing, with other funds available to you or sell the home.
How long each year must I occupy my home if I have a reverse mortgage? I was considering a Reverse on my Colorado home then buying outright a second home to 'snow bird' in --I would be in my CO home appx 6 mo. a year
You can have a second home if your reverse mortgage is on the primary residence. Your loan documents would define the primary residence as the home at which you spend most of the year and where you establish your domicile. Spending most of the year means more than 6 months of every year and that would include 6 months and one day. Establishing your domicile in Colorado state would include having your homeowner’s tax exemption on the reverse mortgaged property, using that property for your address for your driver’s license, bank accounts, etc.
Many reverse mortgage borrowers do use their proceeds to buy a second home in warmer climates or closer to family, etc. You just need to be sure that you are keeping your primary residence as the primary and that you don’t end up living more or exclusively at the “second home”. If you do ever decide that you want to make a permanent move out of the reverse mortgaged property, you should make arrangements to sell your home or in some other way pay off the reverse mortgage before you make that permanent move so that you do not face a foreclosure due to a default for non-occupancy.
My father is the one with the reversed mortgage on his home. He is nearly 92 and is not ready for a nursing home as he is in pretty good health but may need me (his daughter) to stay with him off and on to help with cooking, housework and laundry. Can I stay with him a few days a week? He does get very lonely as he lives out in the country. Would it be alright for me to move in and live with him in the near future?
There is no prohibition regarding anyone moving in with your dad. In fact, you can move in with him and he can still rent out other rooms if he so chooses. As long as he still lives there as his primary residence, he is fine.
ATTENTION: LEGAL DEPARTMENTDear Sir/Ms I have just closed (Dec. 28, 2018) on a reverse mortgage listed above and from your company and serviced by Celink Reverse Mortgage Servicers. In reviewing the occupancy requirements of sustaining the mortgage for the next 15 years I have found contradictory vacancy time limits which if exceeded by me taking a vacation out of the home could cause a risk of foreclosure. While I fully intend to comply with the occupancy time requirements and vacancy time limits, I need your legal department to give me IN WRITING a document stating what those vacancy time limits are that would cause a foreclosure to occur because I have included with this letter photocopies of THREE DIFFERENT VACANCY TIME LIMITS THAT CONTRADICT ONE ANOTHER. And obviously I don’t want to risk losing my home during a vacation due to 2 contracts signed (1.) Residential Loan Application for Reverse Mortgages 12-10-2018 signed (39 page contract) citing a 90 Day MAX VACANCY ALLOWED (photocopy included) (NOTE: I have included a copy in this letter of the State of Tennessee Code Ann. 47-30-112 listing 90 consecutive days maximum vacancy allowed also I included the Page 1 of 3 document found in the 39 page contract of 12-10-2018 called Tennessee Disclosure of Loan Terms for Reverse Mortgage And (2). Final Closing contract signed on 12-28-2018 Adjustable Rate Home Equity Conversion Deed of Trust 200-page contract) citing a 180 DAY MAX VACANCY ALLOWED before a risk of foreclosure. and also (3) a third differing vacancy time period provided by Celink Mortgage Servicer quoting in a page of a booklet that I have a photocopy included in this letter representing the H.U.D.(Housing and Urban Development Agency) time period showing a 12 consecutive month non-illness vacancy maximum allowance for lack of occupancy before foreclosure could occur as well as confirmation in a phone conversation with me to Celink on January 14, 2019 with employee David of the 12 consecutive month maximum non-illness allowance. I do not plan on having any vacation that long and Celink requires notification for any vacation exceeding two months away from home. Note this is not the for reasons of mental or physical illness vacancy exception which is always a 12 month max period but NON-ILLNESS such as vacation time away from home I am discussing look forward to the next 15 years of this reverse mortgage with your company and the Celink servicer but as you inspect the documents that I have included you can see that three contradictory vacancy time periods are listed and I need your legal department to give me IN WRITING a document stating what those vacancy time limits are that would cause a foreclosure to occur. Also one other question, the vacancy maximum time limits are listed as consecutive days during a year not cumulative time out of the house therefore if a person took a three month (90 day) vacation at the start of the year but returned home and later in the year took a one month vacation would the two vacations be added together that year for determining occupancy or not since they are not consecutive days during a year?
We are not your lender and since we cannot give legal advice, I can only tell you some general information. The best time to ask a lender these questions is before you close your loan. Borrowers receive a sample set of loan documents at the start of the lending process, another fully executed copy of the loan documents at closing and then also get a right of rescission to allow for any final inspections, including legal review, before closing their loans. I would encourage all borrowers to thoroughly review and receive answers to their satisfaction before closing any loan. Lenders only receive rights to your property that you give them. What happens now if the answers you receive are not in accordance with your plans? I encourage all borrowers to fully review this and every transaction on which you are relinquishing some rights to your property to a lender or anyone else, to fully review the terms of the transaction before you close that transaction.
As a general statement, lenders and HUD are not looking to punish borrowers who enjoy taking vacations, but they do require that this property is your primary residence. Primary residence is defined in layman’s terms in the Security Agreement and very simply put, it is your permanent place of abode, and where you spend most of the calendar year. Your example of taking a 90-day vacation and then going away again later in the year for a month, doesn’t violate your loan documents in spirit or in letter. If however you changed where you had your mail sent, you began spending more than 6 months of each year in locations other than the home on which you had your reverse mortgage, then you would not be living in the home as your primary residence as defined by your loan documents for the majority of the year.
As I started out by saying, this is an explanation of the terms contained in the loan documents, it is not legal advice. I would encourage all borrowers to obtain their own legal advice before they closed a loan if they had any questions at all.
If you have a reverse mortgage can you rent part or all the single-family home?
You cannot rent all the home because if it is a rental property and you no longer occupy the home, you are in default on the terms of the mortgage. That that point, the lender would call the Note due and payable and if you did not pay the loan back when called, they would begin foreclosure proceedings.
You can however rent out part of the home such as would be the case if you rented out some of the rooms. The terms of the loan do not allow for transient use of the property, so you are not allowed to use the property as an AirBNB rental where you have people coming and going nightly, but if you rented out rooms to regular tenants on a month to month basis, that is certainly allowed.
I am 57, disabled and have lived with my father for over 20 years. My father is 93 and due to health issues, can no longer live in the home and has moved to a nursing home. My father is the only person on the loan. Is there anything I can do to remain in the home?
The loan becomes due and payable, but your father still owns the home. You can do several things, but each would require you to pay the loan off. You would have to refinance the loan with a new loan in your name in order to repay the obligation and so you may need dad’s assistance to add you to the title of the home to enable you to obtain the financing.
In the short run though, you need to ask yourself if your disability income will support the payments for the new loan that you will need to make. Because you are not old enough to apply for and receive your own reverse mortgage, you will have to be able to obtain a forward mortgage at this time. I do not know all your circumstances or your goals, but my suggestion is that you look at all options if you think your income would not be enough as is. We work with seniors who have opened their homes to other seniors, and some collect nice rental incomes by doing so. This might be an option for you as well. You might even be able to do that relatively quickly which might allow you to start putting funds aside for the refinance before you need to make that decision, I can’t say.
You may have to consider selling the home and relocating. I don’t know what the equity position in the property is at this time or if you are your father’s only heir so I cannot say if this is even a possibility for you. The one thing I can tell you is that the loan is now due and payable and that once the lender determines that dad is no longer living there, they will call the Note, so you need to consider the best plan of action for your circumstances.
If i go back to work in another country for 3 years but leave my house furnished as my primary residence does it violate the occupancy requirements?
Primary residence is defined as the home in which you live a minimum of 6 months plus one day each year. If you were absent from the home while on assignment for a period of 3 years, you would not meet the occupancy requirements and would risk the home being foreclosed in your absence.
As a part of our retirement planning we want to rent a room or two for income. Does that interfere with a reverse mortgage since we intend to keep this home as our primary residence?
HUD has no prohibition against boarder income under the circumstances you describe. Without a history of receiving the income you would not be able to use this as income for qualification, but there is no reason that you cannot do it if you can qualify for the loan anyway with your other income, property charges and debt.
Hello, is it 1 year that you must stay property for the heir?
The loan becomes due and payable when the last borrower leaves the home. There is no time period or moratorium that gives heirs a right to live in the home for any set period after the last borrower permanently leaves the property. Heirs should have their plans set for the time when the loan will become due, especially if they are living in the home with the borrower(s). You should know if there is equity still in the home and if so, you should work with a senior real estate professional to sell the property as quickly as possible to retain that equity for the sake of the senior homeowner if they are still alive and living in assisted care or for the sake of any heirs (even if just for yourself).
My father has a reverse mortgage on his home. His house got infected with bed bugs so we completely gutted it out to replace everything. In the meantime he's with my wife and I.I reached out to the comp.he got the loan through and they're saying since he's been out of the house for 2 mos now he breached his contract .How much time does he have before they can rightfully take his home?
I would strongly suggest you get a hold of your father’s loan documents and read them. I don’t know when your father closed his loan or if it is a standard HUD HECM loan of if it was closed on a proprietary jumbo reverse mortgage with a private lender’s terms, so I am a little bit hesitant to give you a firm answer as to what his documents say. The HECM loan documents require a borrower to occupy the home as their principal residence, meaning they must occupy the property more than half the year. Those documents allow for some temporary absences not to exceed 12 consecutive months. BUT the documents also allow the lender to enter the property and if they find it abandoned or vacant, the lender can take certain steps to protect its security interest.
If you have evidence that you are in the middle of repairing/removing an infestation in the home and you contacted the company, there usually is not an issue with a temporary absence. And there is no “2 month” maximum located anywhere in any of the HUD documentation. In fact, your dad could live in another home 5 months out of every year and still follow the rules. Something just isn’t right here.
You say that they are saying “…more than 2 months…” but you haven’t said how long he has been out of the house. Unless it’s been longer than 6 months so that they can claim it’s no longer his primary home or longer than 12 months so that they can say he exceeded his temporary absence limit, I can’t tell if he has even defaulted on the terms of the loan yet. If he has not been gone longer than 3 or 4 months and you think the work is almost done, I would suggest you send them a copy of the loan documents with the appropriate section highlighted stating he only has to make the property his primary residence and send them copies of whatever documentation you have of the infestation and work done. Give them a date of when the work will be completed and when he will again occupy the property and things should be ok.
However, if he has been out of the home for 12 months already, he has passed the temporary period allotted by the loan terms and the lender is within its rights to call the loan due and payable at this time. If that is the case, they would have to perform an appraisal, send you notification and if the loan was not paid after proper notification, they could begin foreclosure.
The appraisal and notification process would take about 60 – 90 days under most circumstances and then foreclosures in most parts of the country is complete in about 150 – 180 days after filing which would come shortly after the notification period. If this is just a big misunderstanding though and dad has not been out of the house very long, you should have time to send in your documentation of the date he moved out, what has been done and anticipated move back date to stop any further action.
I warn you though, they will probably perform an occupancy inspection and make sure that your estimates are accurate, especially if there is anything that makes them believe the timeframe is not factual.
I have a reverse mtg and a friend came to visit me and now won't leave he wants to pay rent which I can't except, and he is eating my food costing extra money. Can I get a letter from my mtg company advising him that he can't stay here?
Unwanted visitors can provide a very touchy situation. The answer often lies in your degree of irritation and how far you are willing to go to rectify the situation. I cannot give you legal advice and so the very first thing I would advise is to seek the advice of an attorney if you don’t think he will move out with a simple request to do so. The reverse mortgage does not prohibit you from having anyone else there so you will not be able to get the lender to write you a false letter advising you of something that is not true.
You need to decide what the ultimate outcome you wish to achieve is and then take the necessary steps to complete whatever you need to do for it to happen. You need to decide if you want him to leave or if you don’t mind him being there, but you just want him to pay his fair share which might include rent and for him to pay for his own groceries. Once you know whether you want him gone or contributing, you then can take your next step.
Have you discussed this with your “guest” yet? Here again, you don’t want to talk to him about chipping in if you would rather, he leaves. If you don’t mind him being there if he pays rent and eats his own food, that might be a proposal you can make to him. Do you have any family you can rely on to be present when you discuss these arrangements with him? If you have children living nearby, I am sure they would be willing to help you express your desires to your unwelcome guest in a positive, but definitive manner. He needs to know that his welcome is worn out based on the current situation. How forceful you get will depend on how concerned you are about hurting feelings but if he were really concerned about you and your feelings, he would have made sure he was not taking advantage of your hospitality.
Again, I cannot give you legal advice, but I would suggest you talk to an attorney about putting him on a legal rental agreement before you even talk to him. This way, your expectations are in writing and if he does not live up to your written agreement, you do have a binding contract. As it is, if you try to have him removed now and he claims you have an agreement, he may be able to delay your actions until you can get a court date. Then you (and any family members you have that can help) will have to decide what you do in the meantime but again, I can’t stress enough the importance of talking to an attorney).
There may be laws that you must now follow to evict an unwanted tenant and paying rent or not, he may fall into that category. That’s why I stress that you really should talk to an attorney even before you speak with your “guest” so that you know what your rights as the homeowner are in advance. If you talk to him and he is unwilling to move out on his own, you may have to have him removed by a sheriff or other local law enforcement that handles such evictions and an attorney will have to tell you how to handle that.
If this becomes necessary, there will most certainly be hard feelings but if he was a true friend, it would seem to me he would not be there soaking up all your resources without chipping in to begin with. Here again, if you have any nearby family, you certainly want to bring them in on your plans so that they can be sure to support you and your actions.
If primary homeowner goes into a nursing home how long can a relative stay on property?
Once the reverse mortgage borrower no longer occupies the home, the lender will call the loan due and payable when they become aware of the change in occupancy. The timing for other occupants of the home could depend on whether they are the heir of the owner or whether other family members will become the ones who determine the outcome of the home as much as the lender.
If you are the heir, you should determine if there is equity in the home that would be lost by just waiting for the lender to foreclose on the loan and take steps to sell the home or refinance prior to that time. If you are not the heir and are know your relative who would be the heir, you would best benefit the owner and the family by contacting them now if they are not aware of the circumstances so that they can begin to take whatever steps are needed to protect the equity for the owner and the family.
The homeowner may still have money in the home that he/she could use for their ongoing care. By taking the steps to determine the value of the home and its most probable sales price, there is a very real possibility that the home may be able to be sold and funds could be set aside for the care of the owner. I’m sure if they allowed you to live in the home you would like to return the favor by preserving any equity they may still have, and this would be the best thing you could do for them to achieve that goal.
If I know without a doubt that a person has a HECM as well as a Proprietary Reverse Mortgage and lives in only one of the properties and has been renting one of the properties out for years who do I report the violation to? Let's say I just report the HECM who would I contact that would investigate this and follow through?
Tough question to answer. I guess it would depend on who holds the loan on the property being rented as that is the only one that is potentially in violation of the terms of the loan.
If you know the address, you can go on public records and check the recorded Deed. If the rented home has a HUD Deed, it will also have the HUD Case Number on the Deed. It is a number that will start with 3 numbers for the area, a dash and will be followed by about 7 digits, another dash and another 3 digits. The first 3 numbers designate the HUD office that issued the Case Number and in Oregon, that number might be something like 431-xxxxxxx-xxx.
If you contact HUD and give them the Case Number and let them know that the home is encumbered by a reverse mortgage and is a rental, they can alert the servicer to perform an occupancy inspection. And in all honesty, that’s assuming you reach someone who follows through at HUD.
If the home being rented is the proprietary property, it might or might not be as easy just to determine the Loan Holder. You can do the same thing to look up the recorded Deed, but many of the older Jumbo proprietary loans have been sold to others over the years. Some of the older proprietary programs may not be easy to track down who currently holds that loan. The Deed will tell you who the lender was who originally made the loan, but it doesn’t mean they still hold it.
If I know without a doubt that a person has a HECM as well as a Proprietary Reverse Mortgage and lives in only one of the properties and has been renting one of the properties out for years who do I report the violation to? Let's say I just report the HECM who would I contact that would investigate this and follow through?
My mother owns a reverse mortgage home. My brother (age 62+) has been living in the home for 10+ years. He is not a co-borrower. Mom recently passed away. My brother wishes to exercise some sort of occupancy rights extended to inhabitants who are offspring/heirs and greater than 62 yrs old. We’ve been told this relates to a new rule in effect in CA. Is any part of this a real thing or is it 100% fiction?
I'm thinking about selling my home. With reverse mortgage, I'm not sure how to go about this. I'm secondary owner. Husband passed away 9/2017. Also how much time can I be away from my home, while trying to decide where to re locate?
Selling is easy. It’s your home so you would list the house with a real estate agent and when it sells, your settlement agent would obtain a Beneficiary’s Demand from your lender. In other words, it is the same process as with any other loan. The time away is another issue. Your loan agreement states that the property must be your primary residence. That means you must live in the home for at least 6 months plus 1 day of every year (more than half of the year).
You are allowed a temporary absence for medical reasons, etc. of up to 12 months before the lender will call the loan due and payable. If you are gone on short trips to visit other areas to determine where you want to live, and then you return home, you are well-within the terms of the loan. If you are thinking of taking 18 months to travel and decide, you would not be within the terms of the loan and run the risk of the lender beginning foreclosure proceedings.
My relative has a reverse mortgage and lives in her home. Recently, her grandson and his family moved into the home. Can she charge them rent?
Sure she can! As long as she is not operating the home as a transient rental (meaning it is not an Air BNB or type of hostel rental), there are no restrictions that would prevent her from allowing her family to move in and also collecting rent from them while they are there.
Hi Arlo, my sister and I own outright a house, no mortgage. I will be added to the deed with a quitclaim form. Can a reverse mortgage happen if only one of us lives in the house? The property is in Massachusetts.Thank you
Yes, you can. The non-occupant owner will not be covered under the terms of the reverse mortgage which means that the loan will be due and payable when the borrower who lives in the home at the time the loan closes no longer lives in the home as her primary residence. Also, even though the non-occupant sister does not live in the home, she would be required to attend the counseling and sign some of the loan documents because she would need to know how the loan affects her rights and interest in the property.
Hi. I have been looking and could not find anything describing how long a person could be living outside of home with a reverse mortgage? Also, do any warnings have to be given before someone is forced out of home for non-compliance? Thank you.-Loren G.
My wife and I are full time RVERS. We moved our state residence status from Arizona to South Dakota. We retained our home in Arizona for a place to winter. We do not own any other property. We intend to stay in our Arizona house for the rest of our lives. I guess my question is do we have to be a resident in the state our home is to qualify for a reverse mortgage?
My neighbor moved out of his home, a reverse mortgaged home, to another owned property and is renting home. I have contacted reverse mortgage company and nothing done. Contacted HUD and they know nothing about reverse mortgages.
Your timing is spot on. We just participated in an interview and article done by Shannon Hicks of Reverse Focus for HECMWorld about this very topic. This is becoming an epidemic in our opinion that is all too often left undiscussed when HUD and others talk about the problems with the program. Reverse Mortgages are not meant for rental and other non-owner occupied properties (i.e. families for multiple generations after the borrower is gone).
When borrowers move out or pass and they or their heirs fail to notify the lender and allow the loan to remain outstanding, all too often interest that is never recouped continues to accrue which becomes a part of the loss reported to HUD when the loan is finally settled at some point in the future. I don’t think HUD and servicers even have a good idea of how many properties are no longer occupied by homeowners based on the comments we receive from folks like you.
When these loans are used correctly, they can be a great financial tool for seniors to age in place. When abused, they become a drain on the HUD MIP fund and that endangers the fund for future senior borrowers who may need that program. Due to losses in recent years, we have already seen underwriting guidelines tighten up significantly, loan amounts drop for borrowers and costs rise. And that is not to say that some tightening was not in order, but if HUD and servicers do not find a way to enforce the provisions of the loan on borrowers such as your neighbor who do not occupy the property in conjunction with the terms of the loan, the losses will continue to accrue.
I thank you for making the effort to contact the lender and hope that they do the right thing soon!
If i am just a roommate of home owner, who is deceased, the family are running from law, and i want to continue living in the home which was made to myself as much as the owner by the owner. Can i now make this home my own since she passed away.
The loan will become due and payable now and the lender will attempt to contact the heirs to determine their desires regarding the disposition of the property. The rightful owners (the heirs) will have to decide if they want to keep the home or sell it. Whichever way they want to proceed, the loan is due and payable now and must be paid in full.
If you would like to make it your home, I would suggest you contact the family and see if you can work something out with them but remember that you also would need to have the means to pay the existing loan off with either funds available to you or with a new loan.
Otherwise, if the lender is unable to contact an heir on the property, the loan will be called, and the property would go into foreclosure, so you need to be ready for this eventuality as well.
Hi, My mom has passed and I want to rent an apartment. Can I Lease Option My house to a tenant buyer? If not a long-term lease how about a 1-year lease with the option to buy after one year.
You can do anything you want with the home if you are the current owner, but you must remember that the loan will now be due and payable. Your most urgent concern will be that the lender will contact you for repayment on the loan. This means that you will need to have a new loan ready to repay the reverse mortgage otherwise, the loan could go into foreclosure.
HUD will work with you to sell the home but will not keep giving you extensions and probably not allow you to rent the home out without beginning a foreclosure action. If you want to lease it on this type of an arrangement, I would suggest you refinance the loan first into your name and then you are free to do as you please and to take whatever time you wish and if the first optionee cannot complete the purchase, you are not at risk.
My brother has a Reverse mortgage on his home. His brother lives in the house with him. If he is put in a nursing home can the other brother still live there?
If the brother who is the owner of the home and is on the reverse mortgage no longer occupies the home, the loan would become due and payable. The loan continues only until the last borrower on the loan no longer occupies the property as their permanent residence.
In Oregon, if I go into the hospital, will my reverse mortgage be cancelled?
Your reverse mortgage allows for temporary absences up to 12 months for hospital stays and rehab, etc. when needed. The thought is that if you have not moved back into the home after 12 months, then the move is permanent and at that time you do need to take steps to sell the home or have other family members who wish to keep the property pay off the loan and obtain new financing in their name.
But if your stay in the hospital is less than 12 months, there is no problem at all with your loan. My advice to you is to be sure that you have a plan in place to be sure that the taxes and insurance are kept up to date if you think your stay will be extended.
I will be traveling for 6 months. Can I rent a home with a reverse mortgage for the period of time that I am traveling. I fully intend to come back to my home after 6 months and live in it permanently.
The textbook answer is that you are not permitted to use the home for transient rental use. In other words, you cannot rent your entire home out for things like Air BnB or other such temporary rentals. You can however rent a room while you still occupy the home and you can have family come and stay with you and pay rent, etc. If they are there while you travel, that would not violate any of the terms of your loan. If you have the home listed on a rental site and you are not living in it, that would violate the terms of the loan and you could have negative repercussions as a result.
So I guess it all depends on the manner in which you are renting the home. Family, friends or a permanent tenant that continues to occupy while you are traveling is fine. Transient rental use of the property is prohibited.
Mom has a reverse mortgage. She wants to rent her house so she can afford an independent living facility. She is 93 years old. Can she rent her house?
She can rent out a room or even more than one if she still lives there, but if she rents the home and moves, the loan will become due and payable. Perhaps the rent from the other rooms can pay for a caregiver to come into her home.
If she needs the remaining equity to pay for assisted living in another location, she should sell the home to be certain the lender did not ever begin a call of the Note
For non occupancy as that could lead to foreclosure.
I am married but my husband has been living with his mother taking care of her and intends to continue to. Am I able to get a reverse mortgage? I would be living in our home.
If your husband does not occupy the home, you can still get a reverse mortgage, but he would be considered a non-occupant, ineligible co-borrower if he is on title to the property.
He would still have to attend counseling and would have to sign the documents, but he would not be on the loan as a borrower and the loan would be called due and payable if anything were to happen to you and you no longer lived in the home as your primary residence.
He would be allowed to remain on title and so he would not have to worry about the title if anything happened to you, but he would have to worry about refinancing the loan or paying it off with other funds or he would have to sell the home at that time.
In reading your answers to the questions regarding HUD homes where the borrower goes in to a nursing home or other facility, there is a 12 month period where there is no action necessary by HUD. My question is regarding my sister and her rights if any, to the home should my father dies. My sis is not financially independent. She has multiple health problems and has lived with him for about 20 years. Should he die, does she have period of time in which she could stay in the home? I was also wondering what degree of maintenance is required? The house is physically sound, however the carpeting is worn, the appliances are old, etc. Would that bring any penalties from HUD? Thank you.
The 12 month period you read about is a period that HUD will work with family members to sell a home or refinance the loan, etc. There is no automatic 12 month timeframe that your sister can just stay in the home without doing anything with the promise that HUD will not require the lender to ultimately begin foreclosure if no effort is being made to repay the obligation from the time the loan has been called due and payable.
However, the loan is not due and payable until dad dies or permanently leave the home. If dad has not passed and you are concerned that he may have to move to assisted living, he can be out of the home temporarily for up to 12 months before he is even considered out of the house permanently. So in that case, you sister would actually have that 12 month period plus however long it took the lender to act to call the loan.
Even if the lender moved immediately, foreclosure actions take time and so your sister would end up being in the home for about 18 months on the short side of the scale. Old appliances and worn carpeting is not an issue, there would be no penalties. HUD would require the lender to move faster if the insurance company filed notice that the home was in disrepair and it was going to cancel the insurance, if the city was posting notices that they were breeding mosquitos in a pool that was completely green or the weeds were so high that it needed weed abatement, etc.
My suggestion would be to contact a senior specialist real estate agent now if you think dad will be leaving the home soon and see what the house would sell for. Compare that to the most recent statement from the reverse mortgage. It could be that with a sale, there could be some money available to help your sister set up in a new location rather than waiting until the last moment and then leaving with nothing.
I have had a reverse mortgage for several years. I have always gotten a letter for me to sign stating that I live in the house. Letter of Occupancy. The last one I got was in October of 2017. This year I have not gotten one. I have called, wrote letters, and no response. Should I worry? Thank you.
It is odd that you have not gotten a letter to sign and return. I would suggest you send them a hand-written letter of your own, doesn’t have to be anything fancy or long, just saying that you have not received your occupancy certification and that you want to inform them that you are still living in the home pursuant to the terms of the mortgage.
Tell them they are free to contact you with any questions or concerns and include your address and phone number and be sure to keep a copy of the letter you send them. They should be sending you a letter every year so it’s possible the letter was misdirected or lost in the mail and it doesn’t hurt to be proactive.
If the primary home owner no longer occupies home and other owner dies what happens?
Once none of the original borrowers continue to occupy the property as their primary residence whether from moving or passing, the loan becomes due and payable. That could mean the property must be sold or the remaining owner who is no longer living in the home should refinance the loan with a non-owner occupied loan if they wish to keep it as a rental.
I wasn't aware until recently that the property I rent is a reversed mortgage home. My land lords don't live there at all but have left all kinds of things in our yard... have taken up the shed space in the yard... do I have any way of getting them to get their stuff off the property? Am I even supposed to be there? I just don't want tog et caught up if the mortgage company finds out and they lose the house or something.
If the owners no longer occupy the property, the loan should be repaid. They should make arrangements to refinance the loan with a non-owner occupied loan or sell the house. If they are receiving an annual occupancy certification that they complete stating that they occupy the home when they do not, they are sending the lender false statements in order to defraud for financial gain.
Some people don’t consider the possible result of their actions but if the lender and HUD incur losses as a result of fraud, these borrowers can be prosecuted. Not to mention that actions that endanger the MMI fund also hurt all other potential reverse mortgage borrowers as cutbacks to the program are required to minimize losses.
Can you get a reverse mortgage if you rent out part of your home??
As long as the home is not used for transient use, in other words for BnB or hotel/hostel then yes, a boarder is acceptable. HUD does allow the borrower to rent out a room and will even use the income for qualification as long as the borrower claims the income and has a history of the rental income.
Can I rent out a room if I am still living in the house and have a reverse mortgage?
You absolutely may rent out a room on a home that has a reverse mortgage on the property. HUD does not allow transient use of the property such as for Hostel or Bed and Breakfast type arrangements but has no prohibitions against your renting a room out as long as you remain living in the property as your primary residence.
What happens when one of the spouse of Reversed Mortgage dies and the remaining spouse moves in with family members due to medical reasons? No one presently lives in the house...
Once the home is no longer permanently occupied as the primary residence of at least one of the original borrowers on the loan, the lender will call the loan due and payable. If the owner or the owner’s heirs do not pay the balance in full within a reasonable time after that, the lender would begin foreclosure action to recover the loan.
If the move is a temporary one, the owner has up to 12 months to return to the home. In other words if the spouse is only going to be with the family members for a temporary time period until the medical need is over, that is not a problem as long as the leave is for no more than 12 months at which time, HUD considers the move permanent.
You really should consider your circumstances and start your planning. If you believe it is a temporary absence, then all you need to do is make sure that the taxes, insurance and maintenance on the home are kept up until the owner returns. If however you believe this is a permanent situation, I would strongly suggest that you make plans now for the final disposition of the home. For example, do you intend to sell the house or will family want to keep it?
If you intend to sell the home, I would suggest that you contact a real estate professional now and determine the most likely selling price to see what equity is still in the home. You have time to list the property and make provisions for the owners property if you begin now. If a family member wishes to keep the home, you need to realize that they will have to pay off the reverse mortgage and so they will have to have their own funds or financing available so that they can proceed.
If the individual who has just vacated the home is still of sound mind, it is so much easier to sell or transfer ownership while he/she is still alive and of sound mind than to wait until after they no longer have this status or have passed. If they lack capacity at this time, then you need to realize that it may take a while to get a court ordered conservatorship to complete a sale (to family or others) and therefore if this is the ultimate plan, taking positive steps sooner rather than later is the best way to proceed.
My mom has a reverse mortgage on her home in Redding California, she is now moving into a nursing home, do I just call the mortgage company and tell them the situation of my mom and tell them to take the house ? Do I have to remove the belongings or can I just notify them and walk away ? I do not live in house nor do I live in the state and am not on any deeds or loans. Just need to know if I have to get rid of everything in the house or just let them worry about it !
I would advise you to first contact a senior real estate specialist in the area where your mom lives. There are real estate professionals who work with seniors and their families who can tell you what the home is worth and can also work with estate sales professionals to sell any personal items that are still in the home which might bring your mom or the heirs some money.
They will go in, hold the estate sale and donate the remainder of anything that does not sell at the end of the sale. Then, if the property is worth more than the outstanding loan amount, the real estate salesperson can sell the home and those proceeds will stay with mom or the family. It’s worth the time it takes to make a few phone call before you potentially walk away from thousands of dollars.
I just did a quick search on Google for a senior real estate specialist in Redding CA and there were several pages of listings (although I did not click past the first page). They can usually tell you the value of the home or a most probable selling price very quickly and then all you need to know is what mom owes on the reverse mortgage to determine if listing the home is to your and mom’s benefit.
They can also usually put you in touch with the estate sales company and most of time, will even coordinate the sale for you. If in the end there is no equity and there is no benefit in you trying to contact an estate sales organization directly even if there is no equity for a real estate sale, you haven’t lost anything but a little time. In that even, then you would contact the lender and let them know that mom had vacated the home and you were not interested in trying to take title. They would tell you what would need to happen from there.
What if both spouses live in home and one gets sick and has to go to a nursing home for over a year and the other remains in the home, is that ok?
As long as at least one original borrower or eligible non-borrowing spouse remains living in the home, then you are still within the occupancy terms of the reverse mortgage loan and are fine. If there is more than one borrower on the loan, the loan does not require that all borrowers must always be in the property and as long as one is still living in the home, the terms are met.
I understand that with a Reverse Mortgage you have up to twelve months to sell the property for which the loan was acquired. Is there any condition in which you can vacate the property while the property is being listed for sale?
I’m not sure what you mean by having 12 months to sell a property for which the reverse mortgage was acquired. HUD allows borrowers to be absent from their homes for up to 12 months on a temporary basis before they consider the absence permanent and then the lender can call the loan due and payable – if that absence is intended to be a temporary absence.
As a separate issue, some people have mistakenly quoted an automatic 12 month period to sell a home after the death of the last homeowner and that timeframe is dependent on the heirs’ working with the servicer and their diligent efforts to sell the property. But I am not sure to which circumstances you are referring.
Since you are asking about vacating a property listed for sale, it would seem that the owners have not passed (and I am not sure if this is your home or the home of a family member or friend). But if a borrower with a reverse mortgage lists their home for sale, they are subject to the same terms as any other reverse mortgage borrower.
The borrower has the option to be out of the property for temporary absences for up to 12 months but if the lender determines the borrower has permanently left the home (which might be the case if the borrower has moved all their furniture and personal property from the home), they can call the loan due and payable and begin the foreclosure process if the borrower does not pay the loan off when called.
Depending on sales times in your area, it is not unreasonable to assume that if your property is already listed when you move out and sales times are 6 months or less that the property will sell and close long before there would ever be an issue but you need to understand the possibilities of your actions.
Our main house has a section used as an office for family business, we would like to rent that section of the property while my mom lives on the main house, is this problem?
I’m a little hesitant to answer here. Who is the owner of the home with the reverse mortgage? If your mom owns the home and the mortgage is in her name, that is no problem at all. If this is your house and you have a reverse mortgage, if you still occupy the home as your primary residence, then you certain can have mom occupy another part of the home and rent out another portion of the home. But if you are the owner of the property with the reverse mortgage and you no longer live in the home, your mother living there would not satisfy the occupancy requirement in your place.
I have a reverse mortgage and I have friends of my daughter staying at my home while I traveled and now they wont leave my home. Now I'm back and they are not allowing me on my property because they stated to the police their renting the property. What can I do to get back in my home?
As they say, no good deed goes unpunished? That’s just terrible. Have you spoken with your daughter? If they are friends of hers, can’t she intervene on your behalf? The police often can only enforce the law as they know it. I can’t give you legal advice, but I can tell you that you should find an attorney who can and the sooner the better. If the lender determines that you are no longer occupying the property as your primary residence, then they will call the loan due and payable and your troubles will only get worse. The process may depend on the instrument you used (if any) when you had them stay in the home while you traveled.
For example, did they sign a rental agreement or were they staying rent-free just watching the home? Did they pay you anything or have they been paying the utilities? These are all things the attorney will need to know and then he can tell you how best to proceed from there but the last thing you want is to have the lender begin to enforce the terms of the loan for default based on non-occupancy before you can get them out so my only real advice is do not let this sit idle hoping they become reasonable at some point in the future.
I would suggest that you not allow the occupants to give you some date in the future as that date could come and go and you may not be in any better position than you are now since they have already shown that they are willing to work in bad faith. An attorney will advise you how to get rid of squatters in your area and how you proceed is up to you but I would suggest you consider being as aggressive as the law allows to protect yourself from possible foreclosure action.
My dad has been living with a homeowner for 25 years she passed away last week and their house is under a reverse mortgage in Portland Oregon. The daughter is telling him he has to move right away and she been coming into the house with a spare key given to her years ago while my father is not home. My Dad has lived there for 18 years. I know she owens the property but does she have the right to come in when he is not home. She has taken possessions and property not of her own out of the house. My Dad realizes he has no rights to stay in the house but arn't there some kind of laws that protect for a period of time so he can move..
I’m sorry but I cannot answer this for you. This is a legal question for a practicing attorney in the state of Oregon. This question is entirely about tenants/occupants rights and really has nothing to do with the type of mortgage the late owner had. The reverse mortgage would not affect your dad’s rights in this area and it may depend on the agreement your dad had with the former owner, I can’t say. The sooner he does contact a licensed attorney, the sooner he will know what are his rights and obligations under the law.
Couple thinking about taking out HECM. They have travel plans and want to know if they take off on a one year trip and rent the home while they are gone will this be a problem? They are not moving out: just leaving for one year.
If you plan to be absent from the home for a full 12 months and to rent the home in your absence, I would recommend you wait and take the HECM loan after you return. The loan agreement states that you make the property your primary residence and that you are not using it as a rental. It does allow you temporary absences for up to 12 months for travel, hospice care, etc., but once the home becomes a rental property, it no longer meets the definition of your primary residence.
If you know you have this sort of an arrangement in the near future, it would be best to wait for your return.
Mother has a reverse mortgage. Currently, she is in a nursing home. Due to physical limitation and the dwelling structure, for her safety, her caseworker demeaned this housing alternative unacceptable. She has not paid property taxes or insurance. She received a timed Occupancy Certificate letter. Would like to know the available options for a resolution. Recently, one of her children has expressed an interest in purchasing the home. Is there a way for us to facilitate this process?
Mom still owns the house. She can sell it to one of her children, gift it, do whatever she wants. The loan will become due and payable so whatever your choice is, if someone in the family intends to keep it rather than sell the home, you just need to realize that the person who will end up owning the house will need to have the ability to pay off the loan. That could be with a refinance of a new loan or with other funds available to him/her.
I can’t advise you haw to facilitate the transfer of ownership, that’s up to your family. I don’t know if there is a trust involved, I don’t know if you are her Power of Attorney and can transfer the title of her home now or if you will need a court action to do it. For that information, you really need to speak with an estate attorney to determine if there are any special procedures you need to follow.
If i did a reverse mortgage on my single family home, can I rent it out and live upstairs ?
HUD allows borrowers to rent out a portion of their home as long as they still remain living in the home as their primary residence. When you say “live upstairs”, you are supposed to be in the main portion of the home so if the upstairs is still part of the main property, that would be no problem. If upstairs is an Accessory Dwelling Unit, that could present problems depending on how the appraiser and the lender look at it.
If my mom had a reverse mortgage and I and moving in with her myself and 2 children if my mom passed away and I'm not an heir do I have to leave or could I purchase the house ?
Your mom owns the home. She has a loan against the property that becomes due and payable when she passes. If you are not her heir, when she passes it will go to her heir – whoever that is. Whether or not you can buy the home at that time would depend on whether or not the owner would sell it to you. I can’t give you the answer to that question but would advise you to ask your mom’s heir and I assume if you know you are not your mom’s heir, you know who that is.
The one thing I would remind you is that the loan will become due and payable at that time. You will need to be able to pay the loan off in order to continue to live in the property. Usually that’s just a matter of refinancing the loan with a loan in your name but only you know if your income and credit situation will allow you to obtain a loan for a home. That may also be something that you can plan for in the future if it is something that is not possible at this time.
Mom just went into a senior living home. Her house is up for sale. Her relatives who were helping with care before she moved and are still in the home. Is there a rule on how long they can stay rent free or a grace period once she moves out?
As long as your mom still owns the home, she or her heirs can dictate who still lives in the home and under what conditions (paying rent or rent-free). If the house sells or if the lender has to take the title back because she or her heirs never do sell the home and the lender is forced to foreclose as a result of the occupancy, then obviously this arrangement would change because mom would no longer be the legal owner. When/if either of those events occur (sale or foreclosure), the new owner would dictate who would be allowed to live in the home and under what conditions.
If her heirs decide to keep the home and pay off the loan rather than sell the property, then it would be totally up to them as to how long the relatives could remain and under what compensation arrangement.
Our landlord recently passed away and she had a reverse mortgage on her home. We live in an attached apartment without a lease. She left the home to her son in her will. Do we pay rent to her son now?
I’m sorry, I can’t really answer this for you. I can’t give you legal advice and the question you are asking has no bearing on the reverse mortgage. I would suggest you contact the new owner (the son) to determine his plans though because I can tell you that now that the original borrower no longer occupies the home as her primary residence, the loan will be called due and payable.
If the son is unwilling or unable to pay the loan in full with either funds he has available to him with a new loan, the lender will foreclose on the reverse mortgage. I tell you this because you should know what the disposition of the property is going to be.
Can I have a tenant live in the house with a reverse mortgage?
As long as you continue to live in the home as your primary residence, yes, you can have a tenant occupy the home with you. There is nothing in the loan that would prevent you from renting out a portion of your home such as a room or your guest house, etc. to a tenant while you are still there.
You cannot rent the entire home out to someone and then move out. If you were to no longer occupy the property as your primary residence, that is a call event under the terms and conditions of the loan and the lender would call the loan due and payable (request immediate payment in full and if you did not pay the loan off, they would begin foreclosure).
I am a widow. If I move into an assisted living facility and there is no equity in my home ( as is the case ) do I have to pay the lender the difference? Also, must we try to sell the home immediately?
You can be out of the house for up to 12 months on a temporary absence under the terms of the loan without violating the loan terms. In other words, if you are away for a temporary time period of 12 months or less, you did not violate the terms of your reverse mortgage agreement and you would not have had to sell the home if you think that during that 12 months you might be returning to the home.
If you permanently move out of the house, in other words, you have all your belongings removed and do not intend to reoccupy the home, that would be considered a permanent move and you should contact the lender to let them know of your actions. If the house is worth less than what is owed on it, you may be able to work out something with them so that you don’t even have to be the one to sell the property but the sooner they are able to assess the situation the better the chances to mitigate losses.
But with regard specifically to any losses from your need to move to assisted living or nursing home, the reverse mortgage is a non-recourse loan. You will not be eligible for other HUD related lending programs while there is a deficiency balance (a loss to HUD), but they also cannot look to you or your estate to pay for those losses. They have only the property for recourse to repay the obligation.
Can I rent out portion of my home? I have a reverse mortgage?
As long as the portion of the property you are renting is not for transient use (hotel, B and B, etc), for anything that is against the zoning or legal use of the property and you continue to live in the home as your primary residence there are no restrictions against you renting out a portion of the home. Many owners do rent out a room or two in order to augment their income and this is perfectly acceptable.
My Grandmother lives in the state of Georgia. She has a reverse mortgage. She is thinking of moving in with her friend and renting the home to her granddaughter. Will this be OK or does she have o do some type of transfer?
Under the terms of the reverse mortgage, once your grandmother is no longer living in the home as her primary residence, that would be a default under the terms of the Note and the loan becomes due and payable. If she were to make the move you describe, she needs to be ready to pay off the loan when the lender calls the Note due and payable. The Note has a clause in it that is called an Assignment of Rents that when a borrower does default and the property is rented, your lender in Georgia may require the rents to be assigned or paid directly to the lender.
Your grandmother can refinance the loan with another loan if she wishes to move and keep the property (could not be a reverse mortgage – they are only available for a borrower’s primary residence) or she could sell the property and pay off the loan that way. But if she moves and rents the home, the ensuing default under the terms of the loan would cause the lender to move toward securing repayment which would ultimately include foreclosure if not paid before that point. This outcome would ultimately not be good for anyone.
My dad and step-mom have a reverse mortgage on their home in California. My step-moms health is failing and she was moved into a long term care facility in another state, Georgia to be close to her daughter. My dad is continuing to live in the home in California. In order for my step-mom to continue receiving Medicaid monies to pay for the care in Georgia they are requiring that the home be transferred into just his name and her name be removed from all of their accounts and the home title, has to do with Spousal Impoverishment Rules. Can she be removed from the title without jeopardizing the reverse mortgage rules?
As long as at least one of the original borrowers on the loan remains on title and living in the property, they can add or remove anyone else from title they wish. There would be no problem removing your step-mother from the title as long as dad was on the original loan, is still on title, and still lives in the home as his primary residence.
My parents have life occupancy on the house but I will inherit it. Can I get my own reverse mortgage and pay theirs off?
Hi Mary Ann,
You can get your own reverse mortgage as soon as you occupy the property and the title passes to you but you cannot get a reverse mortgage in your name if you are not occupying the home as your principal residence.
My mom has a reverse mortgage. She has applied for Medicaid and will go to a nursing home. Before going to the home Can she transfer the house deed to her 2 daughters to avoid probate and paying Medicaid fees for her care?
Anyway you look at it, the loan is going to become due and payable. Once mom is no longer living in the home, the loan becomes due and payable. If she transfers the title, the loan also becomes due and payable when she is no longer on title. So either action will result in the loan becoming due and payable but if she transfers title, it would come to the lenders attention much quicker as the title transfer is immediate but mom has up to 12 months temporary absence before the lender can act on the absence without a title change and since you said she willgo to a nursing home but presumably has not left yet.
You need to decide what you are going to do knowing that the loan will need to be repaid either way. If ultimately you need to make a move to protect the asset, then I would suggest you look into doing that sooner rather than later but you begin the steps immediately to either refinance the loan in one or both of the daughter’s names or place the property on the market for sale. I can’t advise you legally with regard to the effect the transfer will or will not have on the Medicaid nor what you should ultimately do there. But from the standpoint of the reverse mortgage, I can tell you that once mom is out of the home or once the title does transfer, the loan will be called due and payable so you need to be prepared to replace the existing financing or sell the home so the lender does not have to begin foreclosure to repay the obligation.
My concern is about occupancy checks. After receiving my reverse mortgage, I'm hoping to construct a partial second story level onto my home (such as an in-law suite, but with a private entrance,) and I want to confirm that I would be allowed to move upstairs into the new suite while renting out the original downstairs portion of the house to a long-term tenant. In the event the lender stopped by my property to make an occupancy check, he/she would likely knock on the front door of the original house, and my worry is that a tenant might mistakenly tell the lender that I don't live there, which could obviously raise a red flag.Is this living situation something that requires my lender approval before I move into the smaller upstairs suite? How might I avoid the possibility of a mistaken occupancy check?
Most occupancy checks are done via the mail initially. Your reverse mrotgage lender would already have received notification of the existence of the additional unit in order to send you the monthly statement and therefore would know that they could reach you at the location upstairs and not at the main entrance. Secondly, since you are aware of the propensity for the misunderstanding, it would seem reasonable that you let your tenant know where you could be reached in the instance that someone knocked on their door attempting to locate you. If the additional suite had a clear entrance and was marked for mail delivery, the lender should also have no problem locating it.
HiAs of 1/27/18 my 91 year old father (divorced in 2007, his ex-wife was a reverse mortgage co-borrower and quitclaimed the property to him and moved back to her home country) was temporarily placed in a six client assisted living home for rehabilitation after a hospital stay in Dec. 2017. Because of a previous car theft and check fraud by the thieves in Oct. 2017 who were ultimately arrested, we asked our daughter (along with our granddaughter) to temporarily stay at his home (which has a reverse mortgage) to act as a caretaker/deterrent to any possible vandalism, etc. She is not renting from him and pays all her own living expenses (Utilities, food, etc.). She maintains the property and gives us his mail regularly. The property is about an hour away, so this arrangement is working well for all parties and has my father's blessing. This also greatly benefits her as her own house lease expired on 1/31/18 and needed a place to live temporarily. She recognizes that this is a short term until grandpa returns home, which we expect will be in 2-4 mos. Question: Is this allowable if he is not physically there and temporarily at assisted living and no other loan borrower is at the property? CeLink (new subservicer taking over for Financial Freedom) recently sent 2nd notice Occupancy Verification dated July 2, 2018 Certificate. We have no record of the 1st notice. I will have him certify and sign the form and call them as I was listed as an authorized contact person.To the best of my knowledge, he has been signing these forms himself in the past (his signature only, not signing for her) since the divorce. I suspect that he has never notified any servicer about the divorce. Question: Could not notifying the servicer of the divorce be a potential issue?Finally, I believe we understand the 12 month rule as it applies to him. He has been in assisted living exactly six months as of July 27, 2018 including two hospital days for a total of 12 days.Question: How to approach/ notify CeLink without raising any unnecessary red flags concerning his temporary absence?
Dad can be out of the home on a temporary absence for up to 12 months with no problems. There is no issue with the divorce and as long as one of the original borrowers remains in the home as his primary residence, it makes no difference that they divorced and his ex-wife has moved out of the house.
Dad can sign the occupancy certificate and if the servicer does an inspection, you need to be prepared with the records to show that dad has only been out for 6 months and that he will return within the next 6 months so that if they do an additional inspection at that time, he will be back at home before he has been out for 12 months or more.
Otherwise, they can call the loan due and payable under the terms of the loan. But the fact that he has his granddaughter there now or even still there after he returns is immaterial. There is no provision preventing him from having family living with him.
I was caretaking my mother in her reverse mortgage home. She has now moved into assisted living and will not return. My brother signed over the house to HUD two weeks ago without my knowledge. How long can I stay in the home? What are the details and ramifications if I stay?
I can’t give you legal advice and I would suggest that you contact an attorney to determine your rights as an inhabitant of a home when that home is being taken back by the lender. I know that by law, there are occupancy rights and I simply can’t advise you on those.
The reverse mortgage requires you to live in the home as your primary residence and once you no longer are doing so, the loan becomes due and payable. If you are renting a portion of the property such as a room to a tenant while you still live there, you are still in compliance with the terms of the legal documents. If you move out and rent out the entire home, that is a default under the terms of the loan and the lender will call the loan due and payable and if not paid back in a reasonable timeframe from that call, they would begin foreclosure proceedings.
My mother is moving into a HUD subsidized, senior income based living facility. Her primary residence has a reverse mortgage on it. She is not moving for any mental or physical reasons; the house is just becoming to much. I am her son and would like to live/occupy it (I actually grew up in this house in the 60's and 70's) for 12 months. Is this legal? If so, is there a way we inform the bank and senior facility? Thanks, Gary D.
The home belongs to your mom until such time as she sells it or the HUD approved lender has to take it back by a foreclosure action to pay back the loan. If you do not plan to seek other financing in your name and keep the house, I would suggest that you first check with a real estate agent and see what the property would most likely sell for if listed for sale.
If the home would sell for more money than is owed on the reverse mortgage (check mom’s most recent statement), you can sell the house and keep the money above and beyond the amount owed. If there is no equity left in the home, mom still owns the home until the bank has to foreclose and if mom allows you to live in it up until that time, that is her choice. It is not up to the bank who does and doesn’t live in the home while it still belongs to mom, mom has that call.
When a borrower has 2 reverse mortgages how does the lender verify that both are split time primary residences?
This should never be the case. Borrowers are only allowed one primary residence and therefore, only one reverse mortgage at this time. In the distant past, there were jumbo/proprietary programs that did offer reverse mortgage options for bona fide second homes (not rentals) but those programs have not been available for quite some time. Borrowers were never allowed two HUD HECM mortgages. HUD has a system whereby borrower’s information is tracked and borrowers with an existing reverse mortgage are not eligible for a second loan.
Can someone with a reverse mortgage take in a room mate for a monthly rental amount?
There are no provisions in the reverse mortgage that would prevent you from renting a room and collecting rental income. You must continue to live in the home as your primary residence but if you choose to rent a room, that is not in any way a default under the terms of the mortgage as long as you are still living there and meeting the other obligations (paying the taxes and insurance on time and maintaining the home in a reasonable manner).
I have a tenant who signed a rental agreement last October for a year occupancy in my mother's 2nd floor unit home. Although, this tenant (a single mom with two kids) was struggling financially (she had only 1st month rent and couldn't afford the security deposit), my mother(who was gravely ill at the time) was kind enough to grant her the apartment, ONLY IF the tenant agreed to pay monthly rent plus payment installments on her security deposit until is paid off. This agreement is stated on the lease. The tenant made good in paying rent until my mother passed away this February and the house is going into foreclosure due to a unaffordable reverse mortage loan. the tenant has not paid rent since April, but was given several verbal notices by me (the executor of her estate)to vacate the apartment and plenty of time to find a new place. My question is Can I issue her a 5 day notice due to the following: 1) she has a boyfriend staying with her who is not on the lease which is a violation on her lease, 2) the boyfriend is accusing me of making harassing phone calls and has threaten to make trouble if it doesn't stop and 3) the tenant claims that she not entitled to pay anything (according to counsel with her lawyer)and can't afford to pay what she owes,
I’m sorry but I can’t answer this for you. This is a legal question that you have to direct to an attorney who specializes in this area of law. The response has nothing to do with the type of loan on the property but more with renter’s and owner’s rights and obligations and for that you need to speak with a real estate attorney in the area where the property is located as those laws may differ from state to state.
My in-laws have a reverse mortgage now, in both names. he has been in a nursing home for a few years paid for by medicare. while she still occupies the home. if she would sell the home, would they lose their proceeds to medicare
I cannot give you legal, insurance or tax advice – I am not licensed to provide guidance in any of those areas. I would direct you to an elder care attorney for advice in this area. I know that there are different programs that carry different benefits and different responsibilities and I cannot comment on them.
The reverse mortgage is just a loan, and the rights of the various programs should not change based on a reverse mortgage as opposed to any other home loan so this really isn’t even a reverse mortgage question. And there is a real difference between Medicare and Medicaid and there are differences in the “cost sharing” of the programs and many people use the terms intermittently so I would be hesitant to comment anyway on the off-chance that your in-laws actually have Medicaid and not Medicare or are what is known as “Dually Eligible” and qualify for both.
To find out how their particular situation would be affected, you should really consult the qualified individual and in this case, that would not be us.
I own my home. Can I use the reverse mortgage to add an in law apartment and let my daughter and family live in main part of house. She lives with me now
As long as you occupy the home and continue to occupy the home as your primary residence, you can use the funds for whatever purpose you choose. When first getting the loan, HUD likes to see that the borrower occupies the main portion of the home but after the loan has closed, there is nothing in the documentation that states what portion of the home you must occupy or where your family can live – just that you continue to live in the home as your primary residence.
If someone lives in a home and the owner receives their mail but does not live there and the Tenant pays rent what will happen
This is not abiding by the reverse mortgage terms. The lender can and often does do occupancy inspections as a condition of the loan. If they determine that the home is being rented and that the borrower no longer occupies the home, the loan will be called due and payable in one lump sum at that time. If the borrower is unable to pay the loan off when called, the lender would have to begin foreclosure proceedings due to the breach of the terms. If the owner does not intend to occupy the home, they are better off either refinancing the loan or selling the property before this happens.
HI my mom got a reverse mortgage and i have been living with my mom for the last pass 7 years......my mom now want to go to ASSISTANT LIVING i want to continue you to stay in the house and i want to take out a mortgage on the 95% value of the house....but my question will they let me stay in the house while i get the financing together?
Your mom is allowed a temporary time away from the home before they can call the Note due and payable anyway. If you begin now, you should be able to have all your financing in place before your mom ever runs into her mandatory notification for leaving. You can have the home ready to finance and change title before the lender is ready to call the loan due and payable.
Brother and sister both names in the home deed as owners. The loan has the brother name only, can reverse Mortgage for only the sister to occupy the home be feasible, sister lives with ssi but brother is willing to support her financially.
If they are both on the title now and the sister is the only one living in the home, they can do a reverse mortgage with the brother still on title but he would be considered a non-borrowing individual. What this means is that he can stay on title and so if anything happens to the sister, he will retain ownership to the home but since the sister is the only person on the loan, when she no longer occupies the home as her primary residence, the loan would become due and payable.
If the sister has not been living in the home, she would have to establish occupancy first so that there would be no question as to the owner occupancy of the home. There may be questions for things I do not know based solely on the content of your question. For example, why are brother and sister on the title now but only brother on the loan? Is brother also 62 and does he occupy the home or does he live elsewhere? If brother does occupy the property and sister does not at this time and bother is not yet 62, it could be construed as an attempt to bring sister on just to meet the age requirement even though she does not and will not occupy the home so the situation will obviously be reviewed for total circumstances to be sure it meets all HUD requirements.
My primary residence is in New Jersey, I want to buy a small trailer in Texas to visit my children a few months a year is this allowed with my reverse mortgage? it won't be rented out. Thanks!
There is nothing that says you can't own a second home or visit it from time to time. As long as the reverse mortgage property remains your primary residence (you are there more than half the year and you get all your mail at that address) and you are not gone for more than 12 months for any one temporary absence above and beyond the more than 6 months per year for each ordinary year, you are fine.
When the home has a reverse mortgage in the homeowner goes into a nursing home. How long do the occupants of that house have to live there?
The loan becomes due and payable when the owner no longer lives in the home as their primary residence. The loan does give the owner a provision for temporary absences from the home for up to 12 months but if you know that the move is permanent, then the lender would seek to call the Note due and payable as soon as they became aware of the permanent move.
This can be quickly or it can take many months and then the process itself takes several months if the borrower or their family are not planning on selling the home to retain some of the equity. The best thing I can tell you is that there is no exact time frame but you need to be aware that under the terms of the loan, once the last borrower on the loan is no longer living in the property, the lender can move to call the Note at any time.
I bought a little house in Burbank, CA 91506 and I am on Reverse Mortgage. The house has leaking ceilings, bad plumbing, bad electric connection, bad sprinklers.... and other problems. I know I am wrong because I signed all the papers my Realtor told me to sign without reading them (I trusted him and I should not have) but isn't a Reverse Mortgage home be in order and habitable? The escrow closed on Feb. 23rd, 2018 and as of today I have not been able to move in the house. All my furniture is in the garage and the driveway as I would like to fix the house first.I am 85 y/o; I will be 86 this next August 10th, 2018 and I am alone with a puppy and nobody else. Please just give me an answer. Thank you for your time and kindness!
There are a number of issues here that you should consider. Firstly, with all FHA loans you should have received a notice about getting a home inspection. Did your real estate professional and lender give you this notice and if so, did you do it? Because if you did the home inspection and if you have a warranty, the warranty company should be on the hook for anything they missed.
The reverse mortgage is a home loan that is insured by FHA. The lender relies on the borrower and even more so, the appraiser to be their eyes in the field when it comes to the property. The appraiser can only make a visual inspection though. If he/she goes through the home and sees signs of water damage from a leaking ceiling, that should be noted in the report and the lender would typically call for a roof inspection at that time. If the tell-tale signs of a bad roof were repaired but not the roof (the seller painted with something to cover the signs of the leak but never corrected the leaking roof), or if you know that the seller or the realtor were aware of other issues and did not disclose them, you may very well have legal recourse against the seller, your agent and/or the seller’s real estate broker as there is a duty to disclose in many states and California is definitely one of them. If you believe they were aware of these issues and kept them from you, I would suggest that you contact competent legal counsel and ask them to review your circumstances and documentation. I cannot give you legal advice and do not know how strong your case is but there are definitely laws against defrauding buyers by non-disclosure of known issues and you may have legal remedy if that is what happened to you.
My labor is in a nursing home and squatters are inhabiting her home. What can i do?
This is a bit tough. If she hasn't been there for over a year, she is still within the terms of her reverse mortgage. In that case, it would be entirely up to the homeowner or her family to contact the authorities to seek to have the Intruders removed. I don't know what you can do as a non-owner of the property.
If she has been gone for over a year, you can contact HUD with the address and they should be able to notify the servicer of her loan. I don't know how quickly they will react though.
Can my neighbor rent her home weekly during the summer months if she is not living in the house ?
Transient rental use of the home is not permitted under the HUD program but HUD does allow the borrower to be away for temporary time periods. Once the loan is closed, if the borrower is not gone too long I don't know how the lender would enforce the transient use prohibition but if the home was being rented at the time they perform an occupancy inspection it could cause them to call the loan die and payable.
I am married to a man in Australia for 25 years he wants to take out reverse mortgage on home its in his name only what happens to me if he dies can I get a claim on home?
I’m a bit perplexed. If he lives in Australia, he would not be eligible for the reverse mortgage here in the states as the property must be your (his) primary residence in order to be eligible. However, the loan does nothing to your rights to the property after his death. If you had a right to a claim after his death before the reverse mortgage, you would still have one after he obtained a reverse mortgage, but the loan would have to be paid off once he passed. To determine that question, you need to seek the counsel of an attorney licensed in the state in which the property is located.
If my mother plans on staying in a nursing home, who do I contact I've been having trouble trying to locate someone to report this to?
The first thing I would do is contact a real estate agent to determine if there is equity in the home and if it would benefit you both to sell the house. If not, then get all of mom’s personal property out of the home and when you’re done, contact the servicer listed on the monthly statement she receives and tell them she has permanently vacated the home and you would like to make arrangements for them to take the home as you cannot sell it for at least what is owed on the loan. They will take it from there!
Have a reverse mortgage on my residence in Las Vegas for the last 9 months. The house is too big and I over did it. Can i sell it and downsize and get another reverse mtg or do i have to be here for a special length of time?
There is no minimum time you must keep the loan in order to be eligible to obtain another reverse mortgage if you sell this home and the loan is paid in full with no deficiency on the first reverse mortgage. You can only have one reverse mortgage at a time and HUD will not grant you another one if they lose money on the first one they did until any deficiency balance is repaid, but with a repayment so quickly there should be no reason you cannot sell your property in this current market and repay the loan in full so that should not be a problem.
If my mother moves to an apartment what happens to her reverse mortgage?
If your mom leaves the home, the loan would be called due and payable by the lender. If that is the case, the loan would have to be paid in full (refinance or sale of the property) or the lender would have to foreclose on the loan to protect their interest. If this is something that your mom feels she really needs to do, the first thing I would suggest she does is contact a real estate professional and get some information on selling the home. If the house would sell for more than is owed on the loan, she would want to put the home up for sale so that she could sell it on her own terms and keep the remaining equity when it sells. If the house is not worth as much as is owed, then you all have to decide if her moving to an apartment where she has to pay rent is better than her being able to stay in the home where she has no payments (but does have to pay the taxes, insurance and maintenance).
If you determine that she really must leave and there is no equity, then you probably would want to contact the lender and let them know once she has vacated and ask if they wish to take a Deed in Lieu of Foreclosure to end the process for mom as soon as possible. If she has to leave the home anyway, it may benefit all parties if the lender can take the property back as soon as she has left to help mitigate some of the losses. The loan is a non-recourse loan so the lender can look to no other assets to repay the loan so it is also in their best interest to try to resolve the situation as quickly as possible. In any case though, if you can sell the home and retain some of the equity, that is by far your best outcome.
My 89 year old father got a reverse mortgage in Hawaii in 2017. He now wants to sell the home and move into a nursing home. My two sisters and niece live with and help him; they are afraid they will not be able to afford a place to live on their own if he sells the home. Can he put them on his deed so they are able to stay in the home if he moves into the nursing home?
Unfortunately, just putting them on the Deed doesn’t not help their situation. Once he permanently moves out of the house, the loan will become due and payable. They really should be looking at other options such as whether or not they can refinance the loan with a new loan in their names if they wish to stay in the home. If he only got the loan in 2017, he has not had it very long and could not have accrued much interest and the loan to value should be relatively low. If refinancing the loan is not an option, they can sell the home and use the proceeds to purchase a home that is more affordable for their budgets or look into renting at that time but the sooner they do make a move, the more equity will be left in the home giving them more money to work with on a refinance (less to pay off) or on a sale (more money in their pocket after the sale).
My father in law has a reverse mortgage ! My husband and I have lived with him for the past 12 yrs ! He recently fell and ended up having surgery and then rehab , he is a full assist , he wanted to come home so we made a lot of accommodations to the home to make it wheel chair accessible! He is now home with us but it’s getting very hard to take care of his needs where we can’t get any kind of care giving help. We both need to work full time ! My question is if we find him a nice nursing home , what happens to the house and do we need to leave ? Also can the state take it over if there is more value to the house even though my husband and I invested with the cost of material and labor ?
The state is not a part of this equation. The loan requires the property to be owner occupied or the loan becomes due and payable. You are doing the right thing to be looking at solutions now, before he moves out of the property rather than waiting until after.
The home belongs to dad, not the lender and certainly not the state. If dad is still able to handle his financial affairs (after all, the fall may make him physically unable but he may still be mentally fit), then dad can add you and your husband to title now and you can look into refinancing the loan into a standard or forward loan which you would just keep, even after dad moves to the new accommodations. Don’t have dad transfer all of his interest or that would trigger the due and payable clause of the Note when dad no longer had an interest in the property (but dad can add whoever he wants as long as he is still on title as well). If a new loan is not possible, then with the remaining equity in the home, you would want to look into a possible sale now, before the loan became due and payable so that you could list the home and sell it on your terms and timeframe, not when you had a time crunch and might have to accept an offer that might not be the most advantageous for your family. There again, your family gets to keep the equity and any added value for improvements made, not the lender.
These are the hard conversations that people need to have before all options, or at least several of them, are taken away. The home and the equity still belong to dad. Therefore, you don’t lose anything if you plan accordingly and you are able to take action based on your family’s needs and not necessarily the timing of the lender.
My dad has a reverse mtg, can he be forced to move out of his house if the value of the house is less than the loan amount, due to the fees being added to the loan?
That’s one of the great things about the reverse mortgage, dad can live there for the rest of his life while making no mortgage payments, regardless of what the values do. He is responsible to pay the taxes and insurance and maintain the home in a reasonable manner and must live in the home as his primary residence and after that, he can remain in the home for life without fear of shortfalls due to rising balances and falling values. And since the reverse mortgage is a non-recourse loan, the lender cannot look to the estate or any other assets for repayment of the loan once he does pass or move out of the property.
If I have a reverse mortgage but I spend four weeks in the summer at a different location can I rent my home while I am away?
Now you’re getting into a possible gray area. Under the HUD guidelines, you cannot use your home for transient purposes such as short term rentals like an Air Bnb or hostel/hotel and qualify to get a new reverse mortgage. However, once you already have the loan, as long as you meet the requirements, that is you live in the home as your primary residence, you stay there for the majority of the year, you pay your taxes and insurance on time and maintain the home in a reasonable manner, there really is nothing that would prevent you from going away for a short trip and collecting rent on your home during a once a year, short trip.
I think you might want to look into it further just to be sure you aren’t going to run into issues with the lender/servicer if you plan to do it more than once a year, or if that time period begins to become longer than just one month, especially if they do their yearly occupancy inspection during the time you are away and renting the home. The last thing you would want is for an inspector to knock on the door and have a renter give them the wrong information or the impression that the home is a year-round rental as that could cause the lender to call the Note due and payable.
Hi. Can an elderly person with a reverse mortgage move out prior to the sale of the home ?
When the borrower permanently moves from the home, the loan becomes due and payable. If the home is listed for sale at the time and is about ready to close, this would probably not be a problem as the sale would close before any action by the lender could take place. If the borrower wanted to move out and then sell the home 2 years later, this would not work under the terms of the reverse mortgage. So I guess it all depends on the period of time you think will elapse between the move and the sale. If it is just a short period of a couple of months or less, you should have no issues. If the home is not even sold yet, the time when the home was not occupied by the borrower could drag out with the time required to sell, delays, etc. and the borrower could eventually find herself/himself in a situation where the loan has been called due and payable, but the borrower does not yet have a buyer. That would not be a good thing if they did not have the resources available to pay off the loan balance and the lender had to initiate foreclosure proceedings.
Neighbor has a reverse mortgage but has moved out of state and purchased a condo but has allowed her son to live in the house for almost 3 years and drug problems have happened. What recourse do neighbors have? The mortgage company refused to do anything
The mortgage company has no control over the drug issues but the loan itself does require the borrower to live in the home as their primary residence. If the borrower has not lived in the home for 3 years, they are falsifying their annual occupancy affidavit. Allowing non-eligible people to live in the home and lying about their occupancy absolutely can cause a financial loss to HUD which also hurts other eligible borrowers when HUD has to lower benefit amounts due to program losses. You can contact HUD directly and notify them of the occupancy fraud with the property address and they should contact the lender to take appropriate action.
My parents are both part of a reverse mortgage contract. Mom moved to a Nursing Home last June (2017). Dad is still in the house, with no plans to move. Should we tell the mortgage company about this arrangement? As long as Dad is still in the house, he won't lose the house, will he?
The reverse mortgage is fine as long as at least one original borrower on the loan still lives in the property as their primary residence. Everything is fine and there is no notification required.
What happens when a borrower becomes ill/incapacitated (dementia) and no longer can occupy the premises/residence?
Once there are no borrowers left from the original loan still living in the home as their primary residence, the loan becomes due and payable. At that time, you would have to decide if you plan to sell the home or pay the loan off and keep it as with a refinance loan. The borrower can be in a temporary hospice for up to a year before they are deemed permanently gone but I would advise not to wait until the last minute if you do not believe the owner will be able to return.
1. My mother-in-law owns her home but rents out part of it to two tenants. Can she obtain a reverse mortgage? 2. Can this rental income be included in her income calculation? 3. If she first obtains a "line of credit" from a bank, could this prevent her from getting a reverse mortgage?
As long as you mother in law has a history of renting the property for at least 2 years and claims the income on her tax returns, the income can be used (and as long as it is mom's primary residence and the rental is not transient as in a air BNB or bed and breakfast type arrangement, that is ok as well).
My brother and I own property deeded to us by our elderly parents. If one of us wants to occupy the house, must both of us reside there in order to apply for a reverse mortgage? We are both in our seventies.
If you are both owners of the property, you must both occupy the home in order to obtain a reverse mortgage. If the non-occupant is willing to deed the property to the brother who intends to occupy, you could get the loan under that scenario and he can even deed you back on to title after the loan closes but you must remember that if something happens to him and due to death, illness or whatever reason, if he no longer occupies the home, the loan would become due and payable at that time.
Can a reverse mortgage be rented? Non owner occupied?
No, properties with reverse mortgages cannot be non-owner occupied homes. The borrower will not qualify for the loan if they do not occupy the property as their primary residence and if they move out at any point during the loan and rent the home, the lender would call the loan due and payable.
If we have a reverse mortgage can we add one of our children to our deed
Under the terms of the reverse mortgage, as long as at least one of the original borrowers remains on title and lives in the property, you can add anyone else you wish. So yes, you can add one or all of your kids to title as long as you are on the title with them and you still occupy the home as your primary residence.
Say someone rented out their house for four yrs without living in it. Can they get in trouble?
Trouble? I am assuming you are talking about a borrower with a reverse mortgage and the answer is No, with a qualification. There is no law that has been broken and therefore the borrower is in no “trouble”. HOWEVER, the borrower would have violated the terms of the loan and lender could call the loan due and payable. If the lender were to discover that the home is no longer owner occupied, they would issue a demand for payment in full and if not paid, the loan would be placed into foreclosure.
Hi my parents have a reverse mortgage I am their daughter and I'm moving to Arizona they would like to come spend some time with me and they're thinking about letting their grandson rent the house when they're gone how long can they be away from their home and how does the lender keep track of when they come and go how does that happen because they would probably like to do it periodically when they come back to the residents how long are they required to stay before they leave again
Your parents have no problem as long as the home remains their primary residence. To be a Primary residence, that would mean that they live in the home more than 6 months a year, have all their mail going there and use it as their residence for legal purposes. They really should not be “renting” the home, but if they collect rental from their grandson for renting a room, that’s ok. The security agreement allows for a temporary leave for up to 12 months for times when needed for things like hospice care, etc, but that can’t be every year or regular trips because then the home is no longer their primary residence. The lender can do occupancy inspections at any time. If your parents are found to be out of the home more often or if it is determined that the home is being used as a rental, the lender can call the loan due and payable.
My mom and dad took a reverse mortgage out on the house about 6 years ago me and my son lives here with them I'm 53 and my son is 10 I'm a single parent with custody.. my mom passed away 2 years ago and now my dad is in hospice.. don't know how long he has. Whats gonna happen. Or what can I do to be able to stay in our home? Can I pay rent to stay?
If Dad permanently moves out of the home, the loan becomes due and payable. If you are their heir, you would own the home at that time. You would need to make arrangements to either refinance the loan in your own name at that time or you would have to contact a real estate agent to see about selling.
Dad can be out of the house temporarily for up to 12 months in the hospice care before it is considered a permanent move. I would suggest that you start looking into each of the options now though since it may take some time to get everything done and it is not any easier if you wait until the clock starts ticking on the final time frame. It's best to know all your options and to have a plan in advance.
My 88 yr old mother in law owns two houses in Fl.. Can she do reverse mortgage on primary residence if she owns two homes? I was told the second home would have to be sold first because it's considered an asset. Thank you
There are no restrictions on the number of homes your mother in law can own and still do a reverse mortgage. As long as she qualifies with the expenses of any other homes and she does live in the home on which she is placing the reverse mortgage as her primary residence (and her documentation supports this), there is no problem with her owning other property.
I have someone a similar question to some on here but not the answer I need me and my wife and kids are living with my uncle and he has a reverse mortgage on the house but yet he had to move out a month ago only due to the fact that his daughter pulled him out thinking he's unfit to live on his own what rights do we have in the house and how long do we have to be before we have to move? And I live here in Southern California
With regard to your specific question, I can’t tell you what “rights” you may or may not have as occupants of the property, you would need to speak with an attorney to ascertain legal rights under the law. I can tell you what the reverse mortgage provisions state. The owner of the home is required to live in the home as his primary residence to be in compliance with the terms of the reverse mortgage. He can be gone with a temporary leave for up to 12 months and still be in compliance (for travel, hospice stay, visiting relatives. etc). After 12 months, his absence would be considered permanent though and the loan would become due and payable.
If he just moved out a month ago, he has another 11 months to move back into the property before it would trigger the lender calling the loan due and payable under the temporary absence rules unless his daughter contacted the lender and previously notified them that he had permanently vacated the home. If the lender had been notified of a permanent move, the lender would call the loan due and payable immediately. I would suggest that you contact the daughter and determine whether or not the home still has any equity in the property before any of this happens to see if it would not be better for all concerned to place the home on the market for sale before the lender calls the loan and/or possibly begins foreclosure action. Many places in Southern California have experienced good levels of appreciation and it might be better for all if the home were sold before the lender had to step in now that your uncle has had to move.
Mom broke hip and is in rehab. Might stay on but this isn't decided. When do we have to notify reverse mortgage company if she transitions to memory care unit permanently? How long do we have before foreclosure? The house has fallen into disrepair also. How does this affect outcomes?
Mom can be out of the home at rehab for up to 12 months before the absence is considered permanent. My suggestion is that you reassess mom’s condition at various stages to determine if you think she will ever re-enter the home and not wait for the entire 12 months to pass. It also pays to be prepared. I would contact a local realtor and determine the value of the home in its current condition and what it would sell for if some basic repairs were completed. You can then determine if it is feasible and advisable to complete those repairs in anticipation of selling the home to retain any equity. If there is no equity in the home and you realize that mom will not be returning, then I would recommend you contact the lender as soon as you remove mom’s personal effects from the home so that they can make arrangements to take the home and prevent it from falling further into disrepair.
My husband me, and my daughter are staying with my uncle. He is under reverse mortgage. Will the lender foreclose because we stay with him?
There are no restrictions on the loan with regard to who the borrowers can have living with them. The home belongs to the borrower and as long as at least one original borrower still lives in the home as their primary residence, there is no restriction on how many family members can live with them (or non-family members as well for that matter).
My dad has a reverse mortgage on his home but does not live there. He has people renting the home. I understand that he is breaking the terms of the loan and if he is caught he risks losing the home. Could he also go to jail?!
Unless your father actually set about to commit mortgage fraud and purposely obtained a reverse mortgage with no intention of ever living in the home, he has no fear of criminal prosecution. That would be extreme and only an option if the lender and HUD determined that your father was part of a scheme to defraud the government and the lender. They would call the loan due and payable immediately though if they determine that the home is not being owner occupied and is being used as a rental. Under that scenario, he may or may not lose the home as he would have to pay off or refinance the loan with a new loan which could cause him to possibly have to sell if he was unable to do so.
I have a reverse mortage on my home can i buy landlords ins. instead homeoweners
If you did not live in the home (and thus the landlord’s policy over the homeowner’s policy), you would not be in compliance with the terms of the reverse mortgage and the lender would call the loan due and payable. The loan terms require that you carry adequate insurance and that you live in the home as your primary residence. If the lender were to receive evidence that either condition were not met, that would be a default under the terms of the Note and Deed of Trust and your loan would be called due and payable.
If we are separated, jointly own house, one lives in the house. can we qualify?
The issue of separated borrowers is one of the most sensitive when it comes to reverse mortgages. The short answer is yes, you can get the loan. But the non-occupant would be considered a ineligible borrower and would still have to go through the counseling process and sign all the documentation for the loan. If anything happened to the borrower who lived in the home (the eligible, borrowing spouse), the loan would become due and payable. The only way to keep from having to go through all this with both spouses involved in the counseling, documents, etc. would be to wait for the divorce to be final and then do the loan in just the name of the spouse who would be the owner of the home in just their name.
Does the person who did a reversed mortgage have to live there? And if she has moved out of state is she committing fraud. If so who do I contact to report it as the home is really in bad condition the people she has living do not maintain it
The borrower does have to live in the home as their primary residence under the terms of the reverse mortgage. They can be out of the property less than half the year every year and it can still qualify as their primary residence. They can also be gone up to 12 months for a temporary leave under the terms and still meet the occupancy requirement. However, if the owner has permanently left the home, then she is no longer in compliance with the terms of the loan.
A borrower no longer living in the home is not considered fraud, but the loan would be called due and payable nonetheless. I cannot tell you how to determine who her lender/servicer is, I do not have that information. If the owner is letting the property fall into disrepair, you could check with the local city and if they file a notice for services (weed abatement, etc), that would alert the lender or you could attempt to notify HUD with the property address. To find the HUD office that services the area where the property is located, just go to HUD.gov, “STATE INFO” in the topics across the top, click on your state and then click where it says Contact My Local Office.
We currently live with a Pastor friend who allowed us to live on the 3rd floor of his home. He has a reverse mortgage. We are not paying rent or operating a business . Under the reverse laws are we allowed to stay in his home?
There is no issue whatsoever with a homeowner allowing others to live with him just because he has a reverse mortgage. HUD doesn’t even prohibit the rental of a portion of the home as would be the case if he was renting you a room. They don’t allow the transient use for a bed and breakfast or the use of more than 25% or the home for a home-based business but what you are describing is perfectly fine.
I have a reverse mortgage with a significant other. She is now in a nursing home. How can I have her name removed from the mortgage?
The name would not be removed from the loan but the fact that her name is still on it does not affect anything. Both of you still own the property by law and as long as one of you still occupies the home as your primary residence, the terms of the reverse mortgage are still met so there is no need to make any change, whether she lives there or not for the loan. In fact, even if you were to change title, that is if she came off title and you remained on, it does not change the terms of the existing mortgage. Therefore it would not change your options on the loan either. You would still be able to live in the home for life even if your partner does not, has permanently left the home and has deeded her interest in title to you. However, if at any time both of you came off title or both of you no longer lived in the home, then the loan would become due and payable.
On my property at the time I got my reverse mortgage,2009, I had a detached work shop and a small guest house attached to the shop. Can I rent the guest house as long as I live in the main house?
HUD has no prohibition which would prevent you from renting a small portion of your property. They do not allow transient or business use so if you wanted to use the guest house as a bed and breakfast that would be a different situation. But if you had a tenant in your guest house and you live in the main house, you are not in violation of the terms of the reverse mortgage.
If the borrower is put in a nursing home can the children take over the mortgage?
The loan becomes due and payable when the last original borrower on the loan no longer lives in the home. The borrower may be absent for a temporary stay in a hospice or convalescent home, but if the borrower is permanently gone or out for more than 12 consecutive months, then the loan would be due and payable. Heirs cannot take over or assume a reverse mortgage loan.
My old landlord that I lived with and care for has fallen ill . he was moved out west with his family last week . I still live in the home . All of equity has been taken out at $200,000. The house inside is trashed and in my opinion needs to be gutted . It is not worth 200 ,000 . my question is ... Would I have a shot at a rent to own on this property . credit score should be in 700"s next yr and qualify for FHA loan. Of course it would take years to fix up, little at a time .
I assume the question involves the fact that he had a reverse mortgage? The loan will become due and payable now that he no longer occupies the property. The lender will probably have to foreclose on the property based on your description of the improvements and his absence in order to obtain title to the home (since he or other family members are not interested in stepping in to pay off the loan and the lender can’t do anything with the property until they own it and the foreclosure would give them title to the property). At that point, the home would be sold at foreclosure auction and the starting bid would be the lender’s and that would be the amount owed. Since you feel that the property is not worth the amount owed, it is very likely that the lender would become the owner with no other bidders at auction.
It would be at this time that you could approach the lender and HUD to negotiate sale/purchase of the property. I have never heard of them doing a “rent to own” deal on a sale, but I have heard of HUD real estate owned sales (REO) sometimes being sold with very little to no down payments and that may very well achieve a better outcome. Usually a rent to own situation with a private seller requires you to pay sufficient rent to cover what the normal rent would be plus an additional amount to go toward the purchase price and is likely to be above what a payment would be on a new FHA mortgage. With good credit, you may find that you can pick up the home at a better deal and it certainly doesn’t hurt to approach them and see what they can do.
We have have a reverse mortgage on our 2 story home which sits on 2 acres plus I believe they included the adjacent 17 acre parcel. Due to health issues we built a single level home on the 17 acres. My daughter would like to live in the original 1890 house. Would the lender call the loan due? If we rented would we put landlord insurance on original house and homeowners insurance on the new house?
If the lender received verification that you had rented the main dwelling secured by the loan (such as a landlords insurance policy), they would move to call the loan due and payable. Your circumstances are really borderline as you describe them and I can’t really advise you fully and would suggest you contact your servicer. Typically, when the loan is underwritten, the underwriters check to be certain that the owners live in the main dwelling and not an accessory dwelling unit (ADU). There are rules which HUD allows for the rental of ADU’s but none for the rental of the main home and the occupancy of the ADU by the borrower. I don’t want to tell you anything is automatic based on what you have outlined but I surely would not want to see you blindsided either and strongly suggest you discuss this with your lender before making any moves.
My Mom has a Reverse Mortgage and she's in failing health and unable to live alone anymore. She's 90 years old. How can she get away from the Reverse Mortgage. Thank you.
She can sell the home and keep any equity in the home. If there is no equity remaining and she is forced to leave the property, you or her other heirs have the option to keep the home and pay off the loan at 95% of the current market value if the balance is higher than the current value or she can contact the lender and let them know that she must leave and work out arrangements to Deed the property back to them if she does not want to do any of the above. In any case, the loan is non-recourse and the lender cannot look to any other assets to repay the obligation.
My home is in reverse mortgage and I am no longer there but have to pack up the home and will then vacate home and once I have notified the bank how long will I be given to move out?
You own the home so no one can make you pack up and leave the home. There is a process for when borrowers no longer meet the loan requirements but before we get into that, have you contacted a local real estate professional to see if there is any equity in the home? If so, that is your equity and you can sell the home now and keep that money. If you have determined that there is no equity in the property and that you cannot continue to live in the home (without having to make a mortgage payment) for some reason or another and you leave the home, the lender will call the loan “due and payable”, requesting you to pay the loan off. The agreement you have with the lender says that you will occupy the property as your primary residence and once that is no longer the case and they discover this fact, the first step is to request payment in full.
If you cannot or choose not to sell the home or pay the loan off with other funds once it has been called due and payable, then the lender must go through a series of steps required by HUD to begin foreclosure proceedings. Start to finish, that takes different amounts of time in different areas of the country depending on the foreclosure laws. In most instances, this whole process cannot be completed in less than 4 – 5 months between notice to you and foreclosure processes and that’s why the lender cannot afford to wait too long once they become aware of breaches. It’s usually many months before they even know about this type of situation and many more before they can secure the home after foreclosure and most of the time the home is neglected and possibly vandalized if no one is living in it or taking care of it. Therefore they look to be aggressive when they know that the property is vacant.
My advice to you is to first contact a real estate sales professional and see if you can sell the home and maybe keep some of the proceeds. As I started, it’s your house and if there is equity, why not keep it? Absent that, I would say that if you cannot sell the home, take all your personal belongings and then contact the lender and see what options are available to you with regard to Deed In Lieu of foreclosure options. This is where you voluntarily Deed the property back to the lender once you are completely out of the property and they do not have to go through the time or expense of a foreclosure. Because the lender and HUD save money when this happens in many instances, you may find that you are able to receive some compensation in the Cash for Keys program from HUD. At any rate, I wish you the best.
Husband and mom co owned home for 17 years, as she QCD to him as tenants in common, so we could add a condo onto existing home for her to live in since Dad had died and we were able to live by her.Then she QCD her portion to me and her son as JT in April. She is no longer owner. In July husband and I closed on a reverse mortgage. Now at age 90 if she needs to go to Medicaid assistant living place would we have a lien put on the home from Medicaid when we tried to sell or if we stayed til we died would our kids have to pay back that lien plus any money that was due from the reverse mortgage? Thank you, we did not think about this possibility when taking out the reverse mortgage.
I can’t answer the Medicaid lien portion of your question because that is a legal question and I am not licensed to give legal advice. I don’t know how Medicaid can put a lien on a property no longer owned by someone but I also think you should seek professional assistance from a licensed elder care attorney because I am pretty sure there are all manner of ways people seek to avoid payment of things and Medicaid may have a way to do things of which I am not aware (and I am not saying that is why you folks made any of the changes you did, only that they may still have recourse I have not considered or don’t even know exists).
Now with regard to the loan itself and your heirs, they have total choice on the matter of repayment. They can sell the home and repay the loan with the proceeds, they can pay the loan off with other funds available to them or they can obtain a new loan with a refinance transaction to pay the loan off. They can never owe more than the property is worth no matter how much you borrow, how long you live there, how much interest accrues or what property values do. In fact, they can pay off the loan by paying the balance of the mortgage or 95% of the current market value, whichever is less. And then if they don’t want the house for any reason at all, the reverse mortgage is a non-recourse loan so they can also choose to walk away with no liability at all. The lender has only the home for security and can never seek repayment from any other assets. If you are concerned with other liens or creditors (such as Medicaid), then you really need to bring that topic up with the senior specialist attorney for guidance on that issue.
Is it OK for a family member to come in an be a caregiver to the borrower?
Absolutely! There are no restrictions against having family members move into the house to care for the borrower or for any other reason. It is very common for family members, especially children, of reverse mortgage borrowers to move back into the home for various reasons and often it’s the parent helping the child. Borrowers are even free to rent out a room in their home if that is their desire. The house just has to be the primary residence of the borrower and they cannot use the home for business purposes (i.e. a B&B, etc.).
Can a reverse mortgage, Financial Freedom now require twice a year occupancy verification? They started foreclosure procedures because i didn't return the june occupancy verification two years ago. Cost me 1,700. I was never informed ,that they now wanted 2 times a year verification on occupancy. My dad has had a reverse mortgage with them since 2007. It is hud whatever. Also they have more than once suggest to me that i put dad in a nursing home and give them the house. They have also told me that if dad spends more than 30 days out of the home that they will call the loan due and payable. My dad is 92 and does go in and out of the hospital. I have cancer stage 3 and when i go into the hospital ,dad goes with me. He stays on a cot. I was told that dad had to be in his home 30 days out of a year. I got a call about 3 weeks ago from someone looking for dad. Dad had come home from an er and he doesn't handle his own financial affairs. The woman refused to tell me who was calling. When i wouldn't let her talk to dad - Financial Freedom requested that adult protective services do a safety check on dad to verify he lives here. Than last week my girlfriend, who gets my mail for us, called me at 8:30 at night as someone knocked on her door and left an envelope. Contained an occupancy verification. Our enjoyment of our home just isn't possible. Who polices reverse mortgages? Now they want a different insurance policy. The hoa insurance inst good enough for them. They bought insurance and want me to pay them 250$ for less coverage than i alreafy have. They also refuse to recognize the power of attorney that they were given back in 2010. If i could pay this off i would. The home is in a trust.
The loan documents do not state any provisions for home inspections. They do however outline the occupancy requirements. Dad has to live in the home as his primary residence and can be out of the property for temporary leaves for no longer than 12 months. The primary residence means that dad lives in the home more than half of the year (6 months and a day) out of each year that is where he receives all of his mail, etc. Borrowers are allowed temporary absences for up to 12 months before they are deemed permanently out of the house – but that would not be every year, they still have to live in the home more than 6 months out of other years.
The lender only has the rights your father granted them through the loan documents when he obtained the loan. I would suggest to you that you review or better yet, have your attorney review, your Promissory Note, your Deed of Trust or Mortgage and your Loan Agreement. If dad is still in compliance with all the terms of the loan and the lender is needlessly harassing you, the attorney can put a stop to that but the attorney can also tell you if you are misinterpreting any of the terms of the loan so that you will stay in compliance with the loan terms (like insurance requirements, amount of time dad has to occupy, etc). From what you are saying, I think there is a combination of misinformation and misunderstanding going on and with a little bit of communication, you may be able to work thinks out amicably and if not, there are remedies if the lender is acting out of line.
If you cannot locate a copy of the documents, have the lender send you a copy (dad may have to sign a written request).
If you live with your parents and they have a reverse mortgage on their home, can they charge you rent?
The reverse mortgage does not allow or prevent a homeowner from renting a room to family or others. The loan does not prohibit borrowers from renting a portion of the home as long as they are still the majority occupant and the home is not being used as a business (such as a B&B, etc). So yes, they can rent rooms to family members and collect the rents.
I am a fultime nurse/caretaker of my dad. 24/7 which i have done for the last 21 yrs. He is 93. I have stage 3 cancer. I was tolf by financial freedom that they will evict me from the home when dad dies. I am his daughter and heir. Can they lock me out? Do i have 6 months to fix up the home and sell and if i need get an extention before they foreclosure? There is 100,000 equity in the home. I have a care agreement that i was to inherit the home as payment for my work. I had to agree to do the reverse mortage in 2005 in order to keep dad in his home. I figure i will get 50,000. There is nothing left to inherit nor does dad have a buriel spot. I haven't worked in 35 yrs. Took care of my mom than my dad. I am 58. I really need something or i will be living in my car. Financial Freedom wants this home. They are now demanding occupency verification twice a year. They foreclosure last year . Can i be evicted when dad dies? Do i have enough time before foreclosure to fix and sell? Would like to get cancer treatment which isn't possible with dad now.
I know that Financial Freedom had the HUD HECM program, FNMA Homekeeper and a proprietary or private program reverse mortgages available to them at that time and I am hesitant to answer too in-depth without knowing which program your father’s loan was done under. What I can tell you though is that the lender has no more right or authority than what is granted to them in the loan documents signed by the borrower. Hopefully, the original documents your father signed are still in a file somewhere and you can access them to review or have an attorney review for you to determine if the lender is acting in a manner not consistent with the original agreement. You can always send the lender a request signed by your father and get another copy of those documents if you can’t find them.
I can also tell you that if you own the home, you can sell it and pay off the reverse mortgage once dad does pass but the concern I have from what you are telling me is that if you are not on title right now, it may take a while for the change of ownership to go through if you have to go through probate, etc. and that could present a problem if that takes long. My suggestion (this is not legal advice) is that you check the current documents for the existing reverse mortgage loan. If it is a HUD HECM loan, your father can add you to title at this time (he cannot not put you on title solely but can add you to title with him as a joint tenant with right of survivorship if your father is of sound mind) and then if something happens to dad later, you are already on title and you can immediately sell the home without having to go through probate or any other delays. I strongly suggest you speak with an attorney now, especially if you have any siblings or if there are any other possible heirs, before you have to make any quick moves later though and make sure you have your plans in place before you are in a crunch. This is just my suggestion as I cannot give you legal advice but I really think the money spent on the legal counsel now is well worth the investment.
My Godmother did a reverse mortgage on her home 10yrs ago. She is currently 92 years old and her home , a tri level is becoming more difficult to navigate.she has a second smaller home she wishes to move into. What are her options, outside of paying the balance of the loan out in its entirety before her death, that will allow her to adhere to the reverse mortgage loan requirements, but will also allow to move into a smaller ,more manageable home.
The terms of the loan state the house has to be her primary residence or the loan will be called due and payable. However, if she wishes to move, she can refinance the loan or sell the property and move into the smaller home but she does not have the option to just keep the reverse mortgage loan on a non-owner occupied home after she moves out of it.
If one spouse leaves the home can the other spouse stay?
As long as one of the original borrowers or qualified non-borrowing spouse’s remains in the home and you continue to meet the other conditions of the loan (paying the taxes and insurance and maintaining the home in a reasonable manner), one spouse is fine – it does not require both of the spouses to keep the mortgage on the home.
We own a home on a reverse mortgage. Can we rent out one bedroom as long as we occupy the residence?
Yes you can. HUD does not allow borrowers to use the property for a business like a bed and breakfast, etc. but you absolutely may rent out a room if you choose as long as you occupy the home as your primary residence.
Can the "primary residence" requirement for a reverse mortgage be waived after the loan is seasoned for a few years?
This loan is meant to allow borrowers to live in the home for the rest of their lives and not have to make a payment for as long as they live in the home. Once they no longer satisfy that condition, the loan becomes due and payable. The home must be the property that the borrower lives in as their primary residence and if they ever leave the home for a period of 12 consecutive months or more, the loan is due and payable.
If the borrowers no longer intend to live in the home as their primary residence, then you should consider other financing options or a sale of the property as the reverse mortgage is not intended to finance second homes or rental properties.
I'm trying to find out who has my sisters reverse mortgage. So I can let them know she no longer lives there. She has dementia and will never be going back.My niece (POA) put her in a nursing and may be using it for her own personal use. This is not legal, I believe. I believe notifying the reverse mortgage company is the proper thing to do.
I know that when we need to know who is servicing a loan, HUD directs us to call Novad Management Consulting at 877-622-8525. We typically have the FHA case number and I believe they would also be able to let you know based on the property address, but I don’t know that for certain. If not, you would have to contact HUD directly at the Home Ownership Center that services your area and that number can be found on the internet for your location.
What happens if a person has a reverse mortgage and decides to live in a different house for the majority of the year?
The terms of the reverse mortgage are that you must use the home as your principal residence. If you plan to live in another location for the majority of the year, the lender can call the loan due and payable as you would not be abiding by the terms of the loan since the property would be a second home at that point. If you no longer wish to live in the home full time, you might consider replacing the financing with a more conventional type of loan, not carrying a loan on the house or selling the house. Once you move into the new home, you can apply for a reverse mortgage on your new primary residence as long as the existing reverse mortgage has been paid in full.
I rent a room in my friend "Joe's" home that was owned by his late father ("Jim") who got a reverse mortgage on the home almost 10 years ago. Joe's older sister, ("DJ") said she is trying to get a traditional loan to pay off the reverse mortgage so her brother Joe can have the house as his father Jim wanted. Joe found out last week that his sister had herself put on the title of the house, because, she said she had to in order to buy the house. Is that true? How does that affect the reverse mortgage - her, putting her name - and only her name - on the title of their late father's reverse mortgaged house while the reverse mortgage is still in effect? Joe hates to admit that his sister can't be trusted, but she can't. That's why I'm writing this - for Joe's piece of mind. Please note: DJ is barely 55 years old, has terrible credit, no steady income, except she has control of her disabled wife's and her wife's disabled sister's pension and SSI and she gets paid for taking care of them both (although someone else does the work in exchange for her floor to sleep on). Please let me know if you need more info. Thank you very much for your time and assistance.
I really can't comment on all of this but I can tell you that now that the reverse mortgage borrower has passed, the loan becomes due and payable. It is now up to his heirs to decide what they want to do with the property and that could include selling the home or refinancing the loan with a new loan in one or both or their names in order to pay off the loan that is due. To obtain financing in their names, they would have to first own the property or no lender would give them a loan and that may or may not have been the motive of your friend's sister, I honestly can't say.
What if your health is bad can you give your house up and leave under reverse mortgage - I was informed if your health status was severe and you could no longer maintain your home you could leave - would you have to pay anything back
The reverse mortgage is a non-recourse loan, whether your health is bad or not. If you can sell the home and keep any money then that would always be in your best interest but if you had to leave the home the lender can only look to the property for repayment of the obligation. They cannot seek repayment from any other assets. If you allow the loan to go into foreclosure and there is a deficit balance, you would not be eligible for another reverse mortgage after walking away and not paying the balance on the first one but the lender cannot require you to make any other payments.
If you have a reverse mortgage but want to purchase another home can you have another loan?
As long as you continue to reside in the home on which the reverse mortgage is placed as your primary residence, there is no restriction on other properties you may own or finance afterward. Due to the fact that you can only have a reverse mortgage on your primary residence though, if you do choose to buy another property you may not finance it with another reverse mortgage, you may only have one reverse mortgage at a time.
We have a reverse mortgage & have our house up for sale. If it is not sold by the end of month can we move & leave the sale with our realtor
I'm not sure I fully understand the question but I will answer what I think you are asking. I think you are saying that you are not abandoning the sale or "giving" the home to a third party, just leaving it with the Realtor to complete the sale. Is that correct? The answer is that the terms of the loan are that you must live in the home as your primary residence. You may be absent for temporary absences for up to 12 months and still be consistent with the terms of your reverse mortgage. But what constitutes a temporary absence?
Vacations, temporary stays in hospitals and hospice, visiting family to help out for less than 12 months are all ok. However, once you pack up and move all your personal belongings out of the home you have established that it is no longer your primary residence, even if it has not been 12 months. But what would be the effect of allowing the property to remain vacant for a month or two while it sold? Maybe nothing but you would have to realize that you would be outside of the terms of your contract and that the loan could be called due and payable. And even then, even if the lender did call it due and payable, by then you might have it sold and ready to pay off by the time any real issues occur but I certainly would not recommend this as a plan of action if it could be avoided. You need to consider what the ramifications could be if the home does not sell and the lender does call the loan and ultimately has to begin a foreclosure action. If at all possible, my advice would be to stay in the home until it sold.
If I have a room can I rent out a room I only get $950. Is this allowed?
There is nothing in your reverse mortgage that forbids you from renting out a room. Many people do it and we can even use income from renters when underwriting the loans as long as the income has been received for at least 2 years and is claimed by the borrower on their tax returns so you should have no problems if you want to rent out a room.
If I decide to leave the home can it be used as rental property?
As soon as the home is no longer your primary residence, the provisions of the reverse mortgage would make the loan become due and payable. You can pay off the loan and still retain the property and then rent it out, but you cannot rent it out without living in it if you intend to keep the loan in place.
After getting reverse mortgage how often is house inspected by hud
Good Afternoon Xavier,
HUD doesn't usually do any inspections. The lender servicing the loan will typically do a certification once a year to verify that the borrower is occupying the home and reserves the right to do a physical inspection if it feels one is warranted to determine that occupancy requirements are still being met. Other than that, there is no annual inspection of the interior of the home or anything like that if that is what you mean.
A friend of mine mother has a reverse mortgage on her house the son has been there taking care of the mother and now she has to go to a nursing home. Can the son take over the mortgage or does he have the right to live there until his situation has changed? Thanks!
Under the terms of the mortgage, the borrower and her heirs still now the home but the mortgage is due and payable when the borrower is no longer living in the property as her primary residence. If they are not sure if this is a permanent move for her yet, she can be absent up to 12 months on a temporary stay before the lender can deem that her departure is permanent. Therefore, the son can still live there while mom and son make their decision if mom is going to be out of the home permanently and if so, he should begin making plans to sell the property as soon as possible and not wait until the last minute.
Assume I buy a house under a reverse mortgage for purchase and in 10 years I want to move and rent it out. Can I rent out the house or must I sell it? Does it make a difference if it is a reverse mortgage or a reverse mortgage for purchase.
With a reverse mortgage, purchase or redo, you must occupy the property as your primary residence and when you no longer do that, the loan becomes die and payable. If you want to later rent out a property on which you have a reverse mortgage, you would not necessarily have to sell the home but would have to replace the loan with other financing.
We have a reverse mortgage since 2007 but are aging and our children want us to move closer. My Daughter is willing to purchase a home with a mother -in law - cottage. She would need our income also to qualify and we would be would also be on the deed. How would this affect our current RM . What are the repercussions of purchasing another property and being on the deed while on an RM?
You can purchase any homes and as many homes as you like and it has no effect on your reverse mortgage whatsoever - as long as you continue to live in the property secured by the reverse mortgage as your primary residence. If you move to be closer to your children they you no longer meet the terms of your reverse mortgage and so you would want to determine what you plan to do with the home first. Would you want to sell it, refinance it with another loan or pay the loan off with other available funds? Those would be your options if you plan to move because the loan would become due and payable if you no longer lived in the home.
Will Wells Fargo allow me to rent out rooms in my house if i have a reverse mortgage?
You cannot turn your home into a bed and breakfast or an Air B "n" B making it a full business, but you can rent out a portion of your home at your discretion to others. If you have questions regarding the usage, I would suggest you contact your servicer (Wells Fargo) and discuss the intended use with them before you begin. Chances are you are fine.
My father is still alive and moving into adult assisted living. He wants me to take over the house which has a reverse mortgage attached to it. How do I go about finding out how much to borrow to pay this off?
He can be out of the home for up to 12 months before the move is considered permanent so you have plenty of time, but if you are certain this is a permanent situation, there is no sense in waiting and letting the interest accrue if you know he will not be moving back to the property. He is allowed up to 12 months for a temporary absence before the lender can call the loan due and payable due to permanent move and then there is still some time even after the loan is called to settle things if needs be, but if you know this is the time to finalize things, I would advise you to do so as quickly as you are able to keep your costs as low as possible.
Aside from the interest that continues to accrue as long as the loan is open, if you let it go long enough and the lender has to begin foreclosure to protect their interest, then additional costs will accumulate and there just isn't any reason to let it happen if you know in advance where this is headed.
My sister and my name are on the deed for the house. My name is on the loan. Could we qualify for reverse mortgage if she is the only one living in the house?
To qualify for a reverse mortgage, all owners of the property must live in the home and be eligible for the loan (62 or older) or be a qualified eligible spouse and live in a state that allows a non-borrowing spouse.
My Husband and I jointly own a home in Michigan and Mississippi. We have a reverse mortgage on the Michigan house. We leave the Michigan house in the Winter, early January for the Mississippi house, then return to Michigan in May. Also go to Mississippi for two months in the fall. We claim Michigan as our Primary residence. Is it a violation of the Reverse Mortgage if my Husband gets his Mississippi residency and gives up his Michigan residency. I will still maintain the house in Michigan, and we will both live together traveling between homes. Obviously this would be for Senior property tax advantage in MS. As I am a 100% disabled Veteran in Michigan and don't pay property tax. Or claim a property tax credit. Is this allowable with the reverse mortgage?
As long as one of the original borrowers remains living in the property as their primary residence, you meet the requirements of the reverse mortgage. So if you are also on the Michigan reverse mortgage and you maintain this home as your principal residence, you live in the home at least 6 months or more each year and you do not leave for more than 12 months at a single time, you are meeting the requirements of the loan.
I invested $100,000 in purchasing a home with my sister. My share of the purchase price is 23% however I am not on the Deed because my sister wants to take out a reverse mortgage. Can the reverse mortgage be designed so that it only recognizes her 77% share and there for would curtail the amount she could borrow. I am concerned about protecting my investment in case of her or her husbands death or illness.
All owners of the property must be living in the home and must be eligible to get a reverse mortgage loan - and that is because they very well could exhaust the equity depending on the funds they draw, interest rates, future property values, etc. There is no way to do a reverse mortgage on a fraction of the ownership.
My sister took out a reverse mortgage in 2014 and now her health is failing, can she come live with me and just let the house go?
2014 is not that long ago and there may well be equity still in the property. If there is equity in the home, I would suggest that you make arrangements with a local realtor to sell the home and keep the funds before you just give it back to the lender. However, the loan is a non-recourse loan and if your sister leaves, the lender will foreclose and take the property back and there will be no other money owed to the lender.
I can no longer afford to stay in my home. my wife died & I don't have the finances to do repairs or pay taxes. Can just leave the house as is to reverse mortgage? Can I be evicted?
If there is any equity in the home, I would suggest that you sell the home and keep the equity. If not, the mortgage company will eventually foreclose and you would have to move if you cannot make the taxes and insurance payments. However, I would suggest you check with family, see about taking in a tenant or other options before I let that happen if I were you. I would think that the cost of even rental housing would be more expensive than your existing taxes and insurance depending on where you live. You will always have water, electric, etc. no matter where you go and I guess it all depends on how expensive your maintenance is on the home.
After I have a Reverse Mortgage; can I get another regular FHA loan in 1 or 2 years? Thanks
As long as you pay off your reverse mortgage in full you would be eligible to take on another FHA loan the reason for this is a FHA insures both regular home purchase loans as well as the federally insured HECM home equity conversion mortgage. Both of these programs are intended to be utilized for your primary residence only and because of such you may only have one of these loans at a single time.
If I vacate my primary "Reverse Mortgage" home (due to personal reasons), and subsequently relocate to another state, can I be eligible to "Reverse Mortgage" my new home & new primary location?
You may take out another reverse mortgage only after the current reverse mortgage you have is paid off in full. You can never have two simultaneous reverse mortgages as the reverse requires that you own or occupy the property you are taking it on. This is one of the three maturity events that you agreed to.
If you would like to list your home for sale and use the reverse mortgage to purchase a new home we can close these transactions concurrently for you utilizing the HECM for purchase program.
My wife is 70 and I am 62. We are considering a reverse mortgage on our condominium. Both of us are in good health now but what we would like to know is if one of us becomes too ill to live in the condo but the other one is still living there do we have to pay off the mortgage?
Hello Mr. Schipper,
That's a great question and fortunately for you a reverse mortgage would not become due and payable should one person leave to a nursing home. It would require both applicants to leave the home permanently for the reverse mortgage to become due and payable so as long as one of you is still living in the home is your primary residence you would not have to worry about any maturity events.
Click here to download a helpful .pdf brochure written by our servicing company Celink in regards to occupancy requirements.
We own a condo in N. H. which is our primary residence and is not FHA approved. We live here approx. 6 months a year. We also own a home in Arizona where we reside the other 6 months . Both owned free and clear with no mortgage. As we have learned, we cannot take a reverse mort. on our condo in N.H. The question is " can we do a reverse mortgage on our stand alone home in AZ. , even though it is NOT our primary residence"?
I am not aware of a reverse mortgage program at this time that allows for a second home. There have been programs in the past that did allow for an owner occupied residence or a bona fide second residence (not a rental) but those programs all disappeared in about 2009/2010 with the collapse of the secondary mortgage market. There may be a time when they are once again allowed, but have you tried to work with a condo approval company to see if there is any way to have your primary location approved? You may have better luck obtaining approval on your primary residence than waiting for a program that may or may not ever be reinstituted.
We own a second home, vacation home, valued at about $225,000 and would love me a reverse mortgage. Is this possible?
Currently, reverse mortgages are available only on primary residences. In the past, there were some proprietary programs that did allow bona fide second homes (not rentals) but those programs disappeared when the secondary market took such a turn for the worse in 2009 - 2010. To date, nothing has come out to replace the programs that allowed a second home to participate and I honestly have not heard of one on the horizon...but you never know! I would advise you to continue to watch the internet for news of changes in this area, I'm sure if a product does emerge there will be an announcement.
At this time though, there are very few proprietary programs even for owner-occupied, primary residences and so I would expect that the market would have to fill up with willing investors before they will begin to expand their product offerings to things like loans on second homes and to borrowers down to 60 years of age instead of 62 once again.
I have a reverse mortgage. My adult daughter is getting a divorce and she and her children will be moving in with us for awhile. Can I charge her rent?
Yes you can. You are still occupying the home as your primary residence and the fact that you have family members move in with you at some point, paying rent or not, does not violate the terms of your agreement on the loan. As long as you meet the terms of the Note, the Deed of Trust and the Security Agreement (live there, pay the taxes and insurance on time and reasonably maintain the property), you are complying with those documents and that is your agreement with the lender.
Can one person have a reverse mortgage on two different properties
Currently, only one reverse mortgage is allowed per borrower and it must be done on the borrower's primary residence. There were programs available many years ago for bona fide second homes, but they were offered by private lenders and not HUD. Those programs are not currently available.
Am 80 yrs. old. HECM balance is 300K. Expects say house is worth $290K. Tried to sell thru realtor past 2 years. Should I advise HUD' s manager I am leaving house in July to move in with famiy? My exposure?
Have you contacted the lender yet to inform them that you cannot remain in the property? If you leave, the loan will become due and payable and they would eventually initiate a foreclosure proceeding even if you just left the home. The loan is non-recourse and so the lender has only the property to look to for repayment.
You would not be eligible for another HUD loan since you chose to move away from this house and a loss would be suffered unless you chose to pay the loss on the loan but I would suspect that you do not plan to purchase another home and use another FHA/HUD loan so this is probably not an issue for you.
We are interested in a reverse mortgage in order to buy a 2nd property in Florida with the cash. Our plan, if allowed, would be to keep the subject property as our primary residence, but we'd like to be able to rent it out short-term when we're gone about 150-175 days/year in the winter, still living in it the majority of each and every year. Is this allowed?
HUD allows you to rent out a portion of the home while you're in it, but once you rent out the entire home the property is no longer your primary residence, it is theirs. If they refused to vacate it could cause all kinds of legal entanglements and I would have to say that if you rent out the entire property it is not your primary residence and could be a problem. When all else fails, you go to the terms of the legal documents themselves. Here is what the Deed of Trust the borrower must sign states regarding occupancy and the right of the lender to call the loan due and payable:
UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows:
4. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application;
Leaseholds. Borrower shall occupy, establish, and use the Property as Borrower's principal residence after the
execution of this Security Instrument and Borrower (or at least one Borrower, if initially more than one person are
Borrowers) shall continue to occupy the Property as Borrower's principal residence for the term of the Security
Instrument. "Principal residence" shall have the same meaning as in the Loan Agreement.
9. Grounds for Acceleration of Debt.
(b) Due and Payable with Secretary Approval. Lender may require immediate payment in full of all sums
secured by this Security Instrument, upon approval by an authorized representative of the Secretary, if:
(i) The Property ceases to be the principal residence of a Borrower for reasons other than death and the
Property is not the principal residence of at least one other Borrower; or
(ii) For a period of longer than twelve (12) consecutive months, a Borrower fails to physically occupy the
Property because of physical or mental illness and the Property is not the principal residence of at least
one other Borrower; or
(iii) An obligation of the Borrower under this Security Instrument is not performed.
There is no provision for "temporary rental or release of primary residence". So I would have to say that if you move from the home and rent it out for the winter (presumably 3 months or more at a time) you could run the risk of having the home declared as being other than your primary residence at that time and subject to being called due and payable since this does not have to run 12 months to be effective based on the terms of the Deed of Trust (you notice the right to call the loan is 12 months OR no longer living in the home, not AND).
I am in the process of selling a home (in NM) that has a reverse mortgage on it. My question is ....1) can I go back to my 'second' home in another state (in NC), which previously was my permanent residence prior to the receiving the current permanent home thru an estate deal & choosing to live in it for the past several years, but has an existing conventional mortgage and qualify for a new reverse mortgage on that 'second' home (in NC) which has sufficient equity, which will become my new permanent residence 'again'????OR2) upon selling my current permanent home with the reverse mortgage ( & paying off the loan, etc.) , can I immediately (?) locate a new/different residence to purchase & acquire that with a new reverse mortgage in another state (in CO.)???
Once you pay off your existing reverse mortgage, you can apply for another reverse mortgage on another primary residence, whether that is on a property you already own or one you wish to purchase. The lender would look at the circumstances behind the occupancy though and it would have to make sense as all reverse mortgages currently must be placed on primary residences. On the property you already own you may want to check with the lender prior to application to determine if there are any seasoning requirements, or a set period of time, that you must be in your home and what documentation they will require at application as verification of occupancy.
If a widow gets a HECM loan and in a couple of years it admitted to a nursing home for over a year does the loan come due at that time. What will she owe at this time. Balance of loan and interest? What if the sale of house does not cover what is owed plus interest?
All good questions. Once the last reverse mortgage borrower permanently leaves the home (and in this case, since there is only one) then the loan does become due and payable. The lender or the lender's servicer will work with the borrower or the borrower's heirs to give them ample time to sell the home, refinance it or pay the loan off with other proceeds. The amount owed would be the outstanding balance plus interest and any fees owed plus any amounts the lender was forced to advance, if any.
The reverse mortgage is a non recourse loan. What this means is that if the borrower lived in the home long enough so that the sale of the home was not sufficient to pay off the entire amount owed, the lender can look nowhere else for the repayment of the debt. At a time when either the interest over a long period with no payments and the falling property values combined can easily leave a home with no equity (many borrowers who make monthly payments are finding themselves upside down on property values), borrowers and their heirs are protected in that the only security the lender can look to is the property itself.