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I assume when you say you reside in a reverse mortgage you mean that you live in a home on which the loan is a reverse mortgage, correct? Not that you are the owner of the property with a reverse mortgage? Because if you are the owner of the home, the lender cannot simply “evict” you, you did not give up ownership of the property by taking out the loan.
And if you are a renter and not the owner, then a whole new set of questions would come to mind that include what are the circumstances surrounding the eviction (did the owner pass and if so, is the owner’s heir or the lender the one evicting you, is the owner still living in the home and evicting you, is the home being sold, etc.?).
In any case, most states do have laws that give renters rights that may vary depending on the circumstances and typically the type of loan has nothing to do with it. If you feel that the eviction is not in accordance with the local and state laws, I suggest you seek legal counsel to determine what your rights are as they may vary depending on the circumstances.
You can rent out a room to a month-to-month tenant if you like while you still live in the property but leaving the home and renting the entire home is not allowed under the terms of the reverse mortgage.
The loan does allow you to make trips that require you to leave the property for extended periods of time, but any absence of more than 60 days does require you to contact the servicer to notify them that you will be away from the home so that they can be certain that the home is properly secured and make certain that they do not schedule an occupancy inspection during that time.
If you do not notify the lender and they happen to inspect the property in your absence, you run the risk of them calling the Note due and payable for non-occupancy of the property pursuant to the terms of the agreement.
I’m not sure how to answer this because I don’t know the context from where the question is coming. Let me explain. Whether you home is paid for or not, if you are talking about renting one of the rooms in your home to someone else it really depends on the zoning ordinances and the terms of the rental, I guess. For instance, some locations have rules against short term rentals. Others specify what constitutes a legal rental in that area. You might be able to get someone who would not mind renting out a converted garage for example but that might not be legal without a permanent heat source in certain markets. Still others have posted that there are limitations on the numbers of people who can occupy a single bedroom so it could be a different answer if you are talking about renting a room to 4 or more people in the same room.
If you are talking about a contract (a reverse mortgage for example), then it would not be a matter of it being against the law but rather whether you violate the terms of the contract and that would be a whole different issue. I’m sorry if it sounds like I am hedging here, but I really am because I am not 100% sure what you are asking, and I don’t want to give you the wrong information. If you really want to know if it is illegal in your area to rent out a room or two, you are probably best to check local zoning ordinances. If you are concerned about your lender or loan restrictions, you need to check your loan documents to be sure that your plans are still in compliance with the terms of the loan.
You sure can. There is nothing in the loan that says you cannot rent a portion of the property like that. The loan does not allow you to use the home for short term rentals like Air BnB, etc., but you can rent a room month to month to a family member or another party.
If his plans conform to zoning regulations, we will not have any problems with an addition that would add value to the home.
When you run into problems with something like this is when you do not conform to the zoning restrictions or change the function or use of the property (i.e., turn the home into a boarding or board and care facility, Airbnb, etc.,) with the nature of the remodeling.
The simple addition of a room and bathroom typically do not fall into this category of changes, but you should check with the local zoning.
I’m not an attorney so I can’t give you legal advice about tenant’s rights but the lender will call the loan due and payable then eventually foreclose if the loan is not repaid. This is not an over-night process though. Foreclosure still usually takes more than 6 months from the time the lender first gives notice of its intent before it can secure the home and evict occupants.
I would suggest you speak to an attorney to determine your best actions based on the local laws but you should know that you will have some time to get your plans together.
Your dad is allowed to be out of the home for up to 12 months for a temporary leave for medical reasons. I would send them a copy of the Power of Attorney with the signed Occupancy Certificate by you as the POA and let them know that he is in the nursing home pending the determination as to whether or not it will be permanent.
I would them that he will either return to the home within 12 months or you will contact them for repayment instructions as is detailed in the Note and Deed of Trust for the loan.
Reverse mortgages are like any other mortgage. They are filed with the county recorder’s office and you can check with the county recorder for your property address to see what type of mortgage is recorded against the property.
If you aren’t sure, you may need to ask a title company or other mortgage professional to look at the Deed and assist you but they will know right away if it is a reverse mortgage loan with that information.
I am not sure I understand what you mean by renting a second place. If you mean, can you go on vacation for short periods of time and rent a home at the beach for 30 days, absolutely.
If you mean, can you own a home with a reverse mortgage then go live somewhere else that you intend to rent instead, the answer to that would be no, that is cause to call the Note due and payable and then begin foreclosure proceedings if the loan is not repaid.
As long as you live in the property on which you have your reverse mortgage as your primary residence, there is no problem with you being gone for short absences but if you are gone more than half the year or the property ceases being your primary residence, the lender can consider that a breach of the terms of the loan.
Yes, you can rent a room and if you have a history of doing so, you can even use the income to help qualify.
Nothing in her loan prevents her from renting a room. This would be fine.
I am not an attorney and cannot speak to legal tenant rights. For that, you would need to speak to a licensed attorney who practices law in the state in which the property is located. And when you say “they kicked us out”, I would have to ask who are “they” before I could be 100% certain how to answer the question from the standpoint of the loan but I can give you a broad overview as it relates to reverse mortgages.
The owners who received the reverse mortgage did so with the promise that they would live in the home as their primary residence. The moment they moved out and rented the property (or passed and their heirs did), they violated the terms of the loan and the loan became due and payable. The lender sends out an annual occupancy certification.
If you have been there for 5 years, someone has been filling that out falsely certifying that the original owners still lived there and returning it to the lender in order to defraud the lender on a federally insured lending program. If the lender has just now discovered that the borrowers no longer occupy the home, they could have called the loan due and payable which would require the current owners to sell the home or otherwise repay the obligation if they wanted to keep the property. But your question really relates to who made the decision to evict you and why, I think.
I don’t know if it makes any difference under the laws in your area or your rental/lease agreement why the owner chooses to evict you but that would be a question for your attorney. The current owner may need to establish occupancy for themselves in order to qualify for a loan if the reverse mortgage has been called due and payable, they may need to stage and sell the home so they do not lose it to foreclosure or it may not have anything to do with that at all.
The owners may have other reasons completely unrelated to the reverse mortgage but it might help you to know if that is their reason because it may save you some legal fees. If you do have the right to fight a landlord’s eviction but lose in the end anyway because the landlord lost the house to foreclosure, was the expense worth it? At any rate, you may wish to try to talk to the owners and ask their reasoning and then make the decision if it is worth it to you to take it a step further by seeking legal representation.
The home is not supposed to be used as a rental property. You can be gone for 30 days on a trip (as long as you spend more than half the year at the home and it is your primary residence) and still meet the reverse mortgage requirements.
The risk you run though is if the lender were to choose that month to do an occupancy inspection and your renters were to tell the person knocking on the door doing that inspection while you were gone that you are not there, that they rent the home from you.
Would a lender discover that you rent the home out for 30 days a year to people you know? Probably not but I certainly cannot make that promise and the agreement is that you will not use the home for a rental.
It is not illegal, but as soon as the lender discovers that the home is no longer occupied by the original owner the loan will become due and payable if the current owner (your landlady) has not refinanced the loan with a new loan in her name by then.
If she does not, and the lender does call the loan due and payable but your landlady does not pay the loan balance in full at that time, the lender would initiate foreclosure proceedings.
HUD does not allow short term rentals (nightly type rentals as is the case with Air BnB) but has no problems with borrowers who rent out a room month to month or on a longer basis.
I can’t begin to advise you legally and would suggest you contact an attorney to see what the law is in your state. I have read the statute in California pertaining to this issue, CCP § 318, 325, and I copied it for you below.
It seems to indicate that there is a period of 5 years of continuous occupancy along with other prerequisites you must meet (which include maintenance and paying the taxes).
CODE OF CIVIL PROCEDURE - CCP
(a) For the purpose of constituting an adverse possession by a person claiming title, not founded upon a written instrument, judgment, or decree, land is deemed to have been possessed and occupied in the following cases only:
(1) Where it has been protected by a substantial enclosure.
(2) Where it has been usually cultivated or improved.
(b) In no case shall adverse possession be considered established under the provision of any section of this code, unless it shall be shown that the land has been occupied and claimed or the period of five years continuously, and the party or persons, their predecessors and grantors, have timely paid all state, county, or municipal taxes that have been levied and assessed upon the land for the period of five years during which the land has been occupied and claimed. Payment of those taxes by the party or persons, their predecessors and grantors shall be established by certified records of the county tax collector.
(Amended by Stats. 2010, Ch. 55, Sec. 1. (AB 1684) Effective January 1, 2011.)
The internet is a great resource and just looking I see several sites dealing with this subject.
Again, in CA, there is a property management company that posts this under “squatter’s rights” in California (https://ipropertymanagement.com/laws/california-squatters-rights):
Ordinarily I would say no, that would not disqualify the borrower but your use of the word “Suspended” concerns me. The home can no longer be used for short term rentals and if you stopped a year ago, that would meet the requirements for HUD.
If you “suspended” the rentals but still had the home available for rent with any services or the lender had any reason to believe it was still an active rental but just not currently rented (i.e., suspended only long enough to close a loan), your request would probably be denied.
Is he and was he living in the home? Lenders don’t typically go from Occupancy form straight to foreclosure, I feel like there may be a few steps missing here.
Lenders/servicers usually send the annual occupancy form but that is just the first step.
If that is not returned, then the servicer will make other attempts to contact the borrower which may also include a personal inspection of the property. If he is and always was occupying the home as his primary residence, he needs to contact the servicer immediately to determine why they believe he does not occupy the home.
However, if he was not occupying the home, you need to realize that he was not in compliance with the terms of the loan and the lender is justified in calling the loan due and payable. If he does no longer occupy the home, he should consider refinancing the loan or selling the property immediately before the foreclosure can take place.
You can add your son to title as long as you continue to live in the property as your primary residence if you wish but you cannot transfer the title to him taking yourselves off of title as that would trigger the lender to call the loan due and payable.
You must continue to be the owners of the property even if you add your son to title as well or the loan has a due on sale provision that would require that the loan be paid in full.
Your cousin never signed anything with the lender that said she would notify them if her father passed so she is under no obligation to contact them. HOWEVER, if she falsifies information to deceive the lender, she would be committing a felony and the lender and HUD could decide to seek recourse at that time.
For example, she is under no obligation to contact the lender but the lender does things to verify the borrower’s occupancy which includes sending an annual occupancy certification to the home for the borrower to sign and return (in addition to other verification measures available to them). As long as she does not falsify a certification and return it to the lender, she has done nothing wrong.
If she attests to being the borrower and returns that to the lender stating that she is still living in the property she has committed fraud on a federal lender as well as HUD and then it would be up to HUD and the lender to determine what steps they wanted to take.
You do not need to worry about the loan whatever you choose to do with your personal lives. If one of you continues to live in the home as their primary residence, you are still in compliance with the terms of the loan. You cannot, however, simply remove yourself from an existing loan though. Unless that loan is paid in full, that loan will remain in effect, and you would not be eligible for another reverse mortgage loan in just your name on another property. If, however you do divorce and she does refinance that loan, then you would be free to apply for a new loan in just your name on a different property.
She is in default on the loan now. I can only assume her friend is falsely returning the annual certification that the lender sends saying she is still occupying the home. If the lender becomes aware she is not living in the home, they will call the loan due and payable but if she returns before the lender ever makes that discovery, I don’t see how they would enforce it or even know it existed later.
I am sorry, I cannot answer this for you. This is a question for an attorney who specializes in real estate contract law and practices in the area where the property is located. I cannot tell you what recourse she may or may not have with regard to a loan made to a borrower that may have lacked competence, especially if the husband was the one who lied to the lender and the title company and said he was not married. I don’t know how it didn’t show up to the title company or the credit reporting bureau that there was a spouse.
The loan takes a little while to close and each borrower must attend HUD approved counseling so the husband was able to also pass the scrutiny of the counselor who did the counseling and the notary who signed his loan documents with him as well as his lender so the lender would most likely contend that he had no signs of dementia and there were other steps that HUD requires that also indicated he was of sound mind. I can only assume he had was solely on title at the time in order to close the loan or the lender would have required the wife’s signatures and so I would also be curious as to how he held title.
Did he hold title as a married man sole and separate from his wife or as a single man? If as a married man, that too would have been a red flag for the lender and the title company and would have required them to request additional documents. If he married your sister after he purchased the property and then told everyone he was still single, I honestly do not know what recourse your sister has at this time or what she needs to do to move the title into her name, there may be an issue with probate if there are other heirs as well (if he had children, other family members who can claim heirship, etc.).
I think her first step should be to get the answers to all the questions in her conversations with an attorney and to secure the title to the property. Then she will definitely need to apply for a loan in her name, whether it be a reverse mortgage or a forward loan to pay off the existing reverse mortgage. If worse comes to worst, she may need to consider selling the house and moving but she can’t do that either if she is not the title holder so that would be the most important thing in my opinion but that is why you need to speak with an attorney.
As I started by saying, I cannot give you any legal advice, just some information about the reverse mortgage and how it works. The loan will be called due and payable as soon as the lender receives notice of the husbands passing since the borrower is no longer living in the home as his primary residence and the lender has no information about a qualified spouse. There is a possibility that your sister may qualify as a non-borrowing spouse if she was married to her husband and was living in the home at the time the loan was closed and has ever since but I honestly do not know what will happen when the lender is faced with the request to allow her to stay in the home under the terms of the loan as a qualifying non-borrowing spouse if the borrower’s documentation all states he was not married at the time.
Your attorney may want to pursue that avenue with sufficient documentation that your sister met all the HUD requirements as a spouse at the time and always did and has always lived in the home and but for her husband’s illness, she would have been listed but I don’t know if that will matter or if your attorney will agree. That would be up to your sister and her attorney to discuss and decide.
Whatever your sister decides to do, she should not wait as it is much easier to resolve things before the lender is sending notices that they have called the loan due and payable and their next step is to begin foreclosure if the loan is not repaid.
Short term rental is currently considered business use of the property by most proprietary programs and therefore, most reverse mortgage programs will not allow it. Long term (30 days or more) is deemed residential and is permitted.
If you wanted to rent the unit for residential use and the terms were for 30 days or longer, you would typically not have any issues. Less than 30 days and the lender would probably not allow it. The reasons I use the terms “most” and “probably” is because different investors can set different guidelines for the programs and those guidelines can change.
I would encourage you to check with different lenders if the first lender you contact does not work for your needs. A short while ago, the industry had a firm rule that borrowers had to be at least 62 years of age and HUD still has this minimum age limit. Then some investors lowered their minimum age to 60 years of age. Recently, some investors of proprietary programs lowered still further to a minimum age of 55.
At one time, many proprietary programs allowed for one true second home but I am not aware of any second home eligible programs re-emerging (at least not yet). Guidelines are always subject to change and this one could change at some point as well so if you are using the second unit for short term rental you should still check with multiple lenders and keep watching to see if things change after that if you don’t get the answer that meets your needs.
If you are still living in the home, you can sell it yourself or put it on the market with a real estate professional at any time you like, it is your home and you can sell it any time you want. The only risk you run is if you move out of the house and then the lender does an occupancy inspection only to find a vacant home and subsequently calls the loan due and payable requiring you to take action before you are ready.
But if you are still living in the home, paying your property charges in a timely manner (taxes, insurance, HOA dues, etc.) and maintaining the home in a reasonable manner, you are still in compliance with your agreement with the lender in your loan documents. If you choose to sell your home, that is completely up to you and that includes posting a for sale sign on the property.
I guess that depends on who you are referring to when you ask how do “you” get them out. If you are the borrower or the borrower’s heir, you can evict them just like any other individual if they will not leave voluntarily after you have requested them to do so pursuant to any terms of any legal agreements in place and the laws governing such actions. If you talk to them and they are unwilling to move, you can check with a real estate attorney in your area to determine the necessary steps to evict them if it comes to that. If you are asking how the lender would do it, the lender cannot evict anyone until they became the property owner at the completion of a foreclosure action.
The rightful heir(s) have the option under the terms of the reverse mortgage to keep the home or sell it. The lender does not automatically get the house, the loan becomes due and payable. If the heirs choose to either keep the home or sell the house, then the loan would need to be paid off (could be with funds they have available, with a refinance loan, or through sale proceeds). The heir who inherits the property would determine what would become of any other relatives living in the property at that time because they would become the property owner at that point. If the heir decided not to keep or sell the home and just let the lender foreclose on the loan, the lender would become the owner of the home, but not until the completion of a foreclosure action ending in a Trustee’s Sale (foreclosure sale). At that time, any inhabitants remaining in the home would be evicted by the new owner (the lender).
Since the reverse mortgage can only currently be taken on your primary residence, you can only have one reverse mortgage at a time.
There was a time in the past when some private programs did allow one bona fide second home as well as the primary residence and it would not surprise me if that possibility became reality again in the future but I do not know that it will for sure or not.
The proprietary programs recently lowered their minimum ages to 55 instead of 62 0r even the 60 they dropped to a little while ago so they are being innovative again and it would not surprise me to see a second home product but in the past it did not include rental units.
Reverse mortgages will allow for a non-occupant spouse but at least one of the spouse owners of the property must be living in the property as their primary residence. If the spouse living in the home is not on title, then they cannot be on the loan and that would leave just the spouse who is not living in the property. She cannot get a reverse mortgage on a property she does not occupy, and he cannot get any loan secured by a property he does not own.
To get a reverse mortgage under the scenario you describe, the husband would also need to be on title. If this is not something that can be done or that you are willing to do for whatever reason(s), you may need to consider other lending avenues that will allow a non-owner-occupied loan or perhaps you may need to ultimately consider the sale of the property.
I am not sure if you are asking me if you can rent out one of your rooms if you are the owner of a home on which you have placed a reverse mortgage or if you are a renter looking to rent a room in a home that has a reverse mortgage but luckily the answer is the same either way.
The loan does not prevent a borrower from renting a room as long as the rental is not considered transient (less than 30 days such as Airbnb nightly rentals) and the owner still lives in the home as their primary residence. So, if you are the owner of the home that has a reverse mortgage and wish to get a renter for one of your rooms while you still live there, that is not a problem.
If you are a renter and the owner still lives in the property, that is also not a problem but if the owner has moved and is renting all the rooms you should know that if the lender becomes aware of the occupancy, they will call the loan due and payable and if the owner is unable to pay the outstanding balance, the lender would begin a foreclosure action and you may be forced to move as a result.
There is not a “problem”, but the lender will call the loan due and payable as soon as they become aware of the situation.
It may be a good idea to let the family know so that they can decide for the home before the lender calls the loan and puts them into a time constraint due to a looming foreclosure action.
Yes, they can if the one who lives in the home qualifies under the HUD requirements. The other two owners would be classified as ineligible co-owners and not borrowers on the loan.
They would still be required to attend the counseling session so that they knew their rights and obligations under the program but when the borrower passed or permanently left the property, the loan would become due and payable at that time.
The other owners would need to pay off the loan with funds available to them, refinance the loan or sell the property to avoid the lender starting a foreclosure action.
He would not be eligible to apply for a reverse mortgage while not living in the property as his primary residence.
Borrowers must be living in the home and must be able to demonstrate that the home is their primary residence not only when the loan closes but also at time of application with the only exception being a purchase transaction that they can move into after the purchase closes.
You need to separate both issues. The first is the loan and its occupancy requirements. If at least one borrower is still living in the home as their primary residence, the loan remains valid.
Your mom can stay with the loan in full force even if dad moves away if she continues to meet the other requirements of the loan which would be paying the taxes and insurance in a timely manner and maintaining the home in a reasonable manner.
The second issue is the ownership interest. The reverse mortgage does not affect who owns the property. If dad owns the property now, his moving out would not affect the ownership interest in the property.
It might make sense that they have a written agreement so that there are no misunderstandings about ownership and responsibilities, on both their parts, because if mom leaves the property due to poor health the loan would be called due and payable and if they are not talking, it may be at or near foreclosure before he even knows about it.
Hopefully you will remain close enough to each of them that you can keep them all advised of any needed updates.
It would be important if such an event were to occur that you remain in contact with your lender/servicer. The lender can require sums to pay off the balance of the loan if the property cannot be rebuilt.
Otherwise, the terms of the legal documents state that the insurance funds shall be used for the restoration or repair of the damaged Property. It does state that this is only the case if the restoration or repair of the damaged property is economically feasible and does not lessen the lender’s security though.
A repair that lasts for 2 years would be one that you would need to really keep in constant communication with the lender to ensure that the lender is satisfied that the insurance funds will cover the needed repairs.
Most required repairs are not such that they would take 2 years to complete. The scope of the job and the anticipated results would need to be reviewed to determine what needed to be done that would take that amount of time and whether that was economically feasible at that point.
That’s why it would be extremely important for you to communicate with your lender to be sure that the anticipated job was not something that the lender would deem as not feasible due to the time and the scope of the work required to complete the project.
Back in the year 2007 or so, there was a reverse mortgage program for true second homes, but it disappeared when the mortgage market tightened up in about 2008 or 2009. It was very short-lived.
That is not to say that there may not be another one at some point though because the entire jumbo reverse mortgage market disappeared for several years and now there are multiple programs available.
In fact, those guidelines are expanding all the time. When the programs first reappeared, they would only accept borrowers 62 and over and the guidelines and amounts they would give borrowers were much tighter. Now you can find programs for borrowers down to age 60 and the amounts available are more generous.
It is not unreasonable to hope for another second home product at some point in the future, but I am not aware of one currently. You need to just keep watching and doing occasional internet searches.
You are allowed to be away from the home for temporary time periods of up to 12 months for medical reasons but if the home is a rental and the lender does an occupancy inspection while you are gone, they can call the loan due and payable for a breach of contract.
If you do leave the home for temporary periods, the lender would like to see that the home is secure so if you have family or someone watching the home that is better than leaving the home vacant.
But if you plan to be gone for more than 90 days, you may want to discuss possible absences with the servicer in advance to be sure you will not have any issues with the loan as a result since it does not sound like a leave for a medical necessity.
The home can only be sold to them by the owner if that is what you are looking to do. If you are mom’s heir, you need to take the legal steps to have the title put into your name so that you can sell the home. It might need to go through probate as well so it might benefit you to speak with an estate attorney.
It sometimes takes a little while to complete this so the sooner you investigate it the better. If you are not mom’s heir or there is another sibling or relative who is handling the estate, then these folks would need to speak with them.
Whether you are making renovations or not, the loan becomes due and payable after your father is no longer living in the home as his primary residence. If you are his heir, you would then own the home and you will have several options at that time. You can stay in the home, you can sell the home or you can walk away and let the lender take the property through a foreclosure action and owe nothing.
If you have made renovations that increased the value, I would certainly think you would want to either remain in the home or sell it. To stay in the home, you would need to refinance the loan with a new loan in your name. If you chose to sell it, you would pay off the loan with the sale proceeds and you would keep anything above the amount needed to repay the loan.
There is also another option I did not mention. If you choose not to make any renovations and the amount owed exceeds the value of the home, as your father’s heir, you still have the option to keep the home and pay off the loan at 95% of the current market value if that is less than the amount owed. You would still need to refinance the loan with a new loan in your name but this option would allow you to keep the property, even if the loan balance was higher than the current value of the property without having to take cash out of your pocket to pay the loan down.
There are no restrictions on how many other properties you own as long as you continue to occupy the property with the reverse mortgage as your primary residence.
There really is no time limit agreed to in the loan documents, but the lender cannot enforce anything until they own the property. That only comes after a valid foreclosure process has been completed and that takes anywhere from 5 months to a year in some cases depending on the laws where the property is located.
I would suggest that if you are the heir to the property, you compare the value of the home to the amount owed and check with a local real estate salesperson once you have that information to see if there is any equity in the home (there has been a lot of appreciation in most parts of the country this past year).
If so, a local senior real estate specialist can help you with the sale of the property and possibly with an estate sale of any personal property you do not wish to keep. At this time, the house still belongs to your sister or her estate and if there is equity in the home, there is no reason that you should not sell the home and realize that equity, if nothing else for end-of-life expenses, etc.
But if you decide there is no equity and you do not want to worry about the sale of the home, the lender must first foreclose on the property before they can take possession (and make you remove any personal items you wish to keep). That means they must first become aware of her passing, file notices and follow all legal steps to foreclose in your location and about the fastest I have seen that occur is 6 months and I know of some instances where it has not been completed after several years.
You cannot count on the several years’ timeframe in all cases but depending on your state and local laws, there is usually a notice that must be given, followed by a 30 day right of rescission and then an advertising period followed by the actual foreclosure for Deed of Trust foreclosures and if you live in a Mortgage state and the lender must adhere to a judicial foreclosure, it may take a year or more.
And that timeline only begins after they file the notice which again the quickest, I have heard of was a few months after the passing of the borrower before the process even begins so the minimum timeframe being 6 months in the quickest of jurisdictions.
The rights of renters in any situation would be considered legal advice and I cannot give you such advice. I can tell you a little bit about how the reverse mortgage works and what may happen from that standpoint. The loan will become due and payable as soon as the lender determines that the borrower has permanently left the property.
At that time, the borrower or their heirs will have the choice to pay the loan off, sell the home or let the lender complete a foreclosure and take the home. Obviously if the lender forecloses and takes ownership of the property, they will evict you at that time. However, your right to stay in the home prior to that time may be dependent on the owner or their heirs.
The heirs may determine that they want to keep the home and use it themselves or rent it out. If they want to use it as a rental, they may or may not have the same arrangement available for you at that time with a portion of the home available for rental. They may determine that they need to sell the home to end the interest accrual on the reverse mortgage or to supply care for the original homeowner.
For that, they may determine that they need the home empty for listing and selling. Any one of these options may affect your ability to remain in the home long term and then it would be a matter of legal rights that I cannot determine as to whether you would have grounds to fight their eviction or if they could have you removed from the property within a short timeframe.
My suggestion to you would be to try to contact the owner’s heirs. They will be your first indicator of possible need to relocate. If the owner has no heirs, the lender will determine the speed at which you would need to relocate based on when they will act and while it would not be immediate, a relocation is imminent if the owner is permanently gone.
You should keep this in mind while you make your plans so you are not caught flat-footed when that time does come.
I am sorry but only a primary residence will qualify for a reverse mortgage. You cannot have two properties that you claim are your primary residence to utilize multiple programs that have the same requirements on other properties as well.
That is between you and the owner of the property! There are no provisions in the loan that would prevent the owner from having a roommate or renting a room (you did not state the nature of your relationship) but either is allowed.
Whether the owner will allow you to stay though is totally up to the owner.
People often have family members stay in their homes to watch things while they are away, and this is one of the ways the lender will want to see that you have made provision to secure the home while you are gone.
The terms of the loan state that if you are to be absent for more than 60 days at a time, you need to notify the lender, and this is an excellent time to let them know of your plan to keep the home safe in your absence.
The terms of the loan state that you must live in the property as your primary residence, which means that you must occupy the property more than 6 months each year and it must be the home at which you have established your residency (are registered to vote, have your bank accounts, your driver’s license is tied to, etc.).
The HUD provisions also state that if you are going to be out of the home for more than 60 days, you must contact the servicer and let them know that you will be absent so they can be certain that proper steps have been taken to secure the residence.
You may not rent the property for the 5 months you plan to be gone but can have a family member who is living in the home in your absence or may take adequate steps to secure the vacant home while you are away.
You need to remember that if you say you occupy the Arizona property you should also have an Arizona license.
Especially if you are trying to refinance a loan that you already have in Arizona and presumably have been living in as your primary residence (which is a requirement of the reverse mortgage). Arizona law states that if you are a resident, you are required to obtain an Arizona license immediately.
So, the question for the lender becomes are you a resident of AZ and living in the property or not. If you are, then you should not still have a CA driver’s license and if not, then you should not be a borrower on that loan. Therefore, they will not accept your license for the loan request.
You cannot move out of the house under the terms of the reverse mortgage.
Of course, you can always sell the home or refinance the mortgage with another loan and rent the house if you wish, it is your house, but you would just need to repay the loan with funds available to you or replace the loan with other financing that allows for non-owner occupancy.
The single largest occurrence of fraud with reverse mortgages is occupancy fraud. People saying, they occupy or will occupy and do not. Up until now, HUD has just approved lenders’ use of the call provision in the loan and foreclosure if the borrower cannot repay the loan at such a time.
However, it has been discussed recently that there may be more strict measures taken against those borrowers who sign annual occupancy certificates stating they live in the homes when they do not to defraud the lender and HUD.
Aside from a foreclosure and the credit implications of such, borrowers may find in the future that they may also face legal actions if they make occupancy attestations that are false, especially if the lender/HUD experience any losses on the loan that are not recouped in the foreclosure process.
I am not implying that you would or are asking about such, but borrowers need to know that if they sign an occupancy affidavit and are not truthful on the affidavit, they are potentially opening themselves up to liability.
Yes, you can if the property is all code compliant. The zoning must permit the rentals and then the work must all be done in a workman like manner with no issues surrounding permits or no permits with the local municipalities.
The appraisal may be another issue though. Are there other properties that are similar that the appraiser will be able to use to determine a value? Do not forget that HUD may allow something, but they do require that an appraisal of the home must show that it is marketable as well and that must be demonstrated by sales of comparable properties in the area.
If your home is so unique and there are no other homes like it with the converted barn that have sold, there may be no way for the appraiser to value it in accordance with HUD requirements or to demonstrate that it is readily marketable because there are no recent sales of similar properties in the area.
I am afraid I can be of almost no help in answering your questions.
For legal opinions/advice, you would need to consult with an attorney.
If the family is selling the home, the lender has no jurisdiction over the family’s rights or obligations to you as a tenant in a property they now own that they wish to sell.
The lender will not pay to move you, they are not a party to your arrangement and have no legal standing in the property other than that of a Note holder.
I assume that any legal rights or remedies in your case would be with the family who now desires to sell the home and evict you.
That does not involve the underlying lender. I think that your rights may boil down to the terms of the rental agreement with the now deceased original owner, but I cannot even say that for certain.
Have you contacted the family to request any consideration (time or other help) with your relocation?
As I stated, I cannot begin to advise you what legal obligations they may or may not have and to determine your legal rights, especially now, you would need to consult an attorney.
I cannot really say but I can tell you that the loan will become due and payable as soon as the lender determines that it is no longer occupied by the borrower.
The owner’s heirs would need to refinance or otherwise pay the loan off to keep the property as a rental.
Usually, the home is owned by the deceased owner’s estate until it is passed to the heir(s) and there several ways this can be accomplished.
You may want to seek the advice of an attorney to be sure you are covered in the case of an heir who shows up and claims you have not been paying.
He or she may advise you to set up a trust for the rent if there is no way to determine the rightful recipient and you also want to be careful about paying just anyone if you are not positive, they are the rightful heir.
I wish I could help more but I honestly do not know the best way to protect yourself.
That is a legal question and one that really should be examined with an attorney, regardless of the type of loan on the property.
I cannot advise you in this area, but I might be able to give you a little insight as to how the reverse mortgage process goes.
Once a borrower passes, the loan becomes due and payable.
The owner of the property never should have rented it out under the terms of the reverse mortgage, the loan is specifically meant for owner-occupied residences only (unless of course there are multiple units and the reverse mortgage borrower did live in one of them).
If the owner did not live in the home and had the lender learned of the rental of the property, they would have called the loan due and payable at that time.
At any rate, the lender will now be notified of the passing of the borrower and will call the loan due and payable at this time.
The nephew has the option to keep or sell the home if he is the borrower’s heir and he acquires the title through legal process, but if he chooses to keep the property, he will need to refinance the loan or pay off the loan with other funds available to him.
If he is unwilling or unable to refinance or pay off the loan and does not sell the home, the lender will foreclose on the reverse mortgage.
I would suggest that you contact an attorney to determine what steps you should follow at this time.
He may advise you to verify the nephew’s claims of ownership so that if he is not the actual heir, another heir cannot come along and demand rents that you already paid to another claiming falsely to be the owner, but I don’t know.
What I would advise you to do is to determine what the status of the property will be for your own protection so that if the heir of the owner cannot pay off the loan, must sell the home or the lender does foreclose, you will not be surprised when suddenly you receive word that the property has been listed for sale or receive a notice of eviction later because the lender now owns the property and they need to secure it for sale.
Reverse mortgages are not assumable loans.
He can sell the home any time he chooses but the existing loan would need to be paid off and you would need to get new financing.
Obviously at that point, whether he remains as a tenant is up to you and the current owner.
The lender will call the loan due and payable as soon as they become aware of the fact that the borrower is no longer living in the home.
How long that takes will depend on several things. If the borrower’s daughter takes actions to deceive the lender, it might take them a while to discover the fact that the mother has left so it is hard to say.
In any case, there would never be an “eviction”, until after the lender conducted a foreclosure and the property became the lenders through a foreclosure sale. Until that time, the home belongs to the borrower and even though she may not be acting in accordance with the terms of the loan, the lender cannot evict anyone living in the property.
Their only remedy is to call the loan due and payable and then if the borrower does not pay the loan off with another loan, with funds they have or sell the property and pay the loan off with the sale proceeds, foreclose.
It is unfortunate though. This is one of the reasons the loan program has lost a lot of money for HUD through the years.
The loan is not and never has been intended as a multigenerational program. When a borrower leaves or sells the home, it is designed to be repaid at that time.
When borrowers leave, interest continues to accrue which assures HUD loses money on the loan if the lender is never notified of the borrower’s moving.
As losses to the program grow, HUD must cut back benefits and loan amounts to other borrowers who need it.
Reverse mortgages through the HUD HECM and even the proprietary or jumbo programs are available for owner-occupied primary residences only.
I am not aware of any lender offered programs that will offer a non-owner-occupied reverse mortgage program.
I am aware of an instance where a family created a private reverse mortgage for a family member.
If you have family members who have the wherewithal and the willingness to lend the funds in this manner, that is an option.
The terms of the loan state that the property must be your primary residence and that you live in the home most of the year.
That would mean that you live in the home for more than 6 months of each year.
Furthermore, the property may not be a rental (but you can rent out a minor portion of the home such as a room or two to people who live with you) and if you plan to be away from the home for more than 60 days at a time, you need to contact the servicer so that they can be certain that the home is properly secured during the vacancy.
If you comply with the terms of the loan, there are no issues with you owning a second home, visiting family through the year, or traveling.
Failure to follow the terms of the loan could create problems in that the lender could conduct an occupancy inspection while you are away (they have a right to do so and occasionally do at any time without notice) and could prompt them to call the loan immediately due and payable.
Therefore, it is so much easier to just send the notice if you know you are going to be away from the property for prolonged absences.
I would suggest you contact the lender to discuss any plans to rent a property before you put in a tenant.
Renting a home typically makes it less available for sale and therefore slows the process, not speed it up.
The lender may feel as though you are not serious about trying to pay off the obligation and therefore may speed up the foreclosure process if they become aware of new renters in the home and certainly would be aware of it when performing their inspections.
The loan only requires that you live in the property as your primary residence and for most of the year.
You can occupy a vacation home during some months as long as you are in your home for the majority of the year but if you plan to be away from the home for more than 60 days, you should contact the lender and let them know you will be away and that the home will be properly secured in your absence.
The terms of your loan allow for temporary absences for vacation and health but have no provisions for sale.
How llng do you think you will need to have the home vacant in your market for it to sell? If homes are selling as in most parts of the country now, do you think it will be vacant for 60 days or less?
If so, I think I would contact the lender and let them know that you are selling the home but need to use the 60 day absence that your Note allows to let the home be repaired and painted and see how they respond.
If you contact them and let them know that you will be out of the home for 90 or 120 days for home renovation and that you will take adequate measures to secure the home and that you did not abandon the home and did not rent the home, that also might be all you need to do to keep the lender happy.
You can always just move out and see if the lender contacts you but then you do run the risk that they move to act first. At least if you contact them, you will have correspondence with them and can determine what they are willing to do and how long they will wait and then can make an educated decision from there.
I believe in the communication approach and it can be a lot less costly if the lender does not get the wrong idea and start an action that can add a bunch of extra costs.
But in the end, you need to weigh your needs against the potential timeframe to complete everything. I just would never recommend an action that could result if starting a foreclosure action if it could be at all avoided.
There is no problem whatsoever sending any or all your correspondence to your primary residence.
In fact, I would suggest that you do exactly that, so you do not miss any statements.
If you want some to go to the second home for your son to pay, that’s also fine as long as any financing you have on the second home will not then consider it a non-owner occupied property and take issue.
As far as the reverse mortgage is concerned, as long as you live in the primary residence for the majority of the year and receive all your mail there, have your driver’s license associated with that home, etc., you are fine.
If he is not living in the home, it would be to his benefit to sell the property and save whatever equity he has left instead of allowing the interest to accrue on an empty house.
Sooner or later, the lender will catch on that the home is not owner occupied and then they will foreclose at which time he will most likely lose any equity he might have been able to save with a sale.
He will also lose the ability to ever get another HUD-insured loan until he pays back any loss the HUD experiences on this property.
There is no minimum occupancy requirement under the reverse mortgage program.
As long as you live in the home as your primary residence, there is no requirement that you have lived there for a minimum length of time and the loan is even available for purchases where you have not yet moved into the home (however, if you already own the home you must be living in it when you apply).
HUD allows you to rent a portion of the residence (i.e. a room or an in-law suite, etc.) but not the entire home.
If you rent the entire property, it is considered a non-owner-occupied property and subject to the call provision in the legal documents.
The lender will not review the mailing addresses for the invoice items for the second home.
They will always review the information for the primary residence on which the reverse mortgage is recorded.
They will also conduct periodic occupancy inspections on the home covered by the reverse mortgage and as long as you are living in the property, there is no problem with the mailing address you used for the other home because your son lives at that address.
His name on that property’s utilities makes no difference whatsoever in your reverse mortgage on your home.
HUD allows a month to month rental of rooms.
They do not want transient use of a property as would be the case with AirBnB, hotel or hostel type usage but they do not require yearly leases or even 3 months or longer.
Yes, you can. If it is your primary residence, you may rent out a room or rooms to others to augment your income. HUD’s only restriction is that it cannot be for short term rental (I.e. over-night or weekends such as Airbnb type rental).
There is no prohibition about not allowing you to send your utility bills on a second home to that address.
The only thing that lenders and HUD are concerned about is that you live in the home with the reverse mortgage as your primary residence.
If they ever determine that you are not doing so, they can call the Note due and payable.
Once that happens, failure to pay all sums due can result in foreclosure. But the fact that the mail for that property is sent to that property does not conclude that it is your new primary residence.
Therefore, the mailing address for just those utility bills would not cause you a problem.
She can contact the lender and ask them the procedures for giving them a Deed in Lieu of Foreclosure and they will most certainly work with her, but I caution you that it is not as simple as it sounds.
If she has any equity in the home, she is much better off to contact a local real estate specialist and sell the home herself. Allow me to explain.
Firstly, the lender cannot accept a Deed unless the property is “broom clean” and there are no liens on the home other than the reverse mortgage.
Your mom is still the owner of the property until such time as the title passes to the lender or she sell it which means that she also retains all liability for the property.
If she lets the property fall into disrepair and the City files an abatement lien or someone goes onto the abandoned property and gets injured, she or her estate may be held liable.
The reverse mortgage lender will never make her pay more than the property is worth to repay the loan, but that does not absolve her of all obligations as a property owner.
My suggestion is that she compare the balance owed on her current statement to the properties selling and see if there is any equity at all in the home. Discuss it with a real estate professional.
Even if it is only a little bit of money, there is no reason to walk away and it would eliminate any other potential liability if she could sell the home before she leaves.
I am afraid I cannot help you with this.
The question is of a legal nature and does not pertain to the loan. I would suggest that you contact a licensed attorney or seek a legal aid office in your area and request information about evicting a tenant.
I could not begin to tell you the legal process in your area, what you must do if you do or do not have a rental agreement with this person or what steps you must take for a legal eviction.
I also do not know if there are any special circumstances that should be considered. You really do need the advice of an attorney to be sure you act within the law based on your situation.
There is something wrong with your timeframes and I cannot tell what it is from the information presented.
A lender cannot issue a notice to vacate a home until after a foreclosure has been completed and the lender has taken ownership of the property through a foreclosure sale.
If the lender has issued a notice to vacate, that would lead me to believe that they had already sent the notices to your grandparents about the default (non-occupancy), all the notices required by law to foreclose on a homeowner and were at the tail end of the foreclosure process.
This in and of itself usually takes more than 6 months and I cannot imagine why your grandparents would not have seen any prior notices.
If you are saying that the lender is attempting to evict your grandparents without following any of the procedures outlined in the loan documents or state laws (i.e. the lender has given no other notices), my advice to you is to get an attorney immediately!
In fact, I would suggest your grandparents should probably be represented by legal counsel to repair whatever the misunderstanding is between them and the lender because this has gone way too far if the lender is already at the eviction stage.
They should seek legal counsel immediately to act as quickly as possible.
Until such time as the lender takes title to the property through a foreclosure or receives and accepts a Deed in Lieu of Foreclosure, the property still belongs to your mom. If the city were to take any abatement action, it would be against your mom, not the lender.
As the owner of the property, your mom still has any liability for maintenance or insurance against loss or injury.
The lender will never require homeowners with a reverse mortgage to pay more than the property is worth to pay off the loan but that doesn’t relieve homeowners of all other responsibilities of owning a property while they are the owner.
If the home the reverse mortgage secures is your primary residence and you spend more than 6 months per year in that property, there is no problem with you being in another location part of the year.
You must live in the home as your primary residence which means that is where your identification shows as your home address, your mail and bank accounts, etc. show as your home address and as I said, you must live in that home more than 6 months every year (being gone 4 months a year and living there 8 months certainly meets that requirement).
There is absolutely no problem with you having family members living with you at your home. And as for making payments on the loan, there is never a mortgage payment required for as long as you meet the conditions of the loan (live in the property as your primary residence, pay your taxes, insurance and any other property charges in a timely manner, and maintain the home in a reasonable manner) but there is also never a prepayment penalty and you may choose to make a payment in any amount at any time.
You can pay regular payments to keep the balance from rising, you can pay more to lower the balance, or you can pay the balance in full at any time without penalty. You do need to remember that if you ever pay the balance down to zero (-0-), the loan will be paid in full and closed.
If you wish to keep the loan open always remember to keep a small balance on the line and do not pay the entire balance off or your loan will be closed at that time.
The property with the reverse mortgage must be your primary residence. That means that is where you receive your mail, your driver’s license and other accounts are all tied to that address and you live in the property more than 6 months of each year.
If you meet those requirements, you can have a second home where you stay some of your time.
Mom can rent out a room while she still occupies the home but as soon as she no longer occupies the home as her primary residence and she rents the entire property, that is grounds for the lender to call the loan due and payable.
If mom is unable to pay the loan off at that point, the lender would begin foreclosure proceedings. If she no longer intends to occupy the home, she should consider selling the home or paying the loan off to avoid the foreclosure action.
I hate to assume anything, but I think you are telling me that you have one duplex which consists of two units, is that correct?
When you say both your duplexes, that would actually indicate two properties consisting of two units each or four total units and that is not what I think you are telling me (and not allowed by HUD rules as you can only have one reverse mortgage at a time).
A duplex or two-unit property is a single property, that consists of multiple units (two) with one legal description. HUD does allow 1 – 4 family properties under the reverse mortgage program and if you are living in one of the units, you absolutely can rent out the remaining unit(s).
His ability to evict you or not will most likely have nothing to do with whether or not he is compliant with the terms of his reverse mortgage and everything to do with the terms of your lease/rental agreement with him and local laws regarding tenant’s rights.
You really need to speak with an attorney to determine what your rights are as a tenant and if he has followed all legal obligations, he must meet to protect your rights. He may be in violation of the terms of the loan but that is a different subject.
The lender can call the loan due and payable if they determine he is not living in the home but that is their only recourse.
He has not broken any laws at this point solely by not living in the home although he may be guilty of other financial crimes if he has falsified any information to the lender or the government (HUD) to hide the fact that he is not living in the home.
At any rate, you will need an attorney to advise you about your rights as a tenant.
You can own other property as rentals or second homes and that does not affect your reverse mortgage.
If you live in the home with the reverse mortgage more than half the year and it is your primary residence, there is no prohibition against owning other property.
The only waiting period is that you must be living in the property when you apply for the loan. If you pay cash for the home, you must have moved into the property when you apply but that is it.
You just need to be living in the property at the time of application as your primary residence.
A primary residence is the one that you use for your main home, spend more than 6 months of each year living in and do not rent out to others in your absence (although you may rent out a room to long term residents for periods of 30 days of more who live with you).
This address would appear on your driver’s license, you would show a homeowner’s exemption on your property taxes, and all your other documentation including your credit report would show this address as your mailing address.
If another address appeared in lieu of the property address, it would require adequate explanation, or the loan could be declined for occupancy if your occupancy in the residence could not be established.
The reverse mortgage loan documents lay this scenario out precisely. Borrowers are permitted a temporary absence from the home for medical reasons. In such cases, they may be absent from the home for up to 12 months with no effect on the reverse mortgage.
However, if the borrower does not return after 12 months, HUD considers the move permanent and the loan will become due and payable.
My advice to borrowers and their families in this case is to monitor the situation and do not wait for the last moment if it becomes clear that the borrower will not be able to return to the home.
As soon as you become aware that this is a permanent situation, make a plan for what you will do with the home, contact a senior specialist real estate agent if a sale is imminent or start the steps to pay off the loan with a refinance or other funds if you plan to keep the home before the lender contacts you.
It’s much easier to do things when you are working on your own timeframe than after you have been notified of a deadline when a foreclosure will begin if you have not acted by a certain date.
You may have anyone you want to live in the home with you, it is your house. You can even rent rooms out if you like.
The reverse mortgage terms do limit the rental to long term and not to transient or nightly rental such as would be the case with an AirBnB type situation but if you wanted to rent a room on a monthly or yearly basis, move family members in or a caretaker, that is perfectly acceptable.
If there is at least one original borrower on the reverse mortgage still living in the home, it does not make any difference if the owner has their children or grandchildren also living there. There are no payments required on the loan.
When there no original borrowers remain living in the home as their primary residence though, the home becomes due and payable even if their children grandchildren still occupy the home. If those heirs still want to remain in the home, they will need to pay off the loan at that time (usually with new financing in their names).
The loan on the house is not the issue about the rights of a tenant and a landlord under the law. That would be a legal question, not one regarding reverse mortgages. If you feel that the owner is not acting in good faith in accordance with the lease, you will need to contact an attorney to determine your rights in the matter.
I can tell you that if there is a reverse mortgage on the home though, under the terms of the loan, the home must be the owner’s primary residence. By moving out and leasing the home to you they have violated the terms of the loan and if the lender becomes aware of that fact, they will call the loan due and payable.
This is a separate issue from your lease terms, but you may want to consider looking for another place ultimately anyway knowing that if the lender does discover this arrangement, they can begin foreclosure.
The borrowers on the loan, who are also on title to the property, must occupy the home as their primary residence.
If the home is your primary residence and you do live in the property, there is no minimum time you must be there before you apply for a reverse mortgage.
If you allow the lender to take the home and don’t sell it yourself, the home will be sold (most likely “as is”) with the leaks disclosed and any new purchaser will take a new roof into consideration in the price they are willing to pay for the property. I would advise you to compare the value of the home to the latest statement though and determine if there is any equity left in the home. If so, sell it yourself now so that you can keep that money to benefit mom and the rest of the family.
Your reverse mortgage requires you to maintain the home as your primary residence and that you live in the home for more than half the year. As long as you keep this home as your primary residence and live in the home greater than 6 months of every year, you can own a second home and visit it anywhere you would like.
HUD has no prohibition about you renting a room while you also occupy the home but they do not typically allow transient rental (daily or weekly). At that point, they consider the home being used for business purposes and you cannot support that the people who rent it only use 25% of the home while they are there.
It is not as though they are a renter who occupies one room on a month-to-month tenancy (which HUD does allow). A weekly rental is more like an AirBnB type situation (which may be where you advertise it) and that is not permitted under the reverse mortgage program, even if you do occupy the property for the majority of the year yourself.
The primary residence is where you live most of the year, where you receive your mail and what address you use for legal purposes.
If the property had both a permanent structure and a mobile home at the time the reverse mortgage was obtained, the mobile home would only have been allowed as an accessory dwelling unit (ADU) to the permanent residence and only if it met all zoning requirements at the time. The loan would not have been granted to the borrower if the borrower was living in the ADU at that time.
If the borrower later moves into the ADU and no longer occupies the home, the lender could determine that the home was no longer owner-occupied if they do an occupancy inspection and find that the home is non-owner occupied (rented). At that point, the lender very well could call the loan due and payable and begin foreclosure proceedings if the borrower did not take immediate steps to repay the outstanding loan.
To explain further, an ADU may or may not even bring any additional value to the property. The main value is in the home that was built on the property and in which the borrower lived at the time the loan was granted.
Should the borrower move out of the home, even to move into an ADU that may still be located somewhere on the property, the borrower is no longer occupying the residence agreed to in the legal documents.
If you are concerned that your circumstances may be different and that you feel this situation would still be considered owner occupancy of the mortgaged home, I would encourage you to submit your plans to your lender in advance to verify that you still meet the terms of your legal agreements before you make any moves that could jeopardize the standing of your loan.
I am not sure what you mean by the “options available”. The terms of the reverse mortgage state that the borrower must continue to live in the property as his primary residence or the lender can call the loan due and payable.
If the MIL suite is part of the main dwelling and this is a HUD HECM loan, he should have no issues with this arrangement as HUD allows borrowers to rent rooms out to others.
They do state that a borrower should be living in the primary unit if there is an Accessory Dwelling Unit (ADU), but they do not dictate which room of the house the borrower must occupy if it is all part of the same dwelling.
If the reverse mortgage he has is a private or proprietary program, I could not comment on what might be in their legal documents.
I obviously cannot give you a definitive answer because the final call wouldn’t be up to me, it would be up to the lender based on the legal documents the borrower signed and any discussions they had with the owner of the property.
I guess the best advice I can give you is to speak with an attorney in the area to determine your rights as a renter and what, if any safeguard(s) you can request to be put into the rental agreement to be sure you are protected.
If the property is sold (not closed but under contract) and is in escrow now, I do not believe the lender will bother you with occupancy knowing that the loan will soon be paid in full. Chances are pretty good that your closing agent has already contacted the lender to obtain a payoff demand and I don’t think any lender or servicer would waste the money to order an occupancy inspection just before the loan is due to pay off.
The risk you run by moving out early though is that the sale could fall through and then you would be out of the property and in this market, the next sale may or may not take a while. If your current escrow closes soon, I think you will have no issues at all. If that sale does not go through for any reason, you may want to rethink your strategy so that you are not out of the home for an extended period of time.
You must be living in the home as your primary residence in order to apply for the reverse mortgage. Once you move back into the property and establish it as the property in which you are living full time, you would then be able to apply and close a reverse mortgage loan using that property as the mortgaged property but you would not be able to start while living in another location.
I really can’t give you an exact time frame. Has the original borrower signed a Deed to convey title to the lender or has she just notified them that she is gone and has no intention of repaying the obligation giving them the notice to begin foreclosure proceedings? If the lender still has to foreclosure, that could still take several months. If the Deed has already been signed and the lender now owns the home, the time required to convict her will depend on local laws and I would have to refer you to an attorney for this information.
He must be living in the home at the time of application and closing so he would not be able to get the loan until his release but once he is back in the property, his previous incarceration would not prevent him from getting the loan.
If you use the primary residence in which you live for the loan, you can use the funds for any purpose you wish.
You would want to verify that there is enough available to pay off the loan on the second residence and you may even have to pay off part of the loan and then pay the remaining balance in 12 months when the full reverse mortgage proceeds are available to you, but you could also do that as well.
The only time all money is available to borrowers at the close of the loan is when they are using the loan to purchase a new home or the money is being used to pay off the liens/loans on the property on which the reverse mortgage will be placed.
Otherwise, HUD only makes a portion of the funds available at closing or in the first 12 months with the remainder of the funds being available on day 366 or after.
You may need to pay off the loan on the second home in two installments as a result of this rule but you can do it this way (or also wait and pay the whole thing off at the end of the year).
If the loan was in your grandmother’s name and she is no longer living in the property, the lender will call the loan due and payable. At that point, your father would be required to either refinance the loan, pay it off with other funds available to him or sell the home if he now has control of the property.
He should work with your grandmother if she is still of sound mind to set up a method to allow him to work with the property and the lender. I would advise you all to contact an estate attorney for advice in this area.
You can’t just change the title to your dad as that would trigger a due on sale clause but you could add dad to title in addition to your grandmother and have grandmother sign letter now so that the lender will have authorization to work with dad on all things related to the mortgage.
This will make anything he decides to do much easier because he will have the authorization in place to speak to the lender and they to him.
Since dad is aware that your grandmother is not returning and I assume if he is concerned with displacement that he does not have the funds to pay off the loan, I would suggest that he contact a senior specialist real estate professional to determine what the home would most likely bring in a sale.
Compare that number to what is still owed on the home and if there is still equity in the property, take positive steps now to get the property ready for sale and sell it before the lender must foreclose.
If the loan goes to foreclosure, chances are very good that the foreclosure sale would not net additional money for your grandmother/father, even if there is still equity in the property.
If there is no equity in the home, then your father still has some time left but he doesn’t have forever and he need to plan now. The loan provides for the borrower to be out of the home for up to 12 months for temporary health related reasons so dad will have this time before he has to call it a permanent move and before the lender can proceed to call the loan due.
Once the lender does call the loan due and payable, that process will take 6 – 8 months more between the HUD notifications, appraisals and state foreclosure laws if dad tells them he is not going to sell the home and they are not working with dad for a sale.
Dad needs to understand that during the next year to year and a half he needs to be ready one way or the other to move and with this much advance planning and no mortgage payments, I hope he will be able to make suitable arrangements.
The best of all worlds would be if the home could be sold and dad could get some money for relocation but in any event, he will have some time with no mortgage payments to prepare for the move.
While HUD does not have any issues with you renting a portion of the property, you cannot use more than 25% of your home for business (rental) purposes. If you rent the entire residence, you would exceed that non-business use of the property.
Also, to qualify for use as your primary residence, you must occupy the home for more than half the year. 6 months would violate that requirement, even if you only rented 25% of the home. You also must consider the risks if the tenant stayed over the lease against your wishes at a time the lender was doing an occupancy inspection.
The lender would call the loan due and payable when they determined the home was not owner occupied and if you could not repay the loan at that time, the lender would commence foreclosure proceedings.
My best advice to you is that if you need to rent the home out for 6 months out of the year, or if you need to rent out the entire home for any periods of time, you should explore other lending options. The reverse mortgage may not be your best lending vehicle.
There is no seasoning or minimum time period that you must own or live in your home to be eligible to obtain a reverse mortgage. If you own the property and have established occupancy, you would be eligible from that standpoint for the loan.
The only time a seasoning requirement may come into play is if you just purchased or built the home and you are trying to use a value higher than the cost to purchase or build the home as your value for the loan basis.
The lender must consider all factors when underwriting the loan to be sure that any recent changes in value are reasonable, if that were to be the case.
Your agreement loan does not allow you to use the home for transient rental purposes.
You can rent a room to a boarder monthly or annually, but the terms of the loan do not allow you to use the property for hotel/hospice (AirBnB) usage.
Your loan documents do allow for the lender to perform certain inspections at their expense with adequate notice. If the home is being reasonably maintained, you should have not issued by allowing the appraisal and it is in your agreements.
Remember, the lender only has the rights you grant to them when you take the loan. They cannot exceed the terms in the loan documents, but then again, they can expect you to also live up to your end of the promises.
The servicer of the loan will send it to you when they need one on your loan. There is not a HUD generic form that every lender uses, each lender uses their own format. If you have any questions, you can call or write your lender at the number or address provided on your monthly statement.
You don’t see incarceration mentioned because there is no current exemption to HUD’s policy for why borrowers leave the home for more than 12 months, just that if you leave for more than 12 months the loan becomes due and payable. If this is a situation you or a family member are currently facing, I would suggest you contact the lender to see if there is any leeway if you know the time away will not be much longer than 12 months.
However, HUD must enforce their policy and if they do extend it, at what point do they terminate the extension? At 15 or 18 months? Years? I would be willing to wager that HUD will not extend their policy as that would then leave them open to people who would want extensions to their program requirements for other reasons as well and at what point would they be discriminatory if they approve some and not others? I honestly believe that HUD will continue to enforce their occupancy requirements as is for all borrowers.
You can rent rooms, etc. if you still occupy the home as your primary residence. You just must be careful in that you do not rent the home out as a business that does not meet the HUD restrictions or changes the nature of the property. But if you are just referring to renting out a room or two to boarders, that is perfectly fine.
There is no waiting period required. If you are selling your current owner-occupied home and this will be your only residence, there shouldn’t even be a question after you move. If you retain your current home, the lender will request additional documentation to verify that you have in fact moved.
You will not have any rental income on the home that has not been rented out in the past, therefore the lender will probably not be able to use proposed rents on that property. But if your income is enough to pay all property charges on both homes plus any other debts/obligations you have and you still meet the HUD residual income requirements, that would not be a problem.
In any event, you would need to have established occupancy in your new location by having your driver’s license and other documentation reflect the property into which you have moved.
Oh, and you cannot have a reverse mortgage on the home you previously occupied unless you sell that home and paid off the reverse mortgage with no losses to HUD. If you did have a reverse mortgage that was paid off with no losses, you are eligible for a new reverse mortgage on the new location.
There is no provision that states you cannot have anyone move into the home with you, only that you must live in the home as your primary residence (or at least one of the original borrowers on the loan).
HUD even allows reverse mortgage borrowers to rent out rooms if the rental is not transient or of an “in and out” nature such as a bed and breakfast situation would be. Such a rental situation would not be considered boarder income but rather business usage of the property.
If you are referring to family members, etc., there is no restriction on letting your kids or your sister/brother, etc. move in with you.
You can also remarry, have a significant other move in with you, or move other family into the home, but you must realize that if you do remarry or move other family into the home, they would not be on the loan and you should consider looking at all options if you want to be sure they can continue to live in the home even after you pass.
The terms of the loan prohibit short term or transient renters and if the property is in a resort type area, such a move could easily be construed as a rental property and not a primary residence. If the lender conducted an occupancy inspection while the tenants were in possession, they would call the loan due and payable under the terms of the loan.
You can have others renting from you though such as a renter who rents a room. If you had a long-term relationship with a renter who rented only a portion of the property you would still follow HUD requirements.
Your mother can have a short absence for medical reasons of up to 1 year and still follow the terms of the loan. If she is gone longer than that, the lender will call the loan due and payable which could lead to a foreclosure action if the loan is not repaid at that time.
If you believe your mom must permanently leave the home, you really need to decide if the home should be sold or if you and your siblings want to arrange to either replace the loan with a different form of financing that will allow occupancy of your siblings or pay the loan off with other funds available to you.
The loan is only intended for a borrower’s use until such time as they sell the home or can no longer live in the property at which time it becomes due in full. It is not and never was intended as a multi-generational loan to remain in effect for heirs of the reverse mortgage borrower.
If you believe that there is a good chance that mom will not be returning to the home, I would suggest that you and your siblings all make plans for the payoff of the loan now (whether that is by refinance or with other funds) if you want to keep the property.
If you do not want to keep the home or it is not within your and your siblings’ ability to pay off or refinance the loan, you can sell the home on your own terms before a foreclosure adds pressure and time constraints to such an action.
If there is no equity left in the home, you can pay off the existing loan at the amount due or 95% of the current market value, whichever is less.
And you always have the option of contacting the lender and make arrangements to Deed the home back to them if you do not want to go through the needed steps to sell the home and do not wish to keep it.
I am sorry but I cannot answer this for you. This has nothing to do with the mortgage and is a legal question regarding tenants’ rights. I am not an attorney and cannot give you legal advice. I would encourage you to contact an attorney to discuss this.
Mom can be out of the home for medical reasons for up to 12 months. With the documentation from her physician you would be ok with a temporary absence for up to 12 months under normal circumstances but with the home rented to others, that’s where you may run into issues.
If mom leaves the home for up to 12 months to recoup for a medical condition she is still within the terms of the loan but since she is not going to a hospital or hospice and there are renters in the home, the lender could easily come to the conclusion that the home is no longer owner-occupied.
I would suggest that you have her doctor write a letter for her to stipulate that she is to be under your care and for what period and send it to the lender and explain that she still occupies the home and will be back as soon as practical but remember, if she is gone from the home for 12 months or more, the absence is considered permanent and the lender can call the loan due and payable.
If mom is still out after 6 months and it does not look like she is going home any day soon, you need to do some real soul searching and mom needs to know that if she is unable to live alone again, you need to put the home on the market or make other arrangements to pay off the reverse mortgage before the loan is called due and payable and she faces a foreclosure action.
HUD allows borrowers to have tenants and rent rooms, etc. in the home. If you still occupy the home as your primary residence, you can rent to one or even more than one tenant.
There would be no problem even adding your husband to title but just remember that the reverse mortgage comes due and payable as soon as the last original borrower on the loan permanently leaves the property.
So when mom and dad move or pass, that loan becomes due and payable and you would need to be able to repay the loan either with funds available to you or with a new loan at that time or you would have to sell the house.
The permanent fixtures are all considered real property and therefore part of the loan. Since the lender could not foreclose on the house leaving the land in the event of a default, anything permanently affixed to the land (which also includes built in appliances and other “fixtures”) are considered real property and are covered by the loan.
Any personal property, free standing appliances, non-attached temporary buildings, etc. are not real property and are not a part of the mortgaged property. The loan is due and payable at the time the last remaining borrower is no longer living in the home as their primary residence.
As soon as the lender receives confirmation of the passing of the last borrower, they will begin the process of ordering an appraisal and making all the notifications to determine what the heirs want to do. If your sister is handling things, does that mean that she is the recognized executor of the estate?
The lender would contact whoever is authorized to work on behalf of your parents to plan for the payoff of the loan. If your brother and your sister indicate that they are selling the home, the lender will request things like the listing and will compare that to the valuation they received.
As long as the listing is in line with property values in the area, they will work with you for 3 months at a time with extensions as needed as long as they believe an honest effort is being made to sell the home for up to 12 months.
If at any time though they see that the effort to sell in disingenuous or there is no progress, they can make the call to begin the process of calling the loan due and payable and foreclosure as that still takes approximately 150 days from the time they start. Most family members must go through a probate process and lenders know this and will give them the opportunity to resolve the title as well.
The total time to take care of everything and sell the house may be close to a year if everything is started immediately so the last thing you want to do is wait until the lender contacts you and says that they are starting a foreclosure for non-action.
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.
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.
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 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.
Also See: https://reverse.mortgage/divorce
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.
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.
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.
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.
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.
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.
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.
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.
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.
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).
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.
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.
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.
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?
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.
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.
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.
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!
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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’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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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).
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.
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.
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.
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.
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.
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 will go 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.
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.
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 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.
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.
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.
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’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.
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.
Yes, you can rent your basement. As far as claiming the income goes, that would depend on your total income and deductions and is a question for your qualified tax advisor.
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.
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.
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.
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.
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.
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.
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.
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.
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’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.
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!
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 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.
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).
As long as you live in the home as your primary residence, the home is complete and meets all HUD requirements, there is no set minimum time.
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.
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.
As long as you are still living there, that would be fine.
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.
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.
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.
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.
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.
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).
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.
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.
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.
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.
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.
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.
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.
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 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.
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).
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.
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.
The house on which you wish to place a reverse mortgage loan must be your primary residence.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
There are a number of different reports available to servicers including the Social Security rolls. Usually, Funeral Directors will notify social security when a person passes.
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.
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.).
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).
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 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.
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.
HUD allows just one reverse mortgage and it must be on your primary residence.
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.
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.
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 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.
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 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.
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.
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.
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.
There is no prohibition or stipulations about family living with you at all so yes it is allowed and it does not affect the loan in any way whatsoever as long as you are living there as well.
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.
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.
As long as the reverse mortgage is on the home that you live in as your primary residence, you may own other property that you rent.
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.
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.
Also See: Reverse Mortgage: What Happens When You Leave to a Nursing Home?
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.
It's not illegal, but it is against the terms of the loan. Since there is no law broken, the only entity that would be interested would be the lender.
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.
Once you move out of the home permanently, the loan can be called due and payable so you may want to keep this in mind.
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.
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.
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.
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.
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.
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.
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.
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.
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.
To learn more try out our reverse for purchase calculator https://reverse.mortgage/purchase-calculator or call us toll-free 1-800-565-1722
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.
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.
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.
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.
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.
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.
The home you live in 5 months a year is considered a secondary residence and is not eligible for a reverse mortgage.
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).
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.
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.