My mother has a reverse mortgage and recently had to go into a nursing home as she is terminally ill. Her reverse mortgage has been sold a few times (that is normal). According to the agreement we had to notify “said reverse mortgage company” that she was no longer living in the property. We were told by phone (we failed to document who, what, where) that we had six months to sell property and possible extensions up to a year. Two weeks later we received a notice that the foreclosure process has started and that if we do not acknowledge the letter they sent within 30 days that the debt is valid and the loan must be paid off within 30 days to stop the foreclosure. We have a realtor set up to sell property once the estate sale is complete but the property will not be sold anywhere close to 30 days but we do expect it to be sold before the six-month mark. What steps do you recommend we take in light of this situation?
Firstly, I tell borrowers to use the time allotted to them in the legal documents to their advantage. The agreement states that absences longer than 12 months constitute a permanent move so I would advise borrowers and their families to begin making plans for the sale of the home as soon as they are aware of the fact that a reverse mortgage borrower will not be returning.
This alone will usually give most families many extra months as most time families are aware that the move is permanent long before the 12 months allotted to the borrower to be absent the home in the legal documents.
The notice outlined in the Deed of Trust that you mention refers to property that ceases to be the primary residence of a borrower by reasons other than death and the other absence it referring to would be something like the borrower(s) move to another home and start renting the subject property, etc.
The Terms then go on to further outline the absence the borrower is allowed up to 12 consecutive months before the lender can call the loan immediately due as it is deemed that absences longer than 12 months are permanent and are no longer temporary, which are allowed.
I have heard others say that they were told they had 6 months with a 6-month extension as well and I cringe when I hear this statement because it really depends on whether the absence is due to death or what.
I urge all borrowers and their families to read the legal documents as that is what dictates the terms of the loan and they should know what their plans will be should this even arise.
The times when the lender can require immediate payment of all sums due are specifically spelled out in the Deed of Trust:
I am not an attorney and cannot advise you legally but I would suggest that you do contact legal counsel. If your mom has not been out of the home for 12 months, she has not violated the terms of the agreement as of this time and only your notification that it is no longer her primary residence has allowed them to start anything.
Can she move back in at this time if it has been less than 12 months? If so, it would seem to me that action would certainly stop the process as she would be in compliance with all terms of the agreement and you could demonstrate that your first notification was in error.
If later she was forced to move back to a nursing home, remember the terms (ii) above and while you are determining whether or not the departure is temporary or permanent, you may want to take whatever steps are necessary so that if the departure looks like it will become permanent, you are ready for that eventuality.
In this manner, you can certainly take steps to contact a realtor and place the home on the market while mom is still in her 12-month temporary absence period before you must contact the lender to notify them that she will not be returning if that becomes necessary (and if the home has not sold before then).
- Reverse Mortgage Occupancy Requirements
- Can You Leave Home with a Reverse Mortgage?
- Reverse Mortgage Vacated Property, Deed in Lieu of Foreclosure.
Finding a Nursing Home:
- Medicare.gov: https://www.medicare.gov/nursinghomecompare/search.html?
- A Place for Mom http://www.aplaceformom.com/nursing-homes