when you move out of your home while having a reverse mortgage do you have a certain amount of time to sell the house or is it due asap?
The reverse mortgage loan is governed by the terms of your legal documents. In other words, the agreements you made with the lender and with HUD when you borrowed the money and signed the Note, the Deed and the Security Agreement. Occupancy is a very important feature on reverse mortgages. This topic is specifically covered in the legal documents and I have that portion of the Deed of Trust copied and posted below (Mortgage Information as well).
As you can see, if the property ceases to be your primary residence (you move out of the property). You are required to notify the lender within 30 days of such event. The terms state that if you are not at the home for a period of 12 months or more such as might be the case with physical illness, the lender could call the Note due and payable, but if you just move out of the home with no expectation of return, the lender can call the Note immediately due and payable BUT in both cases, to begin foreclosure requires HUD approval.
What this means is that the borrower has 30 days to notify the lender, the lender has to notify HUD and get HUD’s approval to begin foreclosure and then give the borrower an additional 30 days from the date of notice back to the borrower that the loan is now due and payable. The bottom line is that if you move out before you try to sell, you could have as little as 60 days before any action is started by the lender against you. If HUD does not grant the authority to begin foreclosure immediately to the lender, you could have longer. If you still live in the property and have not moved out, then you have all the time you need as there is not requirement to notify anyone that you intend to sell.
Foreclosure actions take different amounts of time in different parts of the country depending on the local laws. If you are concerned about how quickly the property could go to a foreclosure sale after a notice of default was filed by the lender, you really need to speak with a real estate attorney in your area. But the cards are pretty much in your hands. If you have the chance to make a decision as to move or not, you can always sell before the move and not take any chances. If you are out of the home due to medical reasons and have not moved from the property permanently as of yet, the documents grant you up to 12 months to regain your health to move back in so you can also use this time to make other arrangements.
If however, you just decide that you want to move out now and the home is no longer your primary residence, you need to realize that the options are specifically covered in your loan documents.
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.
(c) Notice to Lender. Borrower shall notify Lender whenever any of the events listed in subparagraphs (a) and (b) of
this Paragraph 9(a)(ii) or (b) occur.
(d) Notice to Secretary and Borrower. Lender shall notify the Secretary and Borrower whenever the loan becomes
due and payable under this Paragraph 9(a)(ii) and (b). Lender shall not have the right to commence foreclosure
until Borrower has had thirty (30) days after notice to either:
(i) Correct the matter which resulted in the Security Instrument coming due and payable; or
(ii) Pay the balance in full; or
(iii) Sell the Property for the lesser of the balance or 95% of the appraised value and apply the net proceeds of
the sale toward the balance; or
(iv) Provide the Lender with a deed in lieu of foreclosure.
The experts at All Reverse Mortgage® are here to answer your questions! If you have a question about the reverse mortgage agreement or documents give us a call Toll Free (800) 565-1722 or request a quote by clicking here »
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