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My mother passed in Oct. of 2018 in a nursing home. Prior to her death as POA I surrendered the home by registered letter to Novad, a HUD management company, requesting a Deed in Lieu of Foreclosure. As of March 2020 they have not taken over the title to the home and the tax collector is trying to get “The Estate of…”to pay the taxes and the estate has no funds nor do I believe they owe anything based on a non-recourse loan. Novad has taken over maintenance of the home because I stopped paying for insurance, mowing, etc., but not transferred the title. I have forwarded by registered letter the tax bill to Novad and refused to pay. Can I just walk away and ignore the tax bill or any liens etc.?
The loan is non-recourse and therefore, the lender can never look to any other assets for repayment of the loan. HUD has a process for accepting a property via a Deed in Lieu of Foreclosure and I don’t know what your letter said or offered to do or what other steps you took to complete a Deed in Lieu of Foreclosure, but I can tell you that a letter alone would not have allowed them to proceed with this process.
And if there are any other liens on the property, the lender or HUD cannot accept a Deed in Lieu of foreclosure at any rate. HUD and lenders are forced to go through a full foreclosure if you did not have full authority to transfer the title and if the title was not clear of all encumbrances or clouds.
If there are any other liens on the property and a lender or HUD accept a Deed in Lieu of Foreclosure, they “inherit” those other obligations whereas if they foreclose on the loan, any other lien-holders have the opportunity to protect their lien position by paying the amounts owed to HUD to move into a first lien position.
If they do not (and they almost never do), then that lien is removed and the Deed upon sale goes to the lender or to HUD minus the other liens. I don’t know what steps you took with the servicer to be certain that the property was even eligible for a Deed in Lieu of Foreclosure but it sounds like you may not have verified this option before you sent in your offer to “surrender”. Have you followed up with them to determine if this was even a viable alternative?
For the lender, or servicer to even speak to someone who is not the borrower or authorized by the borrower to speak to them on their behalf, you would need to have taken title to the property or provided documentation to them that they have the borrower’s authorization to speak with you. Did you provide the lender with this documentation?
With regard to other obligations, remember that property charges are not lender charges and therefore, even though the lender will never look to anyone else or any other assets other than the property for repayment, others may have different options for debts other than the reverse mortgage. I would suggest that you contact an attorney in the area to determine the rights and obligations of the estate versus other debtors.
Another thing you might want to ask your attorney is about the maintenance and any possible liability should anyone be injured on the property while it is still owned by the estate (any insurance the lender has placed on the property after you quit paying covers the dwelling only – it does not cover liability should someone be injured on the property or any contents in the home).
He may tell you that if the estate has/had no assets and since mom has already passed, there is no liability that anyone can seek payment from but I honestly do not know and as I said, I cannot advise you in legal matters anyway.
NOVAD can only look to the home for repayment of the obligation and that is the non-recourse nature of the reverse mortgage debt.
If there are other debts or possible liabilities about which you are concerned, you really need to seek the advice of an attorney.