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My mom did a reverse mortgage & she has now passed away. My question is, I want to give the condo back to the bank through a Deed in Lieu, but since my brother, who has been living in the condo for the past 15 years, will not move out, the bank is telling me I have to evict him. Now my mom's insurance carrier is saying they are non-renewing her condo insurance. Am I responsible for the condo insurance and condo fees and anything that goes on in the condo? My brother has now moved in with his girlfriend, our cousin, and her boyfriend. It's turning into a nightmare, as I was told we could walk away from it. The bank stopped the Deed in Lieu, saying they would not start the process since they are living in the condo. So, I need to know what I am responsible for. If someone gets hurt & I don't keep the insurance, and if I stop paying the condo fees & taxes, what will happen? Thanks!

By Christine S. on 11.07.2018

Dear Christine,

Navigating the complexities of liability involves understanding the distinct levels at play. The lender's recourse for loan repayment is limited to the property itself, as reverse mortgages are non-recourse. However, the situation with relatives who refuse to vacate the property introduces a separate liability concern for you, which is beyond the scope of financial advice I can offer. It's crucial to consult with a legal professional to clarify your rights and assess any potential liabilities you might face.

Should the lender be compelled to place insurance on the property, be aware that this coverage only extends to the physical dwelling. It does not shield you, as the current owner or the executor of your mother's estate, from legal complications arising from incidents on the property, such as personal injuries.

Regarding the acceptance of a Deed in Lieu of Foreclosure by the lender, it's important to note that this option is only viable if the property is free of liens and meets specific conditions, including being in a "broom clean" state. It appears that your brother is benefiting from his current living arrangement without contributing to the resolution of the property's status, which complicates matters for both you and your mother's estate.

Unfortunately, your situation is not uncommon. Some family members become accustomed to living off the equity of their parents or other relatives without contributing. This impacts the immediate family negatively and has broader implications for the Home Equity Conversion Mortgage (HECM) program by increasing losses, which in turn leads to HUD scaling back support for seniors who genuinely need these services.

While I wish the circumstances were more favorable, the lender's capabilities are limited under these conditions. Continued occupancy by your brother might entail additional liabilities for the titleholder.

I strongly advise seeking counsel from a licensed attorney to explore your legal options, which may include the tough but necessary decision to evict. After 15 years of residing rent-free, it's reasonable to expect that your brother should be in a position to secure alternative accommodations.

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