Reverse Mortgage After Death: What Heirs & Family Must Know.

January 27, 2024

It seems that one of the most popular questions we get is:

What happens with my reverse mortgage and my home after death?

When considering a reverse mortgage, an important question many borrowers and their heirs face is what happens to the reverse mortgage and the family home after the borrower’s death. This concern is particularly significant given that reverse mortgages are often viewed as the last loan a homeowner may need, designed to allow them to tap into their home equity while relieving them of monthly mortgage payments for life.

The amount of a reverse mortgage, known as the eligible principal limit, is primarily influenced by the age of the youngest borrower. This figure is determined from the home’s value, HUD lending limits, and the current interest rates. It’s common for borrowers and their families to worry about potential changes to the loan, especially in situations where one of the borrowers, irrespective of being older or younger, passes away first.

Table of Contents

• Reverse Mortgages Aren’t Much Different from Traditional Loans

• How Interest Accrues on Reverse Mortgages

• What Happens to a Reverse Mortgage After Death?

• Utilizing a Deed in Lieu of Foreclosure on a Reverse Mortgage

• Reverse Mortgages are Non-Recourse Loans

• Maintain Communication with Servicer

• Loan Maturity FAQs

• Summary:

Reverse Mortgages Aren’t Much Different from Traditional Loans

As the name implies – in reverse of a traditional or “forward” mortgage, no monthly principal or interest payments are due on a reverse mortgage. The loan accrues interest and other charges not due and payable until the last borrower permanently leaves home (12 months or more).

So, instead of paying a monthly payment to reduce the amount you owe on a loan, you receive funds from the loan (monthly, as a line of credit, in bulk sums, or a combination of some or all these options). Your balance owed grows over time as you accrue interest and borrow money.

And while there is never a payment due on a reverse mortgage, there is also no prepayment penalty, so borrowers can choose to make a payment in any amount at any time without penalty but are not required to do so until the home is sold, or they permanently move out of the property.

However, the borrowers are still responsible for paying taxes, insurance, and the upkeep of their homes. This is the same requirement as on a forward mortgage, and not paying these assessments is a default under the loan terms, so this is an important thing to remember.

How Interest Accrues on Reverse Mortgages

Interest accrues only on the money you borrow. Reverse mortgage borrowers are approved for a maximum loan amount or Principal Limit, but how you take the money and how quickly you accrue interest under the program is entirely up to you. The more money you borrow and the earlier in the loan, the more interest will accrue. (Receive a free calculation here.)

Borrowers looking to leave the most inheritance to heirs should be looking to borrow as little as possible and spread that borrowing over time rather than take a large lump sum to draw at the beginning of the loan.

For example, borrowers who obtain a reverse mortgage under the payment option or the line of credit option but then do not draw large sums of money immediately or only draw a little now and then will not accrue interest as fast as those who take a lump sum draw on the entire amount.

This ensures that the least interest will accrue, and the balance will be the lowest possible when the loan is repaid. Borrowers just looking to pay off an existing loan so that they can remain in their home, who have no heirs or no heirs to whom they are mindful of leaving their home, may want to be able to use the proceeds now to enrich their lives.

Either way, it is your home, equity, and choice. Everyone must remember that property values will also significantly determine the equity left. If property values continue to rise, it certainly helps ensure that there is equity to leave to heirs.

However, if values decline, just as if you had a forward loan, there would be less equity available to family members should you pass and have used all your loan proceeds. But that is the intent of the loan – so that you can use your equity as you see fit.

If you do not need the funds to live, you can save the equity for future generations, but if you do, the loan will help you remain comfortable in your home without paying.

What Happens to a Reverse Mortgage After Death?

Many believe that the home reverts to the bank upon the death of the last borrower, but that is not the case. After the passing of the last surviving borrower, the reverse mortgage loan balance becomes due and payable. Your heirs can decide whether to repay the loan balance, keep the home, sell the house, and keep the equity, or walk away and let the lender dispose of the property.

If they choose to keep the home, they must repay the loan, either refinancing it with new financing or other available money. They can repay the loan at the lower amount owed or 95% of the current market value. If they wish to sell the home, they need to make sure that they take whatever steps are required (probate, trust certification, etc.) to change the title to sell the house. We encourage borrowers to contact an estate attorney to be sure they are taking the property steps for their circumstances.

The lender will work with heirs, and if they are refinancing into a loan of their own, they will typically give them up to 6 months to close that loan or up to 12 months (6 months with two 3-month extensions) if they are selling the home. During this time, the lender or the lender’s servicer will want to see the efforts of the family to sell, and this is where communication is essential. Every 3-month extension may require evidence that the home is listed for sale on the MLS.

The lender has no desire to foreclose and sell the property independently. Still, if the family is not attempting to sell the property and repay the loan, the lender must eventually step in to facilitate the repayment. As with a forward mortgage, all remaining equity stays with the heirs when the loan is paid off. If there is a shortfall in the amount owed and the home’s current market value, the heirs will own nothing, and the lender cannot look to any other assets to repay that money. FHA will cover any losses, as all reverse mortgages are non-recourse loans.

Utilizing a Deed in Lieu of Foreclosure on a Reverse Mortgage

If your heirs inherit a home with more debt than value (“upside-down”), they won’t have to pay any extra money owed on the loan. In such cases, they might consider a Deed in Lieu of Foreclosure. This means instead of going through a lengthy foreclosure process, they can simply hand over the property deed to the lender.

It’s important to remember that a reverse mortgage is just a loan, and you have the power to decide who will inherit your home. It’s best to plan these details ahead of time, while you can still manage your affairs. Consulting with an estate attorney beforehand is advisable. They can help ensure your wishes are documented, preventing potential disputes among family members and saving valuable time that could be used for other important matters.

Reverse Mortgages are Non-Recourse Loans

Upon the sale of the property, all remaining equity belongs to the heirs, just as with a forward mortgage. As we stated previously, a reverse mortgage is a non-recourse loan. This means that if, with the combination of the accrued interest and current market conditions, the property will not sell enough to repay all amounts owed on the loan, the borrower’s heirs are not liable for any additional charges owed.

Borrowers pay for mortgage insurance to the Federal Housing Administration (FHA), a division of The Department of Housing and Urban Development (HUD), which guarantees that the borrower will always have access to the reverse mortgage proceeds and that the borrowers’ heirs will never owe more than the property is worth on a bona fide sale to a third party or a Deed back to the lender.

The program does require a bona fide sale to a non-related third party; heirs cannot “sell” the home to other family members for less than is owed on the reverse mortgage, expecting the FHA insurance to cover any shortfall to the lender on the amount owed. There are no restrictions on sales to family members or otherwise, just in the case of a balance of the reverse mortgage being higher than the value of the property and heirs wanting the lender to forgive the over-value portion of the loan and keep the property within the family.

Maintain Communication with Servicer

Heirs need to maintain communication as they do not have a set 12 months to dispose of the property after the death of the last remaining borrower… even though the lenders are only too willing to work with families who have a viable marketing plan for the property. Lenders will have an appraisal completed by an FHA-approved appraiser to determine if the heirs’ expectations are reasonable.

Reverse mortgage lenders want something other than your home. Lenders are most happy when the loan is repaid, and they do not have to become involved in foreclosure proceedings. Still, the nature of the loan is the last loan you will ever need, and since most reverse mortgages do terminate with the death of the borrowers, foreclosure at termination is often the result when family members do not want to be involved in or have to wherewithal to repay the loan or sell the house.

Reverse mortgages become due and payable upon the death of the last remaining borrower or when the last borrower permanently leaves home. Heirs and others are not entitled to continue living in the home after the borrowers are gone under the loan terms. Reverse mortgages are not multi-generational loans. If family members live with borrowers with reverse mortgages, the day will come when that loan must be repaid, and those family members must plan for that eventuality well in advance.

Borrowers must pay their taxes and insurance and maintain the property to stay within the reverse mortgage contract – the monthly mortgage payments of principal and interest that reverse mortgage borrowers will no longer have to pay if they live in their homes.

Loan Maturity FAQs

What happens if a person dies with a reverse mortgage?

When someone passes that has a reverse mortgage, the loan becomes due and payable. The heirs or the estate must decide whether to keep, sell, or walk away and let the lender take the home to repay the debt. In any case, the heirs or the estate will not need to pay anything they do not wish to pay if they do not want to keep the home, so the choice is entirely up to the heirs or the individual making the decisions for the estate. The best action is to decide the heirs’ or estate’s goals. If the goal is to retain the home, the heirs can repay the loan at the amount owed or 95% of the home’s current value, whichever is less. Heirs should probably contact a senior real estate specialist in the area before they decide to walk away from any property to determine the home’s most probable selling price in its current condition. If there is still equity in the home, heirs should take steps to transfer the title so that they can sell the home and retain the equity. If there is no equity, they can remove all personal property from the home and contact the lender to let them know they do not wish to keep the home and either work with the lender to transfer the property to the lender with a Deed in Lieu of Foreclosure or let the lender take the property in a foreclosure action. Either way, the action has no bearing on the heirs, does not affect their credit, and the lender cannot look to the heirs for any repayments.

Are heirs responsible for reverse mortgage debt?

The loan is a non-recourse debt, meaning that the property is the only security the lender and HUD have for the loan. If the heirs wish to keep the home, they must repay the loan or 95% of the current property value, whichever is less, but that would be their choice. Heirs are never responsible for repaying the debt on a reverse mortgage. They are never obligated to pay for anything on the reverse mortgage if they do not want to, and it does not affect their credit either way.

How long can you live in the home with a reverse mortgage after death?

This depends on your right to the property after the owner’s passing. If you are the heir and are working to keep the home, you may have a longer period to remain in the home. If you are a renter, other circumstances may come into play that would affect how long you can remain in the home. If you do internet searches, there are stories of heirs and others who live in homes for years after the borrowers pass who had reverse mortgages. However, you cannot count on this timeframe. When that happens, something is not functioning correctly with the process or the servicer. The lender usually finds out about the borrower’s death within just a few months of the borrower’s passing. They will usually contact the heirs shortly after that event to determine their plans for the disposition of the loan. If the heirs state that they want to sell or repay the loan and keep the property, the lender has specific steps they must take to determine the final payoff, which includes an appraisal. If there is no contact or heirs are not specific, often the lender will proceed as though the loan will be repaid with a foreclosure action (where the lender must foreclose on the loan and then sell the property to repay the debt). A foreclosure action itself takes anywhere from 5 – 6 months to complete from the time that the initial intent to foreclose is recorded at the county in which the property is located, depending on the state and the foreclosure laws. Some states take longer and require the courts to be involved. Therefore, the shortest time an occupant can live in a home after a reverse mortgage borrower has passed is about 6 months. That is based on the lender’s quickest timeframe to get the home if they begin immediately. If other heirs are involved, they may move to evict once they are the homeowners.

How long do heirs have to pay off a reverse mortgage?

Communication is critical, and the lender and HUD do not want to take the home; they want the loan repaid, so if you show them good faith, effort, and progress is real, they want you to succeed. If you sell the home, the lender will work with you and give you extensions, usually in 3-month increments out to 12 months, if they can see that the house is being actively marketed and the time is necessary for your area. If homes are selling and closing in 60 days, such a timeframe would not be warranted, and you may receive some pushback on a request for extensions. However, if there was a probate or other title requirements necessary to sell the property and you keep the lender informed and are diligent on the process to sell, they will work with you. The same is true if you are refinancing the loan with another lender. If you need some time to have the title changed so you can close a new loan and you keep the lender informed of the process, they will work with you to allow you the time you need if everything is reasonable.

What is the reverse mortgage foreclosure timeline?

The timeline for a reverse mortgage foreclosure is the same as any other loan once the decision has been made to foreclose. It depends on where the property is located and the laws in that part of the country, whether the area is a Deed of Trust state or a Mortgage state, and if foreclosures require a judicial foreclosure or can be conducted with a Trustee’s Sale. But the process is that the lender sends you a notice that there is a breach in the loan terms, and as such, the loan is in default. If that default is not cured within 30 days, the lender intends to file a foreclosure. That breach can be a failure to pay your property taxes, failure to occupy the home as your primary residence, or the borrower’s death. Some violations can be cured, some cannot, and when the breach cannot be cured (such as the passing of the borrowers), the lender would continue with the foreclosure process to repay the now due and payable obligation. If the property is in a Deed of Trust State, the lender then records a Notice of Intent to Foreclose that they also must give to the borrower. This gives the borrower notice that they intend to sell the property at auction at a specific date if the default is not cured. At the end of this period, the foreclosure goes into an advertising period during which the borrower can still repay the loan in full but can no longer redeem the loan and keep the loan active by curing a curable default. This is usually deemed the right of redemption if the default can be cured. For properties located in Mortgage states, the dates and timelines are affected by the court dates. At the end of the advertising period, the property is sold at a foreclosure auction by the trustee for a Deed of Trust sale. Heirs would need to pay attention to the court summons and be sure to respond to any complaints in the applicable periods if they wish to object to the foreclosure, or the judge could authorize the sale of the home with a summary judgment. Some states also have rights of redemption periods, so you need to verify with an attorney in your state if you are concerned with your specific circumstances.

Can heirs walk away from a reverse mortgage?

Heirs can always leave home with a reverse mortgage and owe nothing to the lender. There is no concern with your credit; you never signed any agreement to pay anything, so you have no liability or credit concerns. You may want to consider possible liability if you cancel all insurance, etc., and the estate still has considerable assets. We recommend that you always check with your estate attorney. The lender will order “forced placed coverage” on a property that would protect the dwelling in the event of a fire but would not cover contents or liability. Since the property is still in the borrower’s or their estate’s name, we do not know, nor would we advise on the effect of any liability should someone get onto the property and become injured. We always recommend you talk with your estate attorney to determine any concerns before you cancel insurance policies or let the property run down, dilapidated, etc. We also recommend you speak with a senior real estate specialist before deciding to walk away. These specialists often also work with estate sales professionals, and we have seen many examples where family members living out of state thought they had to let the home go. The personal effects of the homeowner go because they were not in the area. They connected with a senior real estate specialist who showed them that the home still had some equity and that they could arrange an estate sale of the personal possessions that the family either did not want or could not take. The estate sale folks sold the personal property or donated anything left at the sale that netted additional money for end-of-life expenses, cleaned the entire house out as part of their agreement, and donated the remaining unsold items (the family gets the receipts for tax purposes). The properties sold and netted the heirs some money, and the heirs were able to handle the entire process from a distance in most cases (not a lot in all cases, but some was better than walking away with nothing). Heirs can walk owing nothing if the equity is not there, but making a few phone calls first doesn’t hurt.

Summary:

The bank does not own your home; the borrowers and their heirs (upon their passing) do.
Upon the death of the last remaining reverse mortgage borrower, the family has the right to keep or sell the property. If the home is not worth enough to pay off the entire mortgage, the heirs are not liable for any shortfall on a bona fide sale to a third party due to the non-recourse nature of the loan.
Understanding the nature of the loan and the options available and then communicating with your heirs can make the entire process much easier for your whole family.

If you are an heir to a home with a reverse mortgage that’s now due, we recommend taking these as soon as possible.

Reverse Mortgages: Options for Heirs & How Lenders Handle Foreclosure

Additional Resources for Heirs:

Options When a Spouse Dies with a Reverse Mortgage
Ask a related question in our “Ask the Experts” area: Death & Loan Maturity
Read my recent Forbes article “How Heirs Should Handle A Reverse Mortgage After Death.”

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270 Comments on this Article

Sally B.
December 13th, 2024

Can I add a relative's name to my house deed if I already have a reverse mortgage? When I die, can my family sell the house before the lender claims it?
Reply to Sally
- Michael Branson
  December 13th, 2024
  
  Hello Sally,
  Reverse mortgage borrowers can add anyone to the title as long as they remain on the title themselves, continue to live in the property as their primary residence, and meet the other terms of the loan. It's actually a good idea to consider adding your heir's name to the title to simplify the process for them after you pass. However, I recommend consulting with an estate attorney, as there may be additional steps you should take, or other options to consider, instead of or in addition to adding heirs to the title.
  To ease your mind, the lender cannot simply "claim your home." The lender doesn't own the homeâ€”you do. The loan becomes due and payable once you no longer live in the home. At that point, your heirs will need to either pay off the reverse mortgage with cash or a new loan if they wish to keep the home, or they can sell the property to retain any remaining equity.
  Your heirs always have the option to walk away and owe nothingâ€”even if they are on the title. In that case, the lender would need to foreclose on the loan to gain title to the property. The lender cannot simply take the home without completing the legal foreclosure process.
  Reply to Michael
Steve J.
November 13th, 2024

My dad got remarried, and he and his new wife purchased a home together. After being in the house for 10 years, they took out a reverse mortgage. My question is: My dad passed away 3 years ago, and his wife passed away a week ago. Both names are still on the title. When the house is sold and the reverse mortgage is paid back, do the kids on both sides have a stake in the profit from the sale of the house, or, since my dad passed first, was his wife the sole owner of the house for inheritance purposes?
Reply to Steve
- Michael Branson
  November 13th, 2024
  
  Hello Steve,
  This depends on the steps your dad and stepmother took to make their wishes known, what plans they put in place (if any), and state laws if they died without a will or other advance directives. The reverse mortgage does not determine which heirs will inherit the propertyâ€”that's up to the owners of the property. In the absence of directives such as a will or trust, probate court would most likely need to determine the distribution of assets.
  I recommend contacting an estate attorney to establish heirship rights and determine what steps you should take next.
  Reply to Michael
Robyn Y.
November 2nd, 2024

My mother's last loan payment was 10 years ago. Now we are looking for a retirement center for her. From everything I have read, when the resident of the home changes address, the contents of the house have to be removed within 30 days because the lender now holds the deed. Our family does not want to pay off the loan. However, after reviewing the contract, I need some clarification. The contract states, "We can terminate your HECM and immediately require payment of the entire outstanding balance in one payment if no borrower maintains the property as a principal residence for a period exceeding 12 months due to physical or mental illness." Does this mean we have longer than 30 days before the lender takes the house?
Reply to Robyn
- Michael Branson
  November 2nd, 2024
  
  Hello Robyn,
  You are correct that the loan becomes due and payable when the last borrower permanently leaves the home, but your understanding of the timelines and procedures is slightly off. Once you notify the lender that your mom has permanently left the home, the lender will inform you that the loan is due and payable. If you choose not to pay off the loan, the lender would need to initiate a foreclosure process, which can take several months to complete. The only time the lender can take possession of the home before the foreclosure process is complete is if you leave the home vacant and unsecured, and they need to secure the property. Otherwise, they cannot take possession until the foreclosure process is complete, which will take a minimum of 5-6 months after they file a notice of default, which itself usually doesn't happen for several months after the borrower moves out. In any case, the lender does not take possession of the home in just 30 days.
  Let's also discuss your options. The lender does not own the propertyâ€”your mom does until you either sign over a Deed in Lieu of Foreclosure or the foreclosure process is complete. Until that deed is signed and recorded or the foreclosure auction occurs, your mom retains ownership, and as long as the property is secure, the lender cannot remove your belongings from the home. Have you checked the property's equity? I suggest reviewing your mom's most recent monthly statement to check the balance, then consult a senior real estate specialist in her area. If there's equity remaining, they could help sell the home, ensuring the equity remains with your mom or the estate. Selling can often be done remotely, and electronic signatures make the process easy. It's worth the time to explore this optionâ€”it costs nothing, and if there's equity, it could support your mom's care.
  If there is equity and you begin the selling process, the home might be sold before you even need to notify the lender of her move. In that case, ensure she can sign the paperwork to sell or take the necessary steps to manage the transaction with the lender, including obtaining a final payoff amount and closing the loan. Taking a bit of time to evaluate the sale option is definitely worth it.
  Reply to Michael
Cheryl S.
July 22nd, 2024

Do my children need to be on the reverse mortgage in the event of my death and my husband's death to have first access to buying the property?
Reply to Cheryl
- Michael Branson
  July 22nd, 2024
  
  Hello Cheryl,
  Your children don't need to buy the house; you own it, not the bank. You need to make it clear in your will or whatever final instructions you leave that the home is to go to whichever heirs you choose. That's how the ownership will pass, just like any other situation where a homeowner passes when there is a loan on the property. Just remember that they need to know that when you pass, the loan becomes due and payable, so they need to be ready to pay off the loan if they want to keep the house or sell the house and repay the loan with the sale proceeds.
  Additionally, you can always add your kids to the title with you after your reverse mortgage closes, as long as you remain on the title and live in the home as your primary residence. This won't exempt them from having to pay off the loan when you pass, but it does mean they won't need to change the title later. I would always caution you to talk to your estate attorney before making any changes to ensure they are consistent with your estate plans and do not trigger any changes in property taxes.
  Reply to Michael
Danielle G.
July 14th, 2024

My neighbor died three years ago squatters moved in her home and kept up on the electric bill until recently now the powers off but the squatters are still there. There was a reverse mortgage on the home and the women that owned the home thats dead has two sons and neither one of them want anything to do with the property or home. So what can I do to get them out of there. Can I take over her reverse mortgage and move in her home or can I contact the loan company?
Reply to Danielle
- Michael Branson
  July 15th, 2024
  
  Hello Michael,
  I'm not aware of any way to get the property back. Once the lender exercises their option to call the loan due and payable, then forecloses, the property is sold at auction under the terms of the loan, and your uncle is no longer the legal owner. The better course of action would have been to work with family members or another agent to sell the house once he knew he was headed to prison and put the sale proceeds in the bank for safekeeping upon his release.
  But that didn't happen, and looking for any sale proceeds years later may be difficult. Most states have a site where unclaimed funds are held for people when they cannot be released to them within statutory limits. I do not know what the site would be in your state. A foreclosure is conducted by a named trustee on the Deed of Trust or Mortgage, and if the ultimate buyer at the auction bids higher than what is owed to the lender, that money would go to the property owner. If the property owner was unable to collect those funds, the trustee could not hold the funds indefinitely or keep them. My guess (and I do not know for certain) is that they would be forced to turn those funds over to the state unclaimed funds department.
  So, my advice would be to contact the department in your state where unclaimed funds must be turned over to see if they are being held in his name there. Other than that, I don't have any suggestions for you. He may need to contact an attorney to determine where the funds are at this point, but that's where I would start.
  Reply to Michael
- Michael Branson
  July 22nd, 2024
  
  Hello Danielle,
  HUD currently does not have a notification mechanism available to the public for notifying them or reverse mortgage servicers of such events. You can contact your local HUD office, provide them with the property address, and inform them that there is a reverse mortgage on the property. They might contact the lender/servicer if they are not already doing so, but I honestly do not know how responsive they will be.
  Reply to Michael
Chuck
June 23rd, 2024

My mother passed away in 2022, and I've been living with my mom my whole life, 54 years. She had a reverse mortgage. There's also a high amount of equity left on the home. Will they only foreclose if you have little to no equity left? They sent me a letter, and it said they're going to let it accrue. How much does it accrue each year? The house is worth $329K, and the last estimate I owe is $171K.
Reply to Chuck
- Michael Branson
  June 23rd, 2024
  
  Hello Chuck,
  They will call every loan on which the original borrower has left the property and is no longer living in the home. It does not surprise me, though, that they prioritize and work first with the homes that have no equity. However, that is not to your benefit!
  Every month you stay there, the interest accrues, and the loan balance grows. That would be fine if it was your loan and you planned to live there for the rest of your life, but it isn't your loan. Sooner or later, the lender will call the loan due, and when they do, you will have to either pay the loan off at that time or move. If you plan to pay the loan off with new financing, the sooner you do it, the lower loan you will need to pay off the reverse mortgage. If you plan to sell the home and move, the sooner you do that, the more money you will get to keep because the debt will be lower.
  The longer you wait, the more interest will accrue, and the less you will be left with when you do sell the home and move. You definitely come out ahead if you sell the home with the highest amount of equity, which typically means the sooner, the better. Unless you think the value of the property will suddenly begin to grow at a rate faster than the interest that is accruing, the sooner you sell the home, the more equity you will leave the transaction with at that time. No one can tell you what future values will be for certain, but it is certainly something to consider.
  Reply to Michael
Mark
May 28th, 2024

Hi,

My wife is an heir to her deceased mother's home with a reverse mortgage. The home is filthy, is upside down in value, and has nothing of value inside. We have contacted the reverse mortgage company to surrender the home. Are we under any obligation to remove all of the contents of the home which would cost us a ton of money for dumpsters? If so, are we better off letting them take it in foreclosure?
Reply to Mark
- Michael Branson
  May 31st, 2024
  
  Hello Mark,
  You are not under any obligation to do anything. If there is personal property in the home after foreclosure, the lender will have the items removed and disposed of. However, I would suggest having an estate sale company take a look and assess whether there is enough to conduct a sale. If there is, they will take care of everythingâ€”sorting the items, conducting the saleâ€”and you will receive a percentage of the proceeds. If there is not enough, they will inform you, and you've lost nothing. However, if they believe there is enough to warrant the sale, you may receive some funds to help with end-of-life expenses or other needs.
  Reply to Michael
Joyce
May 25th, 2024

I am the executor of my brother-in-law's estate. He passed away three weeks ago, and my sister is predeceased. Their home has a reverse mortgage that was taken out some time ago. He has a son who receives permanent disability benefits and is living in the home. I have not yet notified the lender of the death, as I am deciding what to do and have not relocated my nephew yet.

The home needs significant repairs and remodeling but is not falling down, and the location is good. Although there is no recent record of what is owed on the loan, I am reasonably certain the home is worth more than the balance, and I want to explore selling instead of relinquishing it. Keeping the home is not an option.

My question is, where do I start? Should I pay for an independent appraisal, look for a realtor, find someone who buys properties "as is," or consider something else? I live in CA but am temporarily staying with my nephew in the home in IL. Time is critical, and I am looking to sell or walk away as soon as possible.

Thank you so much for your time and much-needed advice.
Reply to Joyce
- Michael Branson
  May 31st, 2024
  
  Hello Joyce,
  The ultimate decision is yours, but if I were in your shoes, I would not pay for an appraisal. The lender won't use yours, and it would not determine the price people are willing to pay, so it would be money spent that you would never recover and probably would not really help in the long run. I would do two things: check online to see what recent sales of homes similar to yours have been in your area, if possible, and talk to a good, experienced real estate salesperson in the area.
  One trap a lot of people fall into is comparing their home to recent sales of completely remodeled homes or properties that are not at all similar to theirs. You need to remember that, in the end, your home is worth what someone is willing to pay for it. It's very easy to determine a general value if your home is very similar to several properties that have sold recently in similar condition, but you need to be open-minded and realistic about it. A seasoned real estate professional can help you understand the market and where the right place would be to price the home.
  It's also important that you know the actual outstanding balance on the loan. The reverse mortgage is a non-recourse loan, and you can choose to walk away and owe nothing if that is your ultimate decision. But if there is equity in the property, there is no reason not to sell it and keep that equity for your family needs, rather than letting it transfer to the lender. Keep in mind that there will be costs to sell the property, and only by knowing the balance of the loan and then figuring the approximate costs of sale can you really decide whether it's better to sell the home or go in a different direction. You may also want to ask the real estate agent what repairs would need to be made to significantly improve the potential sales price of the home. Sometimes some paint, carpet, and other minor repairs can really increase the value of a property and reduce the time it takes to sell the home. Something to think about.
  Reply to Michael
Don F.
May 13th, 2024

I was a caretaker for an elderly woman who had died. I'm not a family member, she let me stay in the house prior to the reverse mortgage that she got. I have lived in the house for 5 years now. She passed away in January, and it is now May. The beneficiary does not or has never lived in the house of the loan. And has not reported her grandmother passing away to the mortgage company. Can I call the mortgage company to get information about the loan and tell them about the lady I took care of?
Reply to Don
- Michael Branson
  May 13th, 2024
  
  Hello Don,
  Anyone can call the lender to let them know about the borrower's passing. Unless they have a signed authorization from the borrower before she passed, though, the lender will not be able to give you information about the loan. Financial privacy laws prohibit lenders from giving information to anyone other than the borrower, someone authorized by the borrower, or authorized by legal prescription (such as a recognized heir).
  Reply to Michael
Cindy
April 8th, 2024

If the house went to auction and no one bid on it, then the lender put the title under the Trustee's name to sell it REO. It has not been resold yet. There was a conflict in probate court about the ownership of the home, so no one was able to either sell it or refinance it from the RM and were able to get the extensions for a year. One heir has a TOD on the property, and the other heir was actually written out of the Trust by name, which caused the problem. The house is worth over $200k over the reverse mortgage amount due, so there is plenty of equity left. The heir with the TOD wants to sell the property. Is there any way to get the home back? Or if it sells REO will they be able to get the overage?
Reply to Cindy
- Michael Branson
  April 17th, 2024
  
  Hello Cindy,
  This is a legal question and would depend on the laws of the state and whether there is such a provision. I cannot answer this for you. My suggestion to you is to contact an attorney sooner rather than later. If there is such an opportunity, I would think the clock is ticking for any resolution.
  Typically, if the home sells at the foreclosure auction of a Trustee's Sale for an amount higher than the starting bid owed to the lien holder, that overage goes to the property owner. However, if no one bids higher than the lender's opening bid and the lender becomes the owner of the property, there is no further payment owed to the original owner of the property when the lien holder does whatever is needed to prepare the property for market and sells the property later.
  Court foreclosures are handled differently, though. Some have provisions for equity rights of redemption that I can't speak to because I don't know the type of foreclosure completed nor the timeframes involved. I am not aware of an opportunity for an owner or an heir to obtain any portion of that subsequent sale, but your circumstances are unique, and you will never know until you verify with a licensed attorney who specializes in foreclosure laws. With that much equity at stake, it's certainly worth an initial consultation with an attorney now before any possible deadlines come and pass.
  Reply to Michael
Cindy R.
February 16th, 2024

My Sister and I left our mother's home, and she wants to take out a reverse mortgage to buy me out. Can she do that without my permission?
Reply to Cindy
- Michael Branson
  February 16th, 2024
  
  Hello Cindy,
  A borrower can only take out a loan on a property with the consent of all property owners. The lender would only have full security if they exercised the terms of the security agreement, which would be the case if all owners did not agree to its terms. However, suppose you are going to come off title anyway. In that case, you should speak with an attorney about transferring your interest in the home to her in advance and taking back a loan on the property to protect your interest.
  An attorney would structure the transaction so that you would not have to be involved in the loan in any way, you would be assured of payment in full when the reverse mortgage closed, and all would be happy. If you don't want to sell your half of the property, that obviously would not work, and that would be up to you and your sister to determine, but no, she cannot take out a reverse mortgage as long as you are also on title to the property if you do not agree to it.
  Reply to Michael
  - Sheila J.
    March 9th, 2024
    
    Dear Michael,
    
    My beloved Dad died at 97 years old. Nov. 7th,2023 in his home where he lived alone with the help of a reversed mortgage. His children, most of whom live Out of state submitted required deed in lieu of foreclosure documents to his bank Compu-link, as none of us had interest in the property and wanted only to return the property to the bank. We ultimately told the bank that we were walking away and the home as we understood, went into foreclosure in Feb.2024. We were told by a bank representative that the family would no longer be kept abreast of the property and that it would most likely be sold at auction. My sister, who still receives my dad's mail received a real estate notice of lien to be posted on the property if taxes were not paid in April 2024. (My dad's taxes and insurance were fully paid up until a few months past his death). Is the family, esp. one member who was listed in my dad's will as executor, responsible for upcoming taxes while the home is in foreclosure? The Will was written years before my dad got his reverse mortgage.
    Reply to Sheila
    - Michael Branson
      March 11th, 2024
      
      Hello Sheila,
      I cannot advise you legally. If you are concerned about potential liability or liens, you should contact an attorney handling such matters. What I can tell you about foreclosures is that lenders advance funds for property charges as needed, and that includes taxes, insurance, and any special assessments that must be paid that would impair the lender's position.
      Any taxes, insurance, or other payments that the lender is required to pay on behalf of the borrower would be added to the amount owed on the opening foreclosure bid. If a higher bidder purchases the property at the auction, any funds advanced by the lender is repaid from the sale proceeds.
      If the lender's opening bid is the winning bid (I.e., no one bids higher), then the property is sold on the market, and any loss is reported to HUD and paid from the mortgage insurance fund. Neither the lender nor HUD will go back to the borrower, the estate, or the heirs to try to recover any shortfall that the sale did not cover.
      Reply to Michael
Denny
January 31st, 2024

My grandmother passed way 5 years ago, in 2019 and has HCEM/ reverse mortgage on her house.

I recently found out that power attorney never contacted the lender once my grandmother died. But a neighbor contacted them two years later after her death.

I just obtained the will and realized that I am the heir/beneficiary to her house.
However the deed is still in my grandmother name .

I contacted HUD but they won't talk to me because I am not authorized .

Therefore I sent HUD a request for payoff statements and provided them with my grandmother's will, deed, death certificate, and my license.

My licenses, ( and other official documents) has my grandmother address. Because I lived with her for 5 years until she died and then got an apartment with my friends.

Are these documents enough to prove I am the heir?

Also will these documents allow to speak with me now ?

And/or allow them to give me more information?

Will I be able to get payoff statements?

Also the title/ deed is not in my name as of yet .

Do I still have time to get the title transferred to my name in order to sell or keep the house ?

If so, how long do I have to get the title transferred?

Before the house goes into foreclosure or is sold by the lender
Reply to Denny
- Michael Branson
  February 6th, 2024
  
  Hello Denny,
  All good questions. I believe once you send the documentation to the current lender/HUD to show that you are the rightful heir, that will remove any impediment to your ability to get the information you need to determine your options to pay off the loan and keep the home or sell the property. You also need to take the necessary steps to procure the title which may mean a probate depending on the requirements of your state so it may benefit you to contact an attorney who deals in such matters once you make the determination whether you will keep the home, sell it or if due to the lack of equity/current condition, will allow the lender to take the property.
  You should have time if foreclosure has not begun and you act without delay, and HUD will work with you. But you really need to get the numbers for the property value and the loan payoff to be sure it makes sense for you. Once you get the payoff figures, compare them to the current property value the amount of work that may need to be done and make the decision whether it still makes sense for you to move forward with a new loan to pay off the reverse mortgage to keep the property or to conduct a sale that might only garner enough money to pay off the existing loan.
  I would also suggest that you speak to your attorney if you do proceed with the title change about the possible liability of any person who may have hidden the passing of the borrowers or the fact that the borrowers no longer occupied the property from the lender/HUD for personal gain to your detriment. I can't give you legal advice, but I can tell you this about the loan. The lender sends out an annual occupancy certificate. Either the lender or HUD ignored the fact that the property was not owner-occupied, or someone has been returning that certificate to the lender for the past 5 years, attesting that the borrowers still occupied the home. Otherwise, the lender/HUD should have called the loan due and payable long ago. Meanwhile, interest has been accruing on that loan for the entire time, and your inheritance has been being reduced as a result.
  What has the status of the property been for the past 5 years? Has someone in the family or the person you mention as the Power of Attorney been living in the home? Has it been vacant, or has the home been rented out? Unless the home has been vacant this whole time, someone has benefited by living in a home with no mortgage payment, paying no rent, or someone may have been collecting the rent from tenants all the while your equity has been lessened as the interest on the loan continues to accrue. I would guess from your comments that the property is in disrepair, as that is usually what prompts neighbors to contact lenders and HUD - due to the decaying condition of a property and the perceived ill effect on the neighborhood. At any rate, you would typically have been so much better off having dealt with the issue as soon as possible rather than 5 years later before the additional interest accrues and the property condition deteriorates (unless my guess about the condition is incorrect and some other reason prompted the neighbor to make the call).
  My advice would be to determine the property condition, the current value (with the help of a local real estate specialist), and the amount owed before you incur costs to procure the title if there is no equity and your ultimate decision is to allow the lender to take the property back via a foreclosure action anyway. You may have a lot of equity, or there may be none. I don't know. You could do this quickly, though, and possibly substantiate your decision to keep the home or change your plans. Then it's up to you in counsel with your attorney what you want to do about any other issues.
  Reply to Michael
Michelle G.
September 29th, 2023

My Dad has a Reverse Mortgage on his house, and my siblings want to avoid paying for this Mortgage after he passes, and our names are not on the house. How does this work?
Reply to Michelle
- Michael Branson
  October 3rd, 2023
  
  Hello Michelle,
  
  You don't have to do anything if you don't want to. You can just let the home go to the lender, and the house will pay the loan off, no matter how much is owed, and the lender cannot look to your dad's estate or any of you for any other money. I would suggest that you at least look at the value of the home and make sure it isn't in your best interest to sell the home and let the sale proceeds pay off the loan and keep any amount over that payoff. If the home is worth more than what is owed on the loan, you and your siblings can keep the excess money when the loan closes escrow. All you need to do is check with a local real estate specialist to determine what the most likely selling price is, compare that to what the payoff on the loan is, and decide which option is best for you and your family (sell the home and keep any excess proceeds or walk away and let the bank worry about it).
  
  The loan is non-recourse, so if you choose to walk away. The bank can never look at other estate assets or anyone else for loan repayment. They will contact you to ask you what you want to do when he passes, and you can decide what is best for you at that time based on values and the amount he owes. The bottom line is that you will not owe any money and are not responsible for the loan. If you do choose to sell the property, there are senior real estate agents who specialize in estate-type sales who can help you with several services, including estate sales if there are other assets (personal items) still in the home that you cannot use and in many cases, can empty the home of personal belongings after you have removed any items you wish to keep with a sale that will help with expenses, donate any remaining unsold items that may give you a tax deduction if needed for final income tax returns (check with your accountant), can help you stage the home for the best sale returns and then close a sale while many times not even requiring you to be involved in the sale. It certainly doesn't hurt to investigate it.
  Reply to Michael
Wanda B.
September 20th, 2023

Why is a second appraisal done after the reverse mortgage holder dies?
Reply to Wanda
- Michael Branson
  September 20th, 2023
  
  Hello Wanda,
  HUD conducts or directs the lender to conduct an appraisal so that they know what options to offer the heirs after the last borrower on the loan passes. Remember, the loan becomes due and payable when the last borrower passes. The heirs can keep the home, sell the home, or walk away and owe nothing. If the heirs wish to keep the home, they can pay the loan off at the lower of the amount owed on the loan or 95% of the current appraised value. The only way to know what that amount will be is to obtain a current appraisal.
  Reply to Michael
Katie
August 10th, 2023

Hi Arlo,
Thanks for the informative article. My uncle recently passed and was a Medicaid recipient with a reverse mortgage on his home in Virginia. Medicaid has submitted a request for repayment. The combined cost of the Medicaid claim and the reverse mortgage exceed the market value of the home by about $180,000. DMAS in VA can place a lien on the property for the amount of the Medicaid claim.
If this happens, what is the order of payment to creditors? Would Medicaid/the lien be satisfied before the reverse mortgage is paid, or would the mortgage loan be paid first leaving the estate insolvent for the remaining $180,000 Medicaid claim?
Reply to Katie
Deanna
July 22nd, 2023

Hello Arlo,

My mother-in-law had a reverse mortgage on her home. She had to move due to her health & let the lender know she was surrendering the house. The lender continued to send statements of the amount owed and finally got notice that the house was being auctioned. The auction never happened. In the meantime, MIL passed away. She recently received notice of a lawsuit by the lender. Her heirs want to let the house revert to the bank, but there are other heirs (her former deceased husband's heirs) that we do not know. Any recommendations to remedy this situation?
Reply to Deanna
- Michael Branson
  July 25th, 2023
  
  Hello Deanna,
  What lawsuit are you referring to? Is it just that the lender was required to go through a judicial foreclosure rather than a Trustee's sale? Lenders and HUD would instead use the power to sell the property with a Trustee's sale because it is much quicker, but there are times when the circumstances dictate that they must utilize a court (judicial) foreclosure. I wonder if this is the case if other family members have tried to block the process or what. And I certainly cannot give you legal advice. I would contact an attorney in the state where the property is located, though. You can have all your questions answered in one call, which might be an initial consultation that costs you nothing or very little. You can pull the legal documents from the filed court papers online. It is probably still a good idea to have them reviewed if they are anything other than a straightforward judicial foreclosure where the lender seeks possession and ownership of the property (and if you aren't sure, I would still recommend you seek the aid of an attorney).
  The reverse mortgage is a non-recourse loan. This means that regardless of what type of foreclosure the lender uses to obtain the property, you will never owe anything to the lender because of them taking the property back. I cannot comment on anything concerning you and any other family members. Still, the lender will not/cannot seek any payment from you or your mother-in-law's estate. The lender's only recourse is the property itself. The attorney will need to let you know if you need to do anything regarding any claims from other heirs (if any).
  Reply to Michael
Robert C.
May 31st, 2023

My wife recently passed away. We were both named on the reverse mortgage. Is there anything I have to do now?
Reply to Robert
- Michael Branson
  May 31st, 2023
  
  Hello Robert,
  There is nothing you need to do for the loan. As long as at least one original borrower is still living in the property, the loan is still active, and the terms are still being met. If you have family members to whom you wish to leave home later, now is a great time to consider making those provisions. Also, it would not be a bad idea to consider granting authorization to whomever you plan to leave your home to so that they can speak to the lender on your behalf when the time comes that they need to, either upon your passing or should it become medically necessary. Lenders cannot speak to a third party about your loan without your authorization, and many people do not consider this when making their estate plans.
  It is much easier to direct your wishes. At the same time, you are able and for your heirs to work with lenders with your authorizations than try to fight with them later without it. I recommend that all reverse mortgage borrowers keep statements and records to indicate how heirs can contact the lender handy and talk to their family about this information. If you have no heirs, this may not be a concern for you, but if you do have family members to whom you want to leave your home, it makes things much easier later.
  Reply to Michael
Wilbur
May 19th, 2023

I'm listed as a third party on my parents reverse mortgage, I'm their son. Do I keep the reverse mortgage when they die?
Reply to Wilbur
- Michael Branson
  May 19th, 2023
  
  Hello Wilbur,
  
  I believe the listing you are referring to is probably the "alternative contact," which doesn't give you any rights or obligations under the loan. It is just a trusted individual that reverse mortgage borrowers identify that allows lenders to contact someone if they are unable to reach the borrowers for any reason during the term of the loan.
  The loan becomes due and payable when your parents pass, for any reason, are no longer living in the property as their current residence or fail to pay the property charges in a timely manner (taxes, insurance, HOA dues, etc.). The home's new owner would be determined based on your parents wishes if they have legal documents in place (i.e., will, trust, etc.), or the court would make that determination should they pass with no instructions.
  The loan becomes due and payable at that time. The heir(s) have the option to pay the loan off with funds available to them or with a new loan and keep the home, pay the loan off by selling the property, or they can walk away and owe nothing if they so choose without obligation to the lender.
  
  You do not have is keeping the property with the reverse mortgage in place at the same terms. The loan is not and never was intended to be, a multi-generational loan. You can apply for your own reverse mortgage at the time if you qualify under the current program parameters, but you cannot keep the existing loan on the property after they pass.
  When the loan becomes due and payable after your parents pass, you must let the lender know your plans. So, although no one likes to think about parents passing, it is not a bad idea to have a plan in place so you aren't just beginning to consider your options when the time comes, and you must act.
  Reply to Michael
Brianne R.
April 13th, 2023

Hi Arlo,

I am looking to purchase a property that has a reverse mortgage. The listing states, "Seller must comply with HUD Guidelines 24 CFR 206.125 (g). Buyer pays all transfer costs. The seller cannot pay any of the buyer's closing costs." How would my relator receive their commission? Am I able to offer less than the listed price? Do lenders reject these properties often?

This listing also states, "All Reverse Mortgage properties are sold at 100% of the appraisal value within 180 days from the recorded deed." if the property is listed at $125K but appraises for $135K, will I be required to pay that amount? What happens if it appraises for less? Thank you.
Reply to Brianne
- Michael Branson
  April 16th, 2023
  
  Hello Brianne,
  
  They notify you that the buyer must pay all their closing and sales costs, and the seller will not pay any buyer costs or provide any credits. The listing will show any approved commission and the Real Estate Agent's approved portion of the commission. The agent would receive their commission from escrow at closing. You can always offer less, but then the offer can be rejected. Yes, those offers are rejected if HUD feels the offer is too low and the loss specialist reviewing the request, and the sales in the area believe they would ultimately sell the home for a higher price and therefore mitigate the loss by declining your offer and holding out for a better offer.
  
  Every contract written now allows the buyer to review the appraisal and, if the appraised value is lower, cancel the transaction and have their deposit returned. I would make sure that this is included in your offer on any piece of real estate so that if the value came in lower, you have the option to cancel without penalty (I think the most likely result would be the seller lowering the price if the appraisal came in lower but if they did not, you would at least have the option to walk without losing your earnest money deposit). If you have any doubts or questions, check with your agent or even have a real estate attorney review the contract before you sign.
  Reply to Michael
Kay S.
April 1st, 2023

Hi Arlo,

Who hast to clean the house when the borrower dies?
Reply to Kay
- Michael Branson
  April 1st, 2023
  
  Hello Kay,
  
  That would depend on what you intend to do with the property. If you are going to keep it, sell it, or give it back to the lender with a Deed in Lieu of Foreclosure, then the heir would probably clean the home to make it livable for themselves, make it easier to sell, or because the lender cannot accept a Deed in Lieu of Foreclosure unless the home is unoccupied, empty of all personal property and "broom clean."
  Suppose you plan to hold an estate sale with personal property inside. In that case, the estate sale company will typically organize the sale and, after the sale, donate any remaining items and clean the home (again, just broom clean, they will not scrub it and paint, etc.). Suppose you just let the lender take the house through a foreclosure action. In that case, all you really must do is be sure to remove any personal items you want to keep. The lender will dispose of any remaining property when they secure the home after the foreclosure sale if they are the winning bidder at the foreclosure auction or the new owner will if someone outbids the lender.
  
  I recommend contacting an estate sale company if there is enough personal property in the home to conduct a sale. The ones with whom I have been associated over the past have been very thorough, they come in and will look at the estate, and if they do not believe there is enough merchandise to hold the sale and pay them as well as you, they will tell you from the very start. They only get paid a portion of the proceeds, so you don't lose a dime having them check it out, and any money raised can often come in handy for end-of-life expenses that family members might otherwise have to pay.
  It doesn't hurt to ask if you don't plan to keep the property anyway. I consider this the same as the call to a local senior real estate specialist. Before you just let the lender take the home back, it never hurts to have an agent specializing in the sale of a senior's home in the area look at it to see if there is any equity left that you might be overlooking. They are also excellent sources for estate sale leads if you don't have someone in mind.
  Reply to Michael
Ruby D.
January 22nd, 2023

My mother had a reverse mortgage and has died, there was no will left. Do I have the right to remove outdoor plants from the property before it is sold?
Reply to Ruby
- Michael Branson
  January 22nd, 2023
  
  Hello Ruby,
  
  The reverse mortgage is just a loan that secures the property. It does not have any effect on your mom's personal property. It also does not mean that you do not have the right to keep the home. Firstly, any rightful heirs can enter the property and remove all personal belongings. You can take her plants, her clothes, furniture, etc.
  You have the right to sell the home and keep any equity in the property or pay off the loan and keep the home. The only issues you may have been with any other heirs and that is assuming that they exist.
  I would encourage you to compare the amount owed on the reverse mortgage to the estimated value of the home and if there is still equity remaining, consult with a senior real estate specialist to determine what it would take to sell the home and keep the equity in the family.
  If not, then, go to the home and remove all your mom's personal property from the home that you want before the lender takes possession of the home or secures the property due to it being vacant.
  Reply to Michael
Cheryl R.
December 31st, 2022

Hi Arlo,

My mom and dad were separated in Texas state. My dad took out a reverse mortgage, my mom deeded her interest to him, and wrote a letter stating she didn't want to be held responsible for this debt. My father died without a will and the reverse mortgage was paid by an heir. Is my mother entitled to an interest in the property once the loan was satisfied?
Reply to Cheryl
- Michael Branson
  December 31st, 2022
  
  Hello Cheryl,
  
  I am sorry but you really need to speak to an estate attorney who practices in Texas. Texas is a unique state with their heirship laws, and I would not attempt to give legal advice to anyone for any state, but I think it would be even more foolhardy for someone like me to try to quote Texas laws without being licensed to do so.
  Without talking to someone who knows the laws of the state and has seen the instrument that transferred the title (the deed and the verbiage on the Deed), I don't know how much credence you could give to any answer you received. I also don't know what was in the letter she wrote or if that would even make a difference on the matter. I would wholeheartedly suggest you contact an attorney.
  They may be able to answer your questions in the initial consultation for little or even no cost if the meeting is able to be concluded quickly enough so if your mom has a copy of the Deed and the letter, she signed I would suggest you send a copy to the attorney when you speak to him/her.
  Reply to Michael
Carlene
December 12th, 2022

Hi Arlo,

Thank you for a great article. My mother recently passed, and she has a reverse mortgage. We're not going to buy the house. The house is in disrepair, so we are basically going to walk away. Our names are not on the mortgage. Do you know if we should remove her unwanted belongings, furniture etc.? Can we basically just walk away without any consequences?
Reply to Carlene
- Michael Branson
  December 20th, 2022
  
  Hello Carlene,
  Yes, not only can you take her personal property from the home, but you should take it all out. You cannot take real property (things that are built in or permanently attached to the home) but free-standing washer and dryer are included in mom's personal property and refrigerator if it is not a built in unit are also part of mom's property that you can take.
  All her furniture is yours to do with as you please. If you do not want it, I suggest you contact an estate sale company to sell or donate remaining items for extra money or receipts to offset final expenses or possibly any final taxes.
  Reply to Michael
  - Bea
    June 22nd, 2023
    
    You wrote, "Yes, not only can you take her personal property from the home, but you should take it all out."
    
    Should, or must? What if I just want to leave everything?
    Reply to Bea
    - Michael Branson
      June 23rd, 2023
      
      Hello Bea,
      You are under no obligation to remove anything from the home. If you don't, the lender or the winner of the foreclosure auction will have everything discarded when they take possession of the property. You should contact an estate sale company first, though, and let them take a look at the property. They will determine if the contents are sufficient to conduct an estate sale.
      If so, their services are paid for 100% by a portion of the sale proceeds, you would also receive some of the funds, and they usually will donate the remaining items for which you will receive the receipts, which may come in handy come tax time. It can't hurt to have them look. If they agree to conduct the sale, they do all the work, and you can use the funds for final expenses.
      Reply to Michael
Michael
November 29th, 2022

Hi Arlo

A condo has a reverse mortgage. It's going to a sheriff sale 1/20/2023. The starting bid is $8,800. The owner died two years ago. If I bid on this condo, am I inheriting the balance of the reverse mortgage? Does this info have to disclosed to me before I make a bid?
Reply to Michael
- Michael Branson
  December 5th, 2022
  
  Hello Michael,
  What defaulted lien is the result of the sale? It sounds to me like it is an HOA lien and I would always recommend you do your homework and verify all liens that may be on the property with a title company. Any senior liens would not be removed with the foreclosure of a subordinate lien.
  We have had many individuals contact us telling us they thought they were getting "the deal of a lifetime" on a condo unit at a foreclosure sale only to later find a mortgage that had not yet begun their own foreclosure but called the loan due and payable soon after the buyer completed their purchase. There can also be other liens that run with the land such as tax liens that you should know about if they exist.
  I do not know the disclosure laws in every state but based on all the questions and comments we've received; it does not appear that there is any duty to disclose the lien status of a property at a foreclosure sale since the lienholder is advertising that they are foreclosing a lien and the starting bid is what is owed to them. They make no representation of the property and are not offering it for sale.
  It is up to any subsequent bidders to do their homework and I cannot stress strongly enough how important this is as you could be purchasing a unit that is encumbered more than 100% otherwise.
  Reply to Michael
K. Robey (kay.robey@gmail.com
October 30th, 2022

Hello Arlo,

My mother-in-law and father-in-law passed in the same week in Sept. 2019. They had a Reverse Mortgage. We need to how to reach HUD for the Deed of Trust filed after their death. None of their sons wanted the responsibility of the property but their oldest son is now being hounded for Property taxes. The taxes were up to date at the time of their death. But the Reverse Mortgage nor HUD have not paid them. We keep getting help locally but it's still a run-around because they don't know what to either. Any advice or assistance would be greatly appreciated.
Reply to K.
- Michael Branson
  October 30th, 2022
  
  Hello Kay,
  
  I am not sure what you are requesting. There is no Deed of Trust filed upon a borrower's death by a lender. A Deed of Trust is the instrument that secures a loan. It is recorded when the loan is closed, and it secures the property for the loan that the borrower(s) executed with the lender.
  When the borrowers pass on a reverse mortgage, that loan becomes due and payable with the lender. Nothing in that Deed of Trust does anything to affect the title of the property because of the borrowers' passing but could if the lender were to exercise its power to foreclose when the loan is not repaid according to the terms of the agreement.
  In other words, the home still belongs to the borrowers or their estate unless they have made other provisions for the title to pass somehow, or their heirs have done something to change title since that time. HUD can't file a new Deed of Trust or any Deed for that matter at that time because they don't own the property, the borrowers or their estate/heirs own the home and they would be the ones who would need to Deed the property to someone else at that time (and then the instrument would be a Grant Deed or some other form of Conveyance Deed which transfers title, not a Deed of Trust because a Deed of Trust is an agreement to hold property in trust until a debt is paid).
  
  Until such time as HUD receives title to the property through a foreclosure action or some other transfer (i.e., Deed in Lieu of Foreclosure), the property is still owned by your mother-in-law and father-in-law, their estate, or their heirs if the title has not been transferred to another party. I
  am not an attorney and cannot advise you legally and I would suggest you contact an estate or other attorney specializing in this area of the law. If the title is still in the name of the deceased parents and their children do not have any interest in the property and do not wish it, I don't see how anyone can hound them for anything but again, I am not an attorney.
  As far as the reverse mortgage is concerned, it is a non-recourse loan, and the lender can never look to any heir for payment of any amount due. I cannot advise you about your local tax laws, but a good attorney should be able to. My understanding is that the taxes run with the land.
  That being the case, the lien that would be created for non-payment of the taxes would also be attached to the land. Since the oldest son never owned it, it would stand to reason the lien the delinquent taxes created would be on a piece of property he does not own, so there would not be cause for his concern but again, I cannot make that assurance and cannot advise you on legal matters.
  He would be best served speaking with an attorney who specializes in this area of the law. It could probably be resolved in just one consultation and the cost would be well-worth the peace of mind.
  Reply to Michael
J'neane
July 12th, 2022

Hi Arlo,

My mom just passed away 5 days ago and had a reverse mortgage. Me and my two kids have lived with her taking care of her for the past 14 years. Will I be able to pay off the loan if I can get a loan on what she owes or sell the house? Or do I need to have the house in my name to make that decision?

Not sure what I need to do to be able to make that decision.
Reply to J'neane
- Michael Branson
  July 12th, 2022
  
  Hello J'neane,
  As the heir, you would certainly have the right to sell the home, refinance the loan and keep the property or walk away and owe nothing under the terms of the reverse mortgage. You should consult an estate attorney to determine what steps you need to take if you want to keep the home or sell it if it isn't in your name.
  I am not an attorney and cannot advise you on legal matters and I don't know if your mom's home must go through probation, if there is a will or trust or if there are other heirs who might also have some claim to title.
  Keep in mind, to sell and deliver title to another party, you need to be able to prove you have the right to sell it and certainly to obtain another loan to pay off the reverse mortgage and stay you would need to prove ownership of the property (you would need to be on title). An attorney can give you all the information you need for your area to accomplish your goals.
  Reply to Michael
Alicia M.
July 6th, 2022

Hello Arlo,

I'm the successor trustee and beneficiary of my parents property. There's a reverse mortgage I want to keep the property and secured a loan to pay the reverse off ,but there's not enough money to give the other 2 beneficiaries.
Reply to Alicia
- Michael Branson
  July 6th, 2022
  
  Hello Alicia,
  My suggestion would be to sit down with your other heirs and discuss the numbers. If the equity just isn't there, they would also lose it if the property went back to the lender. Perhaps they will see that they aren't really losing anything if your purchase of the home goes through under those circumstances.
  If, however, there's not enough equity because you need a stronger equity position to make your loan work and there would be more equity with a sale, perhaps you need to make an offer to them to buy out their equity. Remember, subtract the closing costs to determine the estimated net after all fees to determine what each heir would receive from a sale and use that number since any money they received from a sale would be net of costs.
  Reply to Michael
  - Vicki Z.
    September 14th, 2022
    
    Hello Arlo,
    
    My parents had a reverse mortgage. They both died but before they passed, they transferred the loan to my brother who has been making the payment because he will inherit it. Can he pay off the loan with estate funds?
    Reply to Vicki
David P.
June 16th, 2022

Hello Arlo! Both parents are deceased and had a reverse mortgage that is now in foreclosure (although not yet transferred to HUD). Would their daughter be responsible to pay property taxes or liable if the house burned down? She is not on the loan at all.
Reply to David
- Michael Branson
  June 16th, 2022
  
  Hello David,
  
  I cannot give you legal advice and your question is about legal liability for other things and not about reverse mortgages. I don't know if the heir ever transferred the title of the property into her name or not and I cannot advise about legal matters because I am not licensed to give legal advice.
  I can tell you that the loan is a non-recourse loan and the lender can never look to any other individual or asset to repay the obligation. If the hazard insurance expires, the lender will order forced coverage that will insure the dwelling itself, but none of the contents. Property taxes are a lien that runs with the property.
  
  I would advise you the same way I do other heirs. Contact a senior real estate specialist to determine if there is any equity in the home so that if there is, the daughter can sell the home before the lender can foreclose and keep the equity to use for end of life expenses or anything else she deems appropriate. If there is no remaining equity and she does not wish to try to keep the home, she can let the lender foreclose and the lender cannot look to her for payment of any amount.
  If she is concerned about any other possible liability to the estate from sources other than the lender (not from the loan and not to her), she can probably lay that concern to rest with a short meeting with an estate attorney.
  Reply to Michael
Patricia S.
April 21st, 2022

Hi Arlo,

My mother passed in June 2019. After going to foreclosure court and the pandemic, we finally sold the house March 1st, 2022. My mother left money in the equity from the total loan back in October 2007. She always told me that she left the money in equity for my sister, brother and myself. Now that the loan is paid in full, I was told by the reverse mortgage person that we can't get the equity that my mother left. The sale of the house totally paid off the loan. I'm confused about why we can't get the equity that was left.
Reply to Patricia
- Michael Branson
  April 21st, 2022
  
  Hello Patricia,
  
  I honestly cannot make a firm assessment as to how your mom's equity fared or what you possibly could have done to keep more of it with the very little information I have here. It is really easy to look back when you have all the information and say "goo, you should have done this...." or perhaps advise that "she shouldn't have done..." but I can't even do that because I don't have the information.
  I can tell you that during the time periods you reference (2007 - 2019) we experienced a fall out in property values nationwide in 2009 and then tremendous growth in most markets at various times during 2013 through 2021, but not all. It would depend on where and what type of home your mom had as to whether or not her home also benefited from that property value growth.
  
  Also, how she took her funds and on what program would make a difference. Borrowers who only took a little money as they needed it on the adjustable-rate loan programs did much better over this time period than borrowers who took a lump sum draw of all their money on the fixed rate option.
  The adjustable rates stayed low and borrowers only accrued interest on the money they borrowed whereas the fixed rate was around 5 - 5.56% and since it was a fixed rate, borrowers who opted for this program were required to take all their money in one lump sum draw at the start of the loan and therefore they accrued interest on the entire loan balance for the entire time.
  
  Finally, most heirs don't think of it this way but when the owners pass, the best thing they can usually do is get the home ready for sale as quickly as possible and sell it. The 2.5 years before the home was sold were the highest interest accruing years of the loan. I don't know if any family members were living in the home, but during that entire time the interest was accruing on the loan at the greatest rate because the balance was the highest at that point.
  Unless there is no equity in the property at the time the owner passes and there are family members living there rent free, no one is benefitting from the interest accruing on the property at that point. If there is still equity in the home and only one heir is living in the property and the other heirs lose inheritance as a result, that could create a hardship between family members if this is not something they have all agreed to or made provisions for.
  
  I am sorry though; I do not know why your mom felt she had the equity protected or what may have happened to upset those plans. A lot happened in the real estate market between those dates though and it may just be that in the 14 years the loan was outstanding, she started by using all available funds just to pay off an existing loan and her property never appreciated.
  In that case the loan allowed her to remain in place for her life without having to make a payment which is a good thing. Any "remaining equity" would belong to her estate or her heirs but that would be dependent on what she needed to live, what she had to repay to start the loan and market conditions which I can't begin to know.
  Reply to Michael
Alfredia S.
March 6th, 2022

My mother passed did reversed mortgage l took care of her also lived with her. I'm 55, am entitled to take over mortgage?
Reply to Alfredia
- Michael Branson
  March 9th, 2022
  
  Hello Alfredia,
  
  The loan is not assumable and is due and payable when the last borrower permanently leaves the property. At 55, you are not eligible for a HECM of your own, but some proprietary or private programs do go down to age 55 so you should check on that.
  Also, you can always refinance with a standard forward loan as well. If neither of these options work for you, I would suggest that you consider selling the home if there is still equity remaining to be sure you get to retain the equity in the home.
  Reply to Michael
Joan
February 9th, 2022

Hello Arlo,
My father is 91, and took out a reverse mortgage years ago. When he passes, the house goes to the bank. My 57 yr old brother has been living with him for years and has no income. My question is, how long can my brother remain in the home after dad dies? Neither I or my other siblings have any interest in purchasing the house.
Reply to Joan
- Michael Branson
  February 9th, 2022
  
  Hello Joan,
  
  Firstly, the house does not go to the bank unless the heirs want it to. The home is owned by dad and once dad passes, the loan becomes due and payable. I would suggest that you all look at dad's last statement now, compare the amount owed balance to the value of the home and decide if there is any equity in the house.
  If so, make arrangements now to sell the home or at least take the steps so that your 57 year old brother can get clear title to the property quickly so that he can either sell it or get the other siblings involved to remove the personal belongings of your father and sell the home. There is no reason to let the bank foreclose if there is equity remaining in the home.
  
  If you determine that there is no equity and you do not wish to go to the trouble of selling, you can always let the bank foreclose and take the property without any obligation from any heirs or the estate. Your brother could remain in the home until the bank completed the foreclosure process and became the owner of the property.
  They would need to become aware of the passing of the borrower, appraise the home to advise all of their options and then foreclose. Once they were aware of the passing of the borrower, it would be at least 6 - 8 months from the time they began the notifications then the foreclosure before your brother would be forced to move at the quickest if they began the process immediately.
  Reply to Michael
Sherry
November 22nd, 2021

My parents have a reverse mortgage. They are both still living & wanting me to buy their house but they will still live there. I tried to get a loan with my credit union but they wouldn't approve since that would not be my primary residence, it is my parent's primary. Should I just pay on their current loan or find another route?
Reply to Sherry
- Michael Branson
  December 7th, 2021
  
  Hello Sherry,
  
  There are no payments on the current reverse mortgage but as long as your parents continue to live in the home as their primary residence, there is no reason that you cannot pay that loan down while they live there. The payments would need to come from them but they can even add you to title at this time as long as they remain on title as well and still live there.
  The loan will become due and payable when the last remaining borrower is no longer living in the home. I would suggest that if you decide to go this route, you have your parents write a letter to the lender now authorizing them to speak to you and allow you full access to speak to them on all matters relating to the loan.
  Reply to Michael
Patsy W.
October 8th, 2021

Will the reverse mortgage company accept a lower payoff than what is owed?
Reply to Patsy
- Michael Branson
  October 8th, 2021
  
  Hello Patsy,
  
  If the loan balance is higher than the home is worth when you determine that you must leave the property, then the loan is non-recourse, and you can work with the lender to sell the home for the amount owed or simply walk away and owe nothing.
  The lender can never look to other assets to repay the obligation. However, if you are not forced to leave for any reason, you can also continue to live in the home for as long as you like.
  It makes no difference that the balance is greater than the value of the home and you probably cannot find rental housing for just what you pay for taxes and insurance so if the home still meets your needs, you do not need to feel like you must leave the home and can continue to stay for as long as you want.
  Reply to Michael
Jeanette F.
August 9th, 2021

Hi ARLO,
My mother who was 93 when she passed away had a reverse mortgage with my sister who is 76. The family wants to sell the house, but the reverse mortgage people are calling my sister and mother tenants in common. Will that affect the sale of the house, with the proceeds going to her heirs. There was no will so does the sell and proceeds go to probate?
Reply to Jeanette
- Michael Branson
  August 9th, 2021
  
  Hello Jeannette,
  
  The reverse mortgage lender has no say over the manner the title was held or how that affects the rights of heirs. Your mom set that up when your mom put your sister on title to the property and then they took out the loan together with both on title. You need to speak with an estate attorney to determine the rights of heirs now and the attorney will pull the recorded Deed.
  He/she will not ask the lender for the manner of title or for the rights of the other heirs because they will know that the lender does not have a say in that. The attorney will know what the law allows based on the heirship rights and the way the title is held (and that may vary from state to state so it could also depend on where the property is located).
  Reply to Michael
Lynn S.
July 19th, 2021

How would that work, if the title passes to a daughter from a mother with a reverse mortgage? Wouldn't the 1st reverse have to be paid off? Can the daughter who is 64 get a reverse mortgage on the same home after the mother passes away?
Reply to Lynn
- Michael Branson
  July 19th, 2021
  
  Hello Lynn,
  
  The title and the loan are not the same thing. Even if the title does not pass and stays in the name of the borrower who passes, the loan still becomes due and payable once the borrower who was on the loan is no longer living in the property as their primary residence (this is true if the borrower passes, must move to permanent health care or even just decides they no longer want to live in the property).
  In those instances, the title doesn't change but the loan still becomes due and payable. And since the loan is due and payable, heirs can change the title to whomever they choose which would include to themselves to facilitate a new loan or a sale to a third party. That new loan can absolutely be a new reverse mortgage as long as the heir and the property qualify under current HUD guidelines for the program.
  Reply to Michael
Paula
July 1st, 2021

Hi ARLO,

Mom died with HECM on primary residence. I've informed HECM lender of intent to sell and provided copy of signed Purchase Agreement.

Mom died 6/15/21 and sale is scheduled to close 8/2/21.

HECM loan balance is ~$80k and pending sale price is $195k.

Buyer is obtaining a conventional loan and an appraisal will be conducted for that loan.

HECM lender is telling me that they must order an appraisal to close out the loan. This makes no sense to me. Given the loan balance and sales price, there is no question the lender will be paid in full. Furthermore, if an appraisal is required, why can't the buyer's appraisal be accepted if it is performed by an HUD certified appraiser? Just seems like a cog in the wheel and unnecessary expense that we will have to pay.

Lender says HUD requires this appraisal. From what I've read, it appears this is likely true ... are you able to confirm? If so, it seems as though there should be some changes made to HUD requirements in instances where the net sales price exceeds the loan balance. This is extremely frustrating.

Also, last year the lender charged $490 for a pre-foreclosure appraisal because they said they didn't receive mom's annual occupancy certificate. I have proof that it was indeed sent to them. I uploaded it to their website *and* emailed it to the address on their certification form, two of their stated methods for submission. Afterwards I followed up to confirm receipt. First, they said they didnt receive it and asked me to email it to a different email address. Then it took a few calls and emails to get them to acknowledge receipt. Despite such acknowledgement, they charged mom's account $490 for what I assume was a drive-by appraisal. (They never asked to visit the home.) How can they be allowed to do this?

Extremely frustrated!
Reply to Paula
Sally
May 4th, 2021

My ex-husband is terminally ill and has a reverse mortgage. He has put in place a trust so the title transfers to our two sons. If the bank sells the home, will it go to auction for just the loan amount or will it be fair market value? Want to find out if they will receive any funds from sale or if they should try and pay off loan and sell themselves. What happens to the draw down during the time they are selling the property? Is the grace period only six months?
Reply to Sally
- Michael Branson
  May 4th, 2021
  
  Hello Sally,
  
  First thing you should do is verify the value and the amount owed now. Heirs have the right to keep the home or sell it and your decision may be based on the equity position. If there is no equity, they can choose to keep the home by paying off the existing loan and the lender will accept 95% of the current market value as decided by a current appraisal as payment in full for the loan, even if the balance owed is over the current value.
  If they do not wish to keep the home, they can choose to walk away and owe nothing. If they want to keep the home for themselves or to sell later, they need to pay off the current loan so they would need to have a plan to refinance the loan with another loan in their name(s) at that time.
  
  They can also sell the home if there is equity in the property. They would need to let the lender know that they are going to sell the home and the lender will work with them to give them time to sell but that time in not unlimited. If this is the route they choose, they need to be sure to find a real estate professional and actively market the home quickly so that they can sell on their terms and not because a foreclosure is looming.
  If the lender does ultimately foreclose on the loan, the foreclosure must be completed in accordance with foreclosure laws. This means the lender would have the Trustee conduct a sale and that sale is often conducted at a courthouse, title company or sheriff's department.
  You would need to verify where such sales are normally conducted in the area where the property is located. The lender only starts the sale with the amount owed to the lender plus any costs (attorney's fees, etc.). Then, if there are other bidders, they can bid higher than the lender's opening bid. The lender can only open with the amount owed and cannot bid higher if they are outbid.
  So, the lender will never know what the final selling price will be. If no one bids against the lender's opening bid, that is the sales price and there would be no money for the heirs. If others are at the auction and the price is bid up but competing bidders, that might increase but most people buying at auction are looking for "deals" and I would not recommend this to get top dollar for a home. If you believe there is equity in the home, contact a real estate professional and sell them home yourselves before a foreclosure action.
  
  I am not sure what you mean by your last question. When you say what happens to the draw down, I am assuming you are talking about any money remaining in the line of credit left unused? If the borrower never used the funds, they were not borrowed and do not require repayment. Think of it like a credit card that you close with a $20,000 line of credit but on which you only used $1,000.
  The amount needed to pay off the card and close the account is $1,000, not the $20,000 limit and there are also no more funds due to you. The same is true with the line of credit that the borrower never used. He or his heirs do not need to repay any amounts that were never used, and this is still equity in the home.
  Reply to Michael
Elizabeth
May 4th, 2021

My mom's home reverse mortgage has now been taken over by HUD, can I still buy the house as a short-sale? The home has structural damage that predates the reverse mortgage and has worsened with time. Floridian, with a home built on near-surface clay, proven not to be a sink hole. I want to buy the house and fix the foundation. I just don't know how to start.
Reply to Elizabeth
- Michael Branson
  May 4th, 2021
  
  Hello Elizabeth,
  
  HUD is under no requirement to approve a short sale to a relative which would lock in the loss on the loan if the borrower were still living. If your mom as passed, there is a provision that as the heir, if you want to keep the home you may pay the loan off in full for the amount owed or 95% of the current appraised value, whichever is less.
  So, to answer your question, if your mother has passed, as her heir, yes, you can pay off the loan at 95% of the current appraised value even if that is insufficient to repay the entire outstanding loan amount.
  If mom just wants to sell you the home at this time and you are inquiring if HUD would approve a short sale with payoff of less than the outstanding balance on the loan, I cannot answer that question and you would need to contact HUD through their servicer NOVAD to request such a payoff.
  I do not believe they will approve it under those circumstances but the worst they can do is say no.
  Reply to Michael
Robin K.
February 9th, 2021

When considering the value of a house with a reverse mortgage in probate, is it valued at appraised value or appraised value minus the amount of the loan?
Reply to Robin
- Michael Branson
  February 9th, 2021
  
  Hello Robin,
  
  The value of the home is the value of the home. The loan is an encumbrance or lien on the home, and it does not affect the value. Even if the loan amount is higher or lower than the current value, that value is unchanged by the lien.
  The owner cannot sell the home for more than it is worth (its value) simply because the loan balance is higher or lower.
  An appraiser will compare the home to current sales in the area and based on the home's location, size, utility, condition, and other factors relating to the home itself in comparison to the recent sales and adjusting where necessary, he/she will give an opinion of the value of the home.
  The amount of any liens or absence of liens will not come into the appraiser's reconciliation of value.
  Reply to Michael
Denise
January 25th, 2021

Are heirs required to carry insurance on a home after the death of the homeowners who originated the reverse mortgage? No heirs are on the reverse mortgage, nor was any money owed on the home, besides the reverse mortgage. The heirs simply surrendered the home to the reverse mortgage company.
Reply to Denise
- Michael Branson
  January 25th, 2021
  
  Hi Denise,
  
  This is a popular question and here is how we answer it. When you say that you "surrendered it to the lender" in whose name is the title to the property at this time?
  If the lender has foreclosed on the mortgage or has accepted a Deed in Lieu of foreclosure and now owns the property, the owner and heirs absolutely have no obligation to pay any continuing payments for insurance, taxes, maintenance, etc. for a property no longer owned by themselves or a deceased family member.
  They might never have been obligated for an expense that they never agreed to pay in the first place but here is where you get into a gray area. If title to the property has not passed to the lender and is still owned by the estate or an heir, there becomes a question of liability.
  
  If the insurance lapses, the lender will insure the home with what is known as "force-placed coverage" which a lender is authorized to do even if they are not the owner of the property to protect their security.
  Such a policy is expensive and covers only the dwelling, it does not cover the contents and does not include liability coverage. If anyone should venture onto the property and get injured, they would not seek settlement from the lender, they do not own the property.
  They would look to sue the current property owner which would be the heir (if title had passed to the heir) or the estate of the deceased.
  This is the point where I always advise heirs to contact an attorney before they cease paying on an insurance policy because I simply cannot advise about any potential liability in such a case.
  Reply to Michael
  - Bud P.
    June 1st, 2021
    
    I'm in a similar situation. My mother walked away from her reverse mortgage after my father died, as she was financially and physically unable to maintain the property and moved into a senior facility. The mortgage company came in and secured the property in November of 2020. They sent us paperwork in December, where we confirmed this should move into foreclosure.
    
    In January, my mother passed away, and we sent in her death certificate. In April, her estate (what little there was), was finalized in probate and closed. In May we received documents from lawyers hired by the company again calling in the debt (same as the company did in November). we advised that this needs to move towards foreclosure as we'd been telling them since last October. We have just received notification that we have to pay them $1,700 for insurance on the house, to cover through November of this year.
    
    Why - We've had no access to the house, they've been aware this needed to move forward to foreclosure more than 7 months ago, and the estate is closed - and we don't want the property. I keep hearing we're not responsible for any costs associated with my parents reverse mortgage, as we never signed a thing.
    Reply to Bud
    - Michael Branson
      June 2nd, 2021
      
      Hello Bud,
      The lender will send you all the notices of any items due including taxes, insurance, etc., especially if you are empowered to act on behalf of the estate. I cannot give you legal advice but as you stated, you never signed any agreement to pay anything about the loan.
      If you do not pay the insurance and the insurance lapses, the lender would order "force-placed" insurance which covers only the dwelling, none of the contents or liability. That may not bother you though because the estate may no longer have any personal belongings in the property and there may be no assets that the estate still has that are in peril should someone enter the property or get hurt on the land.
      It is not common for a lender to move in and secure a property prior to foreclosure unless they feel that their security is threatened because of the vacancy (it is unlocked and in danger of being vandalized, etc.). Typically, the lender does not take possession of the property until after the foreclosure has been finalized.
      Maybe you want to just check with an attorney and see if you have any remaining liability through the estate assets (if any) since the home is still owned by mom at this time.
      I can't advise you on legal or property and liability issues, but I can tell you that under the terms of the loan, the lender cannot seek repayment from you or anything you own for the loan so if you do not want to pay them you are not required to do so.
      If you have a copy of mom's documents, send them a copy of the legal documents high light the terms that state that the loan is non-recourse and that the only security the lender has is the property.
      If you don't have a copy of mom's documents, send them a letter and tell them that you are not responsible for any of your mother's debts and would they please send you a copy of the document that you signed wherein you agreed to repay them for any expenses on a property that does not belong to you and for which they have already secured and have agreed to take back through a foreclosure action.
      If it were me, would personally have my attorney advise them that I do not intend to pay any expenses on the property or the loan and therefore would advise them to move much more quickly on their foreclosure actions - but that is just me and as I said, I cannot advise you legally.
      Reply to Michael
Toni H.
January 7th, 2021

I apologize if this was already asked - your article mentions paying 95% of the assessed value of a reverse-mortgage home, and I have read 95% of market value. Is there a difference between assessed and market value, and if so, what will I have to pay as the heir after the death of the borrower if I sell the home, assessed or market value?
Reply to Toni
- Michael Branson
  January 11th, 2021
  
  Hello Toni,
  
  HUD allows heirs to pay off the loan after the borrower passes if they wish to keep the home at the amount owed or 95% or the current market value, whichever is less. I am not familiar off-hand with the article you mention but the term "assessed value" should probably not have been used as that is typically understood as the taxing authority's assigned value.
  If that term were used, the reference to "assessed value" to determine the amount required to be paid would be referring to an appraiser's opinion of value if you were keeping the home and the lender had to have an appraisal performed by a HUD-approved appraiser at that time. It would not refer to any assessment for taxes, etc. Perhaps appraiser's opinion of value would be a better choice of words.
  
  If you decide to sell the home rather than keep it, the amount required to repay the loan would be the amount owed. If you wanted to pay the loan off for any amount less than the amount owed since the selling price is less than the amount owed, that would be considered a short-sale and it would require an approval from the lender/HUD.
  They would review the terms of the sale to determine that the sale was a bona fide sale at current market value before such an approval was granted. If the sale terms were higher than 95% of the current market value, I believe they would require that the loan be paid in full or that the full sale proceeds would go toward the payoff of the loan if that was not possible to approve the terms of the sale.
  Reply to Michael
Rhonda B.
December 17th, 2020

Hi ARLO. My mother passed away and had a reverse mort on the property. After the loan was processed, the house was put into a trust. What do we need to do? I have read a lot of your posts which are very helpful. We live out of state and need to plan a trip back to empty the house. How does the bank find out that she has passed? I am concerned that the bank will put a lock on the house before we can get back there and get the things that we want. It is winter in IL where the home is, and an estate sale is not ideal this time of year. Thanks.
Reply to Rhonda
- Michael Branson
  December 17th, 2020
  
  Hello Rhonda,
  
  The bank will not put a lock on the home before they own the house unless it is determined that the home is abandoned and is not secure.
  At that point, they can enter the property and secure the home to protect their security.
  However, is there anyone nearby who can go by the home and be certain it is locked up and secure for you? I am sure you do not want your mom's personal effects to go missing so it would be beneficial for all.
  If the lender performs an inspection and the home is secure, they will then go through the normal process of calling the loan due and payable.
  Next, you would have the option of paying the loan off, selling the property or letting the lender take the property through a foreclosure action.
  Before allowing the lender to take the property, I would strongly suggest you try to get a copy of mom's last statement to see the balance on the loan and then talk to a local real estate specialist.
  There may still be equity in the home and if there is, you should list the home and sell it so that the heirs/estate retain that money and that you do not walk away from it.
  Thank you for your compliment and I wish you the best!
  Reply to Michael
Lisa
December 11th, 2020

I'm currently taking care of an old relative who is on hospice. She did a reverse mortgage years ago. Neither I, nor her children have plans to keep the house. What is the minimum amount of time that I have to find my own place and move out? 30 days? More?
Reply to Lisa
- Michael Branson
  December 15th, 2020
  
  Hello Lisa,
  The very minimum amount of time would be the time it takes the lender to call the Note due and payable and then to foreclose on the loan.
  The quickest that can happen is about 150 - 180 days from the time they call the loan due and payable since they need to follow all the state required foreclosure laws.
  That is one of the reasons that lenders will move quickly to get things started in most instances once they become aware that the borrower is no longer living in the home.
  If you know it is going to take a minimum of 5 - 6 months from the time you start, the longer you wait to start the higher the loss to HUD will be.
  Reply to Michael
Angela F.
December 8th, 2020

Hello Arlo,

My Aunt owns a home with a reverse mortgage, she recently passed away. Her two children do not have the finances to keep the house. Am I able to take over the loan? Can I refinance the loan into my name?
Reply to Angela
- Michael Branson
  December 8th, 2020
  
  Hello Angela,
  Since the borrower has died, the loan now becomes due and payable.
  The existing loan is not assumable, it must now be paid off in full by using funds available to the heirs, by refinancing the loan with a new loan or by selling the property.
  If you all wish to keep the property and her children (your cousins?) do not have the funds to pay the loan off, then it would take a refinance through another lender to pay off the existing loan.
  The lender has no say in what the heirs do with the property or how they finance it so it would be up to you and your cousins to determine how you want to do that. But for you to refinance the loan, you would need to own the property (no bank is going to lend you the money to refinance the loan if you do not own the property).
  You would need to work out an arrangement with your cousin that would make you the title holder and capable of financing the property through your chosen lender if that was the route you intended to proceed.
  Before you all make any changes to title, I would suggest you make certain that you understand the lending requirements of the new lender and your possible risk/liability by entering into such an agreement.
  Reply to Michael
Linda H.
November 19th, 2020

No probate or mortgage lawyer... criminal defense.
What tis the time frame that HUD must start foreclosure proceedings once notified of death of borrower, with no spouse living in home. HUD notified of death in 2011. Have documentation from servicer/HUD that they were going to begin foreclosure. HUD/servicer did nothing to foreclose. October 2009, began getting calls from foreclosure attorney, wanting family tree info. In the 9 year period the loan amount/debt has increased approx. $150,000.00. Is there a statute of limitations/laches that would apply? There is a will but was not filed because in 2011, was told by HUD/servicer that house was under water.... were no other assets.
Reply to Linda
- Michael Branson
  November 24th, 2020
  
  Hello Linda,
  I am sorry but I honestly cannot answer this for you. I can tell you what the reverse mortgage documents say, and this is not covered in those documents.
  If they are asking for family tree information, I would guess that the property is in a state like Texas with very strong heirship laws, but I can't imagine why it's taking so long.
  I would first ask what their response has been when you ask them what the delays are?
  And next, have you contacted an attorney in the area where the property is located?
  I think you need to speak to an attorney because it becomes a matter of law when it is not covered in the loan documents and with that, I am afraid I can be of no assistance.
  Reply to Michael
Richard B.
November 2nd, 2020

The heirs intend to abandon the property. Can the lender come after the heirs of the estate to recover cost from refurbishment prior to a sale by the lender? Also, if the heirs notify the lender of abandonment does the fire/liability insurance burden then transfer to the lender?
Reply to Richard
- Michael Branson
  November 2nd, 2020
  
  Hello Richard,
  The loan is non-recourse which means that the lender can never look to the borrower or heirs for repayment of the loan.
  Fire, liability, and other issues are a different issue completely. You should contact an attorney to determine the liability of the estate.
  For example, if you allow insurance to lapse, the lender does not own the property and can only "force place" a policy that covers the structure alone. It covers no contents of the property and no liability.
  I cannot give you legal advice and do not know what liability that may or may not leave for the estate or any heirs.
  Once the lender forecloses and owns the home, then the liability would transfer to the lender at that time as the owner of the property.
  Reply to Michael
Nancy
October 31st, 2020

If the person who has the reverse mortgage passes away and there is no will, what is the first thing the family needs to do?
Reply to Nancy
- Michael Branson
  October 31st, 2020
  
  Hello Nancy,
  
  The loan becomes due and payable and so the first thing you need to do is to seek the assistance of a probate attorney who can guide you through the necessary steps to complete the court process to gain title.
  Each state is a bit different and there may be things you need to do during the probate process that will take some time. The probate attorney will be able to let you know exactly what you might need regarding family members, other possible creditors, etc.
  When the lender contacts you, let them know that you have entered probate to obtain title and what your plans are. If you were going to sell the property, they would verify your intended asking price, etc.
  Since you want to keep the home, the lender will conduct an appraisal on the property to determine the current market value as they will accept the amount owed or 95% of the current value, whichever is less, as payment in full for the payoff of the loan.
  
  But keep in mind that the lender cannot communicate with you about the loan unless they have written authorization from the borrower (which obviously means it would have needed to be completed prior to their passing) or until you can show that you are the new owner of the property as the heir.
  The lender does not know to whom the property will be awarded and will not take the chance of being pulled into a family argument or being sued by disclosing personal information without proper authorization and that means either the borrower or court authorization.
  You can also be setting up your method of loan payoff during this time. If you already have the funds available to repay the loan, great.
  Otherwise, you will need to arrange financing and no lender will lend to you until you are on title to the property as well but you may be able to at least determine which lender you will be using and get a "preapproval" from them so that once you have title the loan can be processed and closed quickly.
  Reply to Michael
Stacey H.
October 26th, 2020

Is a beneficiary signature required on a transfer of deed upon death when there is a reverse mortgage on the property?
Reply to Stacey
- Michael Branson
  October 26th, 2020
  
  Hello Stacey,
  
  You need to speak with an attorney for this matter. I am not sure why this would come up unless you have a reverse mortgage lender requesting that you sign one. I am only vaguely familiar with the Deed you are referencing and then only in California. From what I read, the Beneficiary's signature is not required but is a good idea.
  I would recommend that you contact an attorney to determine what is required and also the contact the lender if the lender is telling you that you need to sign the Deed to ask why if you do not agree with the requirement but I honestly cannot give you legal advice.
  I can advise you to communicate with the lender and sooner is always better than later.
  Reply to Michael
Crystsl J.
October 10th, 2020

My mom passed and she has a reverse mortgage. I plan to return the home to the lender. What does a letter of content consist of?
Reply to Crystsl
- Michael Branson
  October 10th, 2020
  
  Hello Crystal,
  
  I am guessing that you are asking about a letter of intent. That is when the lender asks you to let them know what you intend to do with the property so they can proceed on their end.
  If you said you wanted to sell, they would then ask for your plans, selling price and set up times to verify your progress.
  Since you intend to Deed the home back to the lender, they will begin the appraisal process, do title investigations and determine if they can accept a Deed in Lieu of Foreclosure of if they will be forced to conduct a full foreclosure sale in order to protect themselves from any other liens, etc.
  Also, to accept a Deed from you, the home must be completely free of any personal property and "broom clean". Broom clean means you do not need to go in and scrub the place from top to bottom but all personal property, any trash and everything must be removed from the home.
  Many families who do this arrange for an estate sale and the estate sale companies hold the sale over a period of days, then on the final day, all unsold merchandise is typically donated with the receipt going to the estate to help with and final taxes.
  If they are looking for a letter of intent, you do not need anything fancy. Just a couple of sentences telling them that you intend to cooperate in any manner to Deed the home to the lender, that the home is free from all personal property and that it is broom clean will suffice along with your contact information.
  Don't forget, to be able to Deed the property to the lender, you must have the legal ability to do so (you must have title to the home in your name or other legal authorization that allows you to change the title from your mom to the lender if it is still in her name).
  Reply to Michael
Lynette F.
October 1st, 2020

I am moving to my 98-year-old father's home to take care of him. When he passes away will I still be allowed to live in the house?
Reply to Lynette
- Michael Branson
  October 1st, 2020
  
  Hello Lynette,
  
  The loan will become due and payable when dad no longer lives in the home.
  If you are dad's heir, you will inherit the home but that does not stop the loan from becoming due.
  At that time, if you wish to remain in the home, you would need to either refinance the loan with a new loan (and that can be a reverse mortgage as well if both you and the property still qualify or other financing) or you could sell the home if you did not wish to remain in the property.
  Reply to Michael
James F.
September 28th, 2020

Hello ARLO,

Recently my relative has decided to leave the house to me as her heir. She hasn't passed away but is considering moving into a retirement home. Will there be any issues in regards to me selling or purchasing the home?
Reply to James
- Michael Branson
  September 28th, 2020
  
  She owns the home, she can do anything she wishes with it. Just remember that as soon as she no longer occupies the home as her primary residence, the loan becomes due and payable. At that time you will need to arrange for financing in your name or selling the property to repay the loan that is due.
  Reply to Michael
Monica S.
September 22nd, 2020

How can someone find out what company holds the reverse mortgage? The heir cannot find that information.
Reply to Monica
- Michael Branson
  September 22nd, 2020
  
  Hello Monica,
  
  The lender has been sending monthly statements to the borrower since the loan closed. Even if the borrower kept none of the statements while they were alive, there is usually several months before the lender even learns of the passing of the borrower and then they begin sending notices and information to the borrower's address.
  Does the heir have access to the borrower's mail, now or in the past? That would be the easiest way to determine the lender.
  Reply to Michael
Cathy
September 20th, 2020

My daughter read that if l get a reverse mortgage , she would be responsible to pay the loan off after l die? Is she responsible for the loan?
Reply to Cathy
- Michael Branson
  September 20th, 2020
  
  Hello Cathy,
  
  Your daughter has the option of paying the balance if she would like to keep the home or she can sell the property and keep the equity or she can simply let the bank take the home if she does not wish to be bothered with it, but she has no obligation to pay anything whatsoever.
  The loan is non-recourse so the lender cannot even attempt to collect from your estate. In short, your daughter can never be made to repay the loan but has every option to keep the home or sell it and repay the loan as your heir if she would like to.
  In addition, if the loan balance were to ever exceed the balance due to accruing interest or falling values, the loan allows her to repay the loan in full at the outstanding balance or 95% of the current value of the home, whichever is less.
  This means that no matter how much you owe on the loan, she has the right to keep the property and pay off the loan for less than the current market value of the property if she wants to keep the home, but never must pay anything.
  
  I hear this misconception occasionally, and I always point out that your daughter is not a borrower on the loan and has never signed a promise to pay.
  No lender can make any individual responsible to pay for any debt that they did not agree to be responsible for by signing the Note and Deed of Trust/Mortgage.
  Yes, the lender can foreclose on the loan and take the property, but that is their only recourse.
  They cannot look to your heirs and ask them to pay for the debt since they never agreed to it in the first place and the loan documents specifically state the non-course nature of the loan right in the body of those documents.
  You do not need to accept anyone's word for the fact that your daughter is never liable for the obligation, the mortgage documents spell it out.
  And it does give her the option of retaining the home if she wants but at that time she would need to refinance the loan with other financing or the option of selling the home and keeping the equity in the property, but it is entirely her choice.
  Reply to Michael
Sandra D.
September 8th, 2020

Hello ARLO,

My mother died with a reverse mortgage. I want to buy the house so I was advise to file probate , I was told by the reverse mortgage that I had 3 months to decide what I wanted to do and if I wanted to buy I could ask for an extension for up to a year.

I called them to ask for that extension and they told me that before they give me the extension, I had to put a for sale by owner sign in front of the house and send pictures so they would hold foreclosure for 3 months and only after that if I still need time then I could ask for the extension.

I have two question if you can answer, can they pressure me to put a for sale sign in the yard, and does filling probate not hold off foreclosure?
Reply to Sandra
- Michael Branson
  September 8th, 2020
  
  Hello Sandra,
  
  If you are paying off the loan and keeping the home yourself, you are not "buying" the house. Once the house is awarded to you by the probate court, you own it.
  What you need to realize is that the loan is due and payable, and you need to be prepared to repay the loan either with funds already available to you or with a new loan.
  You need to own the home (that is the title must be vested in your name) before you can do anything regarding selling the property or obtaining a new loan.
  That is the reason for the probate. What you do after that will depend on your plans.
  
  I am confused as to why the lender would tell you to put a for sale sign on the property if you told them that you were going to keep the home.
  Lenders do want to see that heirs are making an effort to sell the home if they are requesting additional time to allow them to sell the property but if you have no intention of selling and have already informed the lender that you wish to keep the home yourself, I do not know why they would make such a request.
  As far as can they pressure you to put the sign out, no not really, but they are not required to hold off beginning the foreclosure process.
  That loan is due and payable right now and they are within their rights to begin foreclosure currently to force repayment of the outstanding balance.
  If I were in your shoes, I think I would make sure the lender was completely informed on my intentions and that they did not confuse what I was attempting.
  I would not want them to think I was trying to mislead them because there is no impending sale and begin foreclosure when I never intended to sell the property in the first place.
  
  The probate is just the legal action to settle someone's estate after they pass. It allows a court to validate wills (if any), determine property settlements, send notices to interested parties including next of kin and possible creditors.
  After all claims are received and considered, the court rules on all claims and settles the estate. I am not an attorney and I cannot tell you whether your probate would stop the foreclosure process.
  You would need to speak with a licensed attorney to receive that information as it probably is not a yes or no answer and comes with provisions (in what circumstances it would or would not) and may vary from state to state.
  Reply to Michael
Dutiful S.
September 4th, 2020

Can my mother transfer title to her house with a reverse mortgage to me while she still lives there?
Reply to Dutiful
- Michael Branson
  September 4th, 2020
  
  Good Morning,
  
  You need to remember that your mom still owns the house and can do whatever she wants with the home.
  She can transfer title at any time, but she cannot transfer the title in its entirety expecting the loan to remain as it is as that would create a call event under the terms of the loan.
  The lender would call the loan due and payable and she would need to pay off any outstanding balance owed on the loan. She can ADD you to title at any time under the terms of the legal documents.
  In other words, as long as she remains on title with you and has not transferred her entire interest (and of course still lives there, pays the taxes, insurance and maintains the home), she would still be in compliance with the terms of the loan and there would be no issues.
  Reply to Michael
David D.
September 4th, 2020

My mother in law died and we are having a hard time finding a place. Our thirty days are almost up, can we stay longer until we find a place?
Reply to David
- Michael Branson
  September 4th, 2020
  
  Hello David,
  
  Once the final notice is up, the lender will probably enforce the eviction, but I can't say for sure.
  Considering the lender does not begin foreclosure proceedings for several months after they find out the borrower has passed (and there is no telling how long that process took), the foreclosure itself typically lasts for anywhere from 150 -180 days at the shortest and then they go through the eviction process.
  The eviction is not typically even attempted until more than a year after the borrower has passed and the loan became due.
  The lender has received no payment on the loan or the accruing interest during this entire time.
  I do not know if you have been in the home during this entire process but if you have, I think the lender will consider it ample time to relocate but you can always ask for additional time, the worst they can do is say no.
  Reply to Michael
Angelon M.
September 1st, 2020

I am a caregiver for a gentleman that has a reverse mortgage and he wants to leave the house to me if he should die, what legal process should we do?
Reply to Angelon
- Michael Branson
  September 1st, 2020
  
  Hello Angelon,
  
  I am sorry but this is a question for an estate attorney as it has nothing to do with the reverse mortgage.
  The loan will be called due and payable when the borrower is no longer living in the home and so the provisions should be in place long before then so that his wishes are known and followed.
  If you wait until after he passes, if there are other heirs, they may challenge your claim.
  The owner needs to take the steps now while he is able to be certain that there are no questions as to his wishes for the disposition of the property and the estate attorney can tell you the best way to handle that.
  Reply to Michael
Dave
August 14th, 2020

If the home is in mom's name alone and she does the reverse, then dies, does the home go to probate before we can sell?
Reply to Dave
- Michael Branson
  August 14th, 2020
  
  Hello Dave,
  
  The reverse mortgage does not affect your mom's choices. You should speak to an estate attorney with mom to determine your best course of action so that the title does not become an issue when the time comes.
  There are many ways to be sure that title passes quickly, and probate may or may not be required, but the attorney will be able to answer all your questions on that subject.
  The one thing that I would be sure to recommend to you is that if mom does do the reverse mortgage, that she writes an authorization letter to the lender shortly after the loan closes that authorizes you to speak to them and them with you on all matter relating to the loan.
  
  By authorizing you to talk to the lender in advance, you will have the ability to discuss the loan and options with the lender during the time period that most heirs are still unable to communicate with the lender.
  Remember, lenders are subject to the financial privacy laws and cannot discuss the loan or processes with anyone who has not been authorized by the borrower until such time as a court issues an order to do so.
  This means that many families waste months when they could be working on their options but they are unable to communicate with the lender because the lender has no borrower authorization to speak with them and they cannot accept the liability from other possible heirs by conversing with the wrong people.
  And it is so easy to put that in place while mom is still alive and able to sign things rather than waiting until later and you need to have the participation of a court action.
  
  With the authorization and the title issues resolved in advance, you will find that the process is so much easier. It does not need to be yet another frustration when you are grieving over the loss of a loved one and a little planning goes a long way.
  Reply to Michael
- Kimberly T.
  August 19th, 2020
  
  Dear Arlo, my mother passed away 16 years ago. She had no will, the home was in her name. She got remarried but never put my stepdad's name on it.
  
  He contacted living there until couple years ago, he remarried and moved to another city. Days after our moms passing, he came to us and said that we needed to sign our part over to him so that he could continue paying the taxes. The loan was paid off.
  
  So, we did with the stipulation of if he remarried that he would sign it back over. Well almost 17 years later I contacted him and told him myself and my nephew wanted to take over the home. He refused and few days later he takes those papers we had signed all those years ago to his lawyer and they file them at the courthouse.
  
  Now is that legal? I thought he would homes had to be passed to an heir not a spouse. Please help me I do not want to lose my mom's house!!! Thanks.
  Reply to Kimberly
  - Michael Branson
    August 19th, 2020
    
    Hello Kimberly,
    You need to seek the help of a licensed attorney for this issue. I hope you put the entire agreement with your stepfather in writing or at least have written communication with him about the agreement.
    At any rate, you really need an attorney to advise you on this legal matter.
    Reply to Michael
Marie
July 24th, 2020

Greetings, I think my question may have been lost in the inter-space :) Thank you for taking a look:

My Mother passed away February 2020, intestate. Mom was in a Reverse Mortgage that is currently in a "refer to foreclosure" status with the Reverse Mortgage Lender. Probate cannot start until September with the delays due to Covid-19. The heirs are her 4 children. Myself and three siblings.
Question is, once Probate starts, if myself or a sibling is interested in buying the home (repaying the RM lender, Hero Loan, and buying out the siblings in any equity), do all heirs need to approve/agree to this through Probate, or is the home open to be bought by the "highest bidder" in Probate? There is a lack of communication going on with one of the siblings who lives in the home, and I am trying to gauge the process regarding purchasing the home through intestate probate, if all heirs are not in agreeance.
Reply to Marie
- Michael Branson
  August 1st, 2020
  
  Hello Marie,
  
  I am sorry, I cannot really answer this for you. This is a legal question and I think you will need to ask a probate or estate attorney. The lender has no control over the probate process.
  Lenders have a lien on the property and would like to be repaid and then be out of the consideration and let you and your siblings determine who does what with the property.
  The home is owned at present by your mom (actually, mom's estate) and as I understand it, the probate court will make the determination as to whom the title should pass if there is no written instructions left by the deceased owner.
  Since we are not involved in heirship and other legal issues, I honestly do not know what criteria the court will use to determine the division of the property but I can give you a little advice regarding the loan that you can pass to the other siblings.
  
  That loan is now due and payable. As I stated, the lender would like for one or all of you to just pay them off and then do whatever you wish with the property but if that does not happen, they will institute a foreclosure action.
  If/when that occurs, the property is sold at a trustee's sale by auction and the starting bid is by the lender for the amount on the loan, plus any foreclosure costs and any sums advanced by the lender on behalf of the borrower.
  If no one bids higher, the lender becomes the owner of the property. If another buyer at the auction bids higher than the amount owed to the lender, the lender is paid off and any amount over the what is owed to the lender is paid to the estate of the owner and the high bidder now owns the property.
  Unless you or one of your siblings was that high bidder at that auction, you would have lost all right to the property at that point. If you do want the property, it is much better to repay the loan with a refinance or other funds before it ever gets that far and not incur additional costs due to foreclosure.
  
  Finally, the one living in the property now is living rent-free and wracking up the interest while this is not settled. If that one is also not paying the expenses like taxes or insurance, the lender is advancing those funds and is adding them to the amount owed.
  The sooner you settle this, if this is your ultimate decision, the sooner the interest accrual and other costs stop mounting. It might not be so great for the one living in the property if they lose their free ride by resolving this situation sooner rather than waiting until later, but certainly serves the rest of the family best.
  Reply to Michael
Marie
July 16th, 2020

Hi, Arlo.
Thanks for the great info.

My mother passed and we were estranged for several years. So far, no will has been located that I know of, but I am certain that she had a reverse mortgage.

My sibling has access to her property and all paperwork, which I don't have access to, as I live in another state. He is neither motivated to act, nor forthcoming about what he knows, if anything.

As I am (at this point) a presumed heir, how can I find out who holds the reverse so that I can notify them of death and start the process? Every lead I have has been exhausted and I still cannot find the servicer.

Is independently (and single-handedly) opening probate the only option?

Thanks!
Reply to Marie
- Michael Branson
  July 17th, 2020
  
  Hello Marie,
  
  That could be kind of a tough issue. You can always check the county recorder's office and look at the recorded Deed of Trust or Mortgage but there is always a possibility that the original lender has sold the loan or assigned it to HUD by now.
  And if mom never authorized you to speak to the lender or the lender to you about the loan, they cannot tell you anything about the loan by law anyway.
  Your sibling obviously knows because there is a monthly statement that goes to the house and so he/she knows how to reach the lender or the lender's servicer but it doesn't sound like they are willing to share that information.
  And if he/she has any financial motive to hide the fact that you mom has passed (they are living in the home rent free or are renting it out in violation of the terms of the loan), then the interest is accruing on the loan and your inheritance is shrinking all the while.
  
  You may need to speak with an attorney to see what steps you need to take to force a probate and to inform the lender of the circumstances. The sooner the loan is repaid, either through a refinance with a new loan or by selling the home, the sooner the interest on the reverse mortgage ceases to accrue.
  I would think that would be much more beneficial for any heirs such as yourself, but I leave that to you and the advice of your counsel.
  Reply to Michael
Marie
July 15th, 2020

My Mother passed away February 2020, intestate. Mom was in a Reverse Mortgage that is currently in a "refer to foreclosure" status with the Reverse Mortgage Lender. Probate cannot start until September with the delays due to Covid-19. The heirs are her 4 children. Myself and three siblings.
Question is, once Probate starts, if myself or a sibling is interested in buying the home (repaying the RM lender, Hero Loan, and buying out the siblings in any equity), do all heirs need to approve/agree to this through Probate, or is the home open to be bought by the "highest bidder" in Probate? There is a lack of communication going on with one of the siblings who lives in the home, and I am trying to gauge the process regarding purchasing the home through intestate probate, if all heirs are not in agreeance.
Reply to Marie
- Michael Branson
  July 15th, 2020
  
  Hello Cynthia,
  This is not uncommon at all. The appraiser does not intend to get into a discussion or debate with the homeowner when he probably has not even done all his research on comparable sales yet.
  If he had any questions about anything, I am sure he would have asked you before he left so it just means he was able to get everything he needed from his visit and he left.
  I think most appraisers are a little more cordial, but it is not uncommon for them to resist small talk and just ask questions when information is needed. I do not think you can read anything into it one way or the other from your comments.
  Reply to Michael
Rick H.
July 7th, 2020

How long after death are family members allowed to take care of deceased personal property in home?
Reply to Rick
- Michael Branson
  July 7th, 2020
  
  Hello Rick,
  
  This is a bit of a tough question because I am not sure what you plan to do with the home. Are you just letting the lender take it back, are you selling it or is one of the family members going to keep the home?
  The easy answer is that if the home is still owned by the homeowner or their estate, you have full control over the property. If you plan to let the lender take the property, they need to do all the inspections, notifications and ultimately foreclose on the Deed of Trust to take title to the property.
  The foreclosure alone usually takes anywhere from 150 to 180 days to be complete depending on where the property is located after all notices are filed.
  It is not uncommon for the entire process to take 6 to 8 months by the time the lender learns of the borrowers passing until the foreclosure is completed but it can happen in as little as 4.5 to 5 months so I would not wait until the last moment.
  If there is still personal property in the home after the lender takes possession, they would be required to have the personal property removed and discarded.
  Reply to Michael
Denise A.
June 2nd, 2020

Hi Arlo, What if a family member passes, has left a will but due to the fact that there are no assets and there are personal debts they do not want to probate the will, however a neighbor would like to purchase the house before it is turned over to lender. If family member is a realtor can she ask the bank for the opportunity to strike the deal?
Reply to Denise
- Michael Branson
  June 2nd, 2020
  
  Hello Denise,
  
  I am not an attorney but how would you accomplish this if you do not own the property? If the property is still in the borrower's name of that of their estate, the lender has no control over the property either, that would fall to the heirs.
  The lender is in no position to allow anyone to sell the home as it does not belong to the lender. As an heir, the family member would need to get the legal right to sell the property to complete a sale to anyone, including a neighbor.
  I think you should contact an estate attorney in your area but I don't know how you would accomplish this without probating the property so that the court could give you legal title and thereby legal right to sell the home.
  But then again, as I have indicated, I am not an attorney and cannot give legal advice so I cannot say for sure -just seems logical that someone would need the legal right to sell the property and at this point, no one, including the lender, has that right.
  Reply to Michael
Mattie M.
May 15th, 2020

Hi Arlo because of health reasons I insert into a reverse mortgage which has now balloon up to about $200,000 I'm saddened because I would love to leave this home to my 28 year old struggling granddaughter who has three kids working and trying to go to school I myself raised five children including my granddaughter as a single black parents who worked multiple jobs for over 50 years for minimum and below minimum pay over the years I also have taken in many people into my home temporarily helping them out until they could do better or help themselves some were young and some were old ones some of them has passed on but I am still here at the age of 80 years old so what I would like to know is if there are any programs or agencies out there that is Government funded that can assist me with this mortgage in any way large or small I would be very humbled and so appreciative I'm asking because unfortunately I have no money or means of getting any so thank you for any advice that you could give me.
Reply to Mattie
- Michael Branson
  May 15th, 2020
  
  Hello Mattie,
  
  I am not aware of any "reverse mortgage cancellation" programs available. The loan is a non-recourse loan with no prepayment penalty though and although there is never a payment required, you can choose to make a payment in any amount at any time to lower the amount owed or to keep interest from accruing or accruing as fast.
  You said you do not have any income but have taken folks in from time to time. I do not know how feasible it is, but if you are able to rent out a room or two, you could use the rent received each month to pay down the loan. I am sorry I do not have any other ideas for you.
  
  The loan was designed to allow you to remain in your home for life even after you had your health issues and so it sounds like it achieved its intended goals but it never was intended to be a multi-generational loan.
  I would also suggest you reach out to community support possibilities to see if there are any programs for which you and your granddaughter might be able to qualify for long term assistance. I wish I had more for you than this but unfortunately, I do not.
  Reply to Michael
  - Mattie M.
    October 2nd, 2020
    
    Is there any programs that can help me financially get out of my reverse mortgage before death?
    Reply to Mattie
    - Michael Branson
      October 5th, 2020
      
      Hello Mattie,
      
      There is never a prepayment penalty with a reverse mortgage.
      You can refinance the loan with any other loan type, or you can sell the home and use the proceeds to move and purchase or rent in another location if you prefer.
      Reply to Michael
Wayne K.
March 9th, 2020

I am the heir of my mother's reverse mortgage property. The original 6 month grace period will expire soon and I am in the process of buying the property but cannot close until 20 days after the expiration of the original 6 months and the lender says it's their policy to refuse to an extension in order for heirs to buy the property even though they have given them a copy of the sales contract, loan pre-approval and statements from the closing company showing the date of closing and also a letter from the probate attorney. Can they close in time to affect the sale?
Reply to Wayne
- Michael Branson
  March 9th, 2020
  
  Hi Wayne,
  
  That is very strange. Their number one goal is to pay off the loan and if you are ready, they should want that. I would try to go higher up the ladder at the lender.
  It is possible that they have just had too many times when family members use stall tactics to keep them from starting a foreclosure, only to fail to ultimately close. If there is anything else you can do to support your ability to close the sale, I would present that to them as well.
  Unfortunately, I think you may just be a victim of all the time people are not truthful or possibly just hopeful and not realistic and have promised future closings only to back out after extensions are granted. You need to convince them that this is not the case.
  Reply to Michael
Jake
January 10th, 2020

My father is too ill to remain in his home but he has almost maxed out the line of credit on the reverse mortgage, it is full of his personal affects, and needs repair. Is there a brokerage that would sell it as is? Or do we need to prepare it for sale? Who could I call to inquire about this? Thanks
Reply to Jake
- Michael Branson
  January 16th, 2020
  
  Hello Jake,
  
  I would recommend that you check the internet for senior real estate specialists in the area where your father's home is located. They have experience with everything from working with estate sale folks to those who clean out the home after the sale is completed and can usually assist you will the entire process requiring you to only remove the things you or your father wish to keep after he vacates the home.
  They can tell you what the home would most likely sell for in its current condition and you can compare that to the amount owed on the reverse mortgage to determine if a sale is a better alternative for dad or if you would rather contact the lender and let them dispose of the property. If there is equity remaining though, regardless of the condition, dad or his estate/heirs should retain that money so it's worth the inquiry.
  Reply to Michael
Jim F.
November 11th, 2019

I've had two extensions thru HUD for Reverse Mortgage and the one-year time frame ends December 1st, 2019 for buying, selling and or walking away. However, I'm stuck in Probate awaiting Deed put into my name by my lawyer. If I'm passed the one-year mark can I still purchase the home thru the Reverse Mortgage Short Sale Department after final appraisal is complete? Home's Market value has decreased by $100k...
Reply to Jim
- Michael Branson
  November 11th, 2019
  
  Hello Jim,
  
  I know that HUD has allowed longer periods at times, but it will depend on you. If you have already gotten other things in place (financing or other funds to repay, etc.) so that you can show HUD that you are serious about purchasing and can show that the delay really is a probate/title issue, they will work with you as long as they deem it possible.
  They don't want to take the house back if possible. And yes, they should still offer the same options because they know if they take it back, they can only sell it for market value and there will be costs associated with that sale. Remember though, if it starts to drag too long, sooner or later they must make the assessment if it ever will go through and will move to mitigate losses and begin foreclosure if there is no closure in sight.
  Reply to Michael
Kristina
October 23rd, 2019

My father's home was foreclosed in January of this year. My sister and I were not contacted about the house at all. My uncle was living in it. We have people calling us now telling us there was money left after the bank was paid and they can get it for us with a 40% take on the money. If we were on the deed or in the will, wouldn't we have been contacted by the bank when this was all taking place? I cannot find a record of this money on a website you can look for deceased members money on.
Reply to Kristina
- Michael Branson
  October 23rd, 2019
  
  Hello Kristina,
  
  If your father had no will, trust or information with the lender to contact you, the lender would not start a search for relatives who may or may not have any claim to the property or heirship. I am somewhat surprised that you were unaware of your father's situation or that your uncle did not keep you informed.
  If the lender foreclosed because no one stepped up to pay off the loan or sell the property after your father's passing (you may want to find out who was your father's alternate contact for the loan as well as ask your uncle why he never said anything to you when he started receiving notices at the property), the property would be sold at Trustee's Sale.
  The lender starts the sale with the opening bid which consists of the amount owed to the lender. Anyone who bids above that amount, automatically takes the lender out of the bidding as the lender is not allowed to raise their bid further.
  The final, highest bidder would be awarded the property and the lender would be paid from the sale proceeds. Any funds left after paying off any liens of record would be held for the owner or their estate.
  
  I do not know in what state the property is located so I can't help you with who might be holding those funds now, but you can contact a title company and determine who the trustee was and contact the trustee who conducted the sale but typically by now, the funds have been turned over to the courts by the trustee.
  Most states have laws that allow the trustee to deposit the funds with a court in the county where the property was located if the trustee is unable to determine the rightful owner or heir of the funds within a short time. If the sale took place in January, surely by now those funds have been turned over and that is probably how the attorneys contacting you have learned of them.
  My advice would be to check with the superior court in the county where the property is located and see if they have a division that handles accounts for just this purpose and contact them first. It may be as easy as filing a claim with the court.
  Reply to Michael
Carol R.
September 18th, 2019

My in-laws had a reverse mortgage. They have both died now. My sister in law is executor and notified the mortgage company when her dad died two years ago. No one in the family wants the house and told the mortgage company. Nothing has been done regarding foreclosure. My sister in law has now rented the house to someone and is receiving the rent. Why is the foreclosure taking so long? Also, we are concerned that the house has been rented.
Reply to Carol
- Michael Branson
  September 18th, 2019
  
  Hello Carol,
  
  Are you quite certain that all the property notifications took place? Any delay like this is strange, especially if the lender had been notified. In fact, it would almost seem as though steps are being taken to keep the fact that the borrowers are no longer living in the property from reaching the lender.
  Typically, after 2 years the title would have passed, and the lender would certainly have acted prior to now. If the title was/is in a trust, the title has not been changed and the lender has not been notified, that could explain the issue but the lender sends an annual certification for the borrowers to sign and return which would also be a huge red flag that they are no longer in the property.
  I have no good explanation for why the lender has not acted if they have received notification that the borrowers are no longer in the property.
  Reply to Michael
- Sandra R.
  June 17th, 2020
  
  My father died and had a reverse mortgage. The estate lawyer put all beneficiaries name on deed to trust. Brother was planning to purchase home but it didn't work out. If house goes into foreclosure are beneficiaries responsible cause trust lawyer added their names to deed after death?
  Reply to Sandra
  - Michael Branson
    June 18th, 2020
    
    Hi Sandra,
    I am not sure what you mean by "responsible" because the loan is and always was a no-recourse loan. No one, not even the original borrowers or their estate can be made to pay anything other than the property itself or the amount owed to the lender for repayment of the debt. And any heirs involved never signed any agreement saying they would pay any amounts as a co-borrower does on a standard loan so there is no liability from that standpoint.
    I still believe you would be doing yourselves a disservice though if you do not at least contact a senior real estate specialist to determine what the most probable selling price would be and compare that to the amount owed on the loan. If there is no equity, you can always let the lender take the home via foreclosure with no effect on any of your credit, etc. if none of the heirs want to keep the property and pay off the loan at the amount owed or 95% of the current value, whichever is less.
    Reply to Michael
Philip C.
September 4th, 2019

What happens when the borrower dies?
Reply to Philip
- Michael Branson
  September 4th, 2019
  
  Hello Philip,
  
  The loan becomes due and payable. The heirs can choose to pay the loan off and keep the home (with other funds or by refinancing the loan). The can sell the house and keep the proceeds or they can walk away and owe nothing if that is their preference. Reverse mortgages are non-recourse loans and therefore the lender cannot seek repayment from any other funds or from the borrower's heirs.
  Reply to Michael
Amy
September 4th, 2019

My dad had a reverse mortgage. When my siblings and I saw the house, we decided to give it back to the reverse mortgage co. Is it legal for me to take some of the kitchen cabinets? My Dad built them, and we are leaving most of them. My Dad was constantly changing things and remodeling. Can't this be just another remodel that he was in the middle of?
Reply to Amy
- Michael Branson
  September 4th, 2019
  
  Hello Amy,
  
  Cabinets and other fixtures are real property and as such are part of the property. Any real property you remove (cabinets included) would be theft and it would be up to the lender to decide if they wanted to prosecute. My advice would be to take pictures if you want to remember your dad.
  Reply to Michael
Elise
August 25th, 2019

My grandmother passed away a month ago, and she had a reverse mortgage on her home. I am just wondering what utilities need to stay on before the house is transferred to the bank. Also, does there need to be an active home insurance policy on the home as well?
Reply to Elise
- Michael Branson
  August 25th, 2019
  
  Hello Elise,
  My suggestion would be to contact the servicer and let them know you plan to sign the home back over to the lender and check with them to see what they suggest.
  Remember, the home is still owed by your grandmother or her estate until the lender takes ownership and if anyone goes onto the property and is hurt or the property goes into disrepair (plants dying, pool turning green and mosquitoes requiring abatement, etc.) might still be liabilities for the estate that could also hinder a smooth transition of the property.
  I would recommend you talk to the lender to determine in what time frame you expect the transfer to be completed and then make sure you don't open the estate up to liability without considering all aspects.
  Reply to Michael
  - Tammy
    October 22nd, 2020
    
    What if the reverse mortgage has been paying insurance from money set aside how can they expect you to pay the insurance on the home when the will has not been validated yet in probate so you don't no what the outcome might be with the courts shouldn't they have to pay it at least untill the will is validated and you even find out that u r gonna get to keep the house if it is heired to you first anything could arise and at this time courts are moving slow due to the virus someone could contest the will and if u pay off the reverse mortgage what if something happened and u do pay it off and probated decided to make you sale the home to pay debts or an
    someone contest it and you were to lose you would be without the home and your money so how come u only have 30days to decide when u don't even no everything is gonna go in your favor in probate to begin with what happens if you did pay it off and something arose and somehow u wound up not inheriting it after all u would be without money and the home .technically untill probate rules the estate is still the deceased untill probate let's u no otherwise right?? Just popped in my head and was curious had to ask cause I love picking your brain cause I love the help and advice you give everyone including me lol
    Reply to Tammy
Steven
August 19th, 2019

Dad died without a will. Had a reverse mortgage which is currently in foreclosure. Bank has advanced about 6k in their legal fees and 2k in Hoa fees. Once probate is filed and completed sister would like to buy condo. The 95 percent of appraisal. Will the bank add the monies they have laid out for expenses, or let her buy just for the 95 percent of appraisal?
Reply to Steven
- Michael Branson
  August 19th, 2019
  
  Hello Steven,
  
  The whole premise behind the 95% option is that it will cost about this much for the lender to sell the property anyway, so HUD is already on the hook for the claim for the loss.
  If the lender tries to make the heirs pay more to pay off the loan that the property is worth, they won't do it anyway and then the lender would not be able to sell it on the open market for more than the actual value. HUD will pay a claim for any lost money from the MIP fund that your dad paid into to get the loan.
  
  But I want to be sure that we are speaking the same language. The deal is that the loan may be paid in full by the heirs for the amount owed or 95% of the current market value.
  If you wait for the foreclosure to be final, there is no agreement at that time for the lender to sell the home to anyone or for any set amount. If she pays off the loan before the lender completes a foreclosure, she is not "buying" it from the lender, they don't own it. Dad does or if it has completed probate it could be his estate or the next of kin.
  If she does wait for the lender to own the property, then there is no agreement for any amount for the sale and she can offer any amount she wishes, and they are free to accept or decline any offers to purchase as well.
  Reply to Michael
Lynne
August 15th, 2019

Mom passed away and left her home to her 7 children. There's a mortgage on the home of $60,000. Only one wants to own the home, 2 want to make money and 5 want to gift it. What are my options to stay in the home?
Reply to Lynne
- Michael Branson
  August 15th, 2019
  
  Hello Lynne,
  
  All heirs of reverse mortgage borrowers have the same option if they wish to remain in the home after the borrowers have passed. If you do not have the money available to just pay off the loan outright, you can refinance the home and pay off the existing loan with a new mortgage in your name.
  You can repay the loan with in an amount equal to the amount owed or if that is more than the home is currently worth, then HUD allows heirs to pay off the entire balance at 95% of the current market value if that is less, regardless of the amount owed.
  
  Now this does not include any arrangements you may or may not need to make with your family and that is completely between you and your siblings. You would have to work out something with them that would be equitable and agreeable for all. Perhaps you can refinance the loan and pay them whatever amount you all agree to at the close of the refinance loan?
  My suggestion is that you determine what the costs would be if you had to sell the home and take them right off the top. After all, if you had to sell the home, none of you would get to keep this money anyway and it would help you secure your financing. Then determine the per their share of the remaining equity and make the remaining two an offer of their pro rate share if the home were to be sold.
  If the remaining 5/7th of the equity (minus the costs you save by not selling) allows you to stay in the home, it works out the same for the 2 that are looking to be paid as if you had sold the home anyway but you get to keep the home. Good luck!
  Reply to Michael
Kathleen
July 12th, 2019

I have listed a charity as heir to my home. If I have a reverse mortgage and die without paying it. Is the charity responsible for the balance of loan in order to get the residual value or will the bank expect payment from any other assets I may leave behind?
Reply to Kathleen
- Michael Branson
  July 12th, 2019
  
  Hello Kathleen,
  
  Your heir, in this case a charity, would have to sell the home in order to repay the loan and realize the balance. Just as they would if you had any type of loan or any liens on the property, before the charity would be able to realize any money from your gift, they would have to sell the property and any loans or liens would have to be paid off and they would keep the money left over after paying off those amounts from the sale proceeds.
  They do not HAVE to do anything. And the lender cannot obtain payment from any other assets you may leave, only from the property. But if the charity decides they do not want to sell the home, the lender would have to foreclose on the loan before they would have title to the property and any shortfall (if any) would not have to be paid by anyone or your estate.
  On the other hand, though, any equity remaining in the property would be lost if the lender foreclosed and there was not a higher bidder at foreclosure sale and there were no funds to pass through to the charity from the foreclosure sale.
  Reply to Michael
Cindy S.
July 4th, 2019

Hello Arlo, my sister took a $40,000 advance from my mom's reverse Mortgage considering that as her inheritance. My mom has now passed, we sold her home and at closing my sister did not claim her $40,000 advance as an asset of the estate. Instead she allowed the proceeds of mom's home to pay back the $40,000. It basically feels like I helped pay back the money my sister owed; I too am a 50% heir. Does she owe me 50% of the profit plus her $40.000 dollars?
Reply to Cindy
- Michael Branson
  July 4th, 2019
  
  Hello Cindy,
  
  I am afraid this is something we cannot help you with. This is something you and your sister will have to work out and if that's not possible, perhaps through the probation court but I can't say. Therefore, we always recommend that borrowers make their wishes known in advance so that when the time comes that asset distribution is a reality, families are not left arguing over who gets what.
  This was mom's house after all, what were mom's wishes? What does your sister say when you talk to her about it? At any rate, there is no provision with the reverse mortgage that would pertain to this situation so the two of you may have to seek the assistance of legal counsel if you cannot work it out yourselves but we have no guidance in this area.
  Reply to Michael
Jeri L.
July 2nd, 2019

Hello, I'm a granddaughter of and an heir and would like to buy my grandparents' home they do not have a will but my cousins want to sell it and get there cut I also have bad credit n trying to fix it. Is there any possible help?
Reply to Jeri
- Michael Branson
  July 2nd, 2019
  
  Hello Jeri,
  
  The reverse mortgage is now due and payable. The heirs have all the say in how that will be done. It is not the loan that will determine if you can keep the property but you and your relatives. I don't know your circumstances or about your ability to pay for the home as it relates to your other heirs. The more interest in the heirship you have and equity your grandparents still had in the home would mean a lot in this case.
  For example, if there is very little equity and there are 15 cousins who all get a portion of the estate, you would have to come up with the majority of the value of the home to keep it (unless your family members were willing to work out a deal with you). On the other hand, if your grandparents had a very small portion of the value of the home covered by the loan and there are only 2 or 3 heirs, then your percentage of the home in relation to amounts owed to the mortgage and other family members would be greater and your loan options would also be better.
  
  I would suggest that you determine really what your percentage ownership in the home will really be. Determine what it would cost to sell the home figuring usually 8 -9% by the time you take into consideration selling costs of commissions, third party costs for escrow and any repairs you need to complete and see if your cousins will subtract that from the amount they are expecting if you take the property since they would not get that with a sale anyway.
  If they think about it, by allowing you to discount the price of the home by this amount to determine how much they will receive, they won't receive any less considering selling costs if they don't do it and it just might allow you to keep the home. If credit stops you from being able to complete the transaction, I am afraid I cannot help you there.
  Reply to Michael
Sherry H.
June 20th, 2019

My husband's mom just died, and she had a reverse mortgage on her house that was fully paid already. We want to keep the house because we still live here. My husband hasn't worked in a couple of years because he was taking care of her. So, my question is will he be able to put my name on the deed of the house so I can take out a loan to pay off the reverse mortgage amount?
Reply to Sherry
- Michael Branson
  June 20th, 2019
  
  Hello Sherry,
  
  The loan makes no determination as to what your mother-in-law's heirs can do with the property. She always owned the home and now the estate still owns it until the title passes through the normal course of events (trust, Grant Deed that has already been recorded prior to her passing, probate, etc.).
  If/when your husband becomes the owner of the property, he can record a Deed to add anyone to title immediately. I would suggest that you contact an estate attorney to determine any and all steps needed to perfect the title in his name as quickly as possible so that he can add you and you can apply for the new financing without delay.
  A new lender cannot grant you a loan on a property which you do not own and I do not know how long that process with take so the sooner you complete it, the sooner you can close your other financing.
  Reply to Michael
Pat G.
June 10th, 2019

My brother and my mother have died and need to find a way to refinance her reverse mortgage. Do I need to contact a probate attorney since there is no will?
Reply to Pat
- Michael Branson
  June 10th, 2019
  
  Hello Pat,
  
  That would depend on the laws in the area and I cannot give you legal advice. I would strongly advise that you contact an estate attorney in the area so that you can take care of any probate issues and he/she can also guide you through any other issues that you may not be considering as well.
  Reply to Michael
Cindy K.
June 10th, 2019

I was left (the only heir) a house with a reverse mortgage. The house was appraised at $205,000 the reverse mortgage is $290,000 the house needs at least $40,000 in repairs just to make it a sound place to live another $60,000 in cosmetics .... how does one negotiate with the bank?
Reply to Cindy
- Michael Branson
  June 10th, 2019
  
  Hello Cindy,
  
  As the heir, you have the right to repay the loan and keep the home at the lower of the amount owed or 95% of the current appraised value. I would suggest that you make sure you are available when the appraiser visits to do the appraisal and point out all the deferred maintenance and items you believe need to be repaired.
  If the homes in the area to which the appraiser will compare your home are all in better condition, he she will adjust reflect the deferred maintenance. You will not be able to suggest a value, as the lender/bank cannot do so either. But you can make sure that the appraiser is aware of all the items that need to be repaired so that it is taking into consideration as he/she determines the opinion of value.
  
  The bank will use a HUD approved appraiser and by law, they cannot influence the value and quite honestly, they don't want to or need to. Based on the numbers you have given, there will be a loss on the loan no matter what value the appraiser determines, and the lender will be reimbursed by HUD for that loss. If you do not keep the home, they will have to sell it on the open market and they know that the average buyer will not pay more than the home is worth in its current condition either so it is not in their best interest to try to have the appraisal come in higher only to have to walk away and have to sell the home anyway.
  
  The lender is bound by HUD rules and they will allow you to pay off the loan in full at 95% of the current value when that is less than the amount owed, and HUD will pay their claim based on that value. If you are not willing to pay 95% of the current market value, HUD will require them to foreclose on the loan, you can walk away owing nothing and they will resell the home as is on the open market.
  If their appraiser was correct, they should be able to sell the home in its current condition for about the amount for which it appraised since the appraisal is supposed to account for all deferred maintenance based on sales of similar homes in the area. If the appraisal was off, they will sustain more of a loss than they thought, but at that point, not any more than if they had accepted a payoff for less from you. I have not heard of them coming off the appraised value and think this is probably why.
  Reply to Michael
Tony M.
May 30th, 2019

I am tenant in a duplex with a reverse mortgage. My landlady recently passed away. I have not been given any information about paying rent. Am I responsible for paying the rent during the 6 months that her trustee must pay the balance owed?
Reply to Tony
- Michael Branson
  May 30th, 2019
  
  Hi Tony,
  
  I am not an attorney and cannot give you any legal advice. This does not pertain to a reverse mortgage but rather your obligation to pay rent under a lease agreement and I cannot advise you on that.
  I can't see how the owner passing relieves you of the obligation to pay rent to her or her estate if you are still living there and seems like it may be grounds to evict you (and all the negative repercussions that goes with an eviction). But again, I am not an attorney, and this is a question for a licensed attorney in your area and I would really suggest that you seek counsel.
  Reply to Michael
Ingrid V.
May 28th, 2019

I am 52 my husband 70 we have been married 25 years. We got a reverse 6 years ago, I could not be on the deed because of my age. 2 weeks before he died we had my name put onto the deed. What must I do if anything?
Reply to Ingrid
- Michael Branson
  May 28th, 2019
  
  Hello Ingrid,
  
  By putting you on the Deed, you have title to the property, but the loan is still now due and payable. I can't tell if you were 52 at the time you closed your reverse mortgage or if you are now, but either way, even if you add 6 years to the age 52, you still are not eligible for a reverse mortgage at this time and that loan is now due and payable.
  You have the title, but the lender will soon call the loan. You have a few options and you need to determine what you will do before you contact your lender, you so that you can do things on your timeframe, not because you are being forced to act quickly.
  
  You can pay the loan off with funds you have or with a new loan. This could be from an insurance policy if your husband had one (which would have been a very wise move at that time) or other savings. Or you can refinance the loan with a forward or conventional loan at this time.
  However, if you plan to stay in the home, one way or another that loan must be paid off now. Or you can sell the property and keep the proceeds to use to purchase another home or for whatever purpose you desire.
  
  I sincerely hope that the lender who originated this loan for you explained all this at the time you closed the loan and that you and your spouse took the necessary steps at that time to line up funds, a new home or alternate plans for this eventuality.
  6 years ago there was no eligible non-borrowing spouse designation and I hope you have taken the steps to ensure that your future is secure knowing that the day would most likely come when you would outlive your spouse and the loan would become due and payable.
  I encourage you to look at the options and to make a plan and take the necessary steps to pay off the loan through one of the methods I described above before the lender contacts you and informs you that the loan has been called and your clock is ticking toward a foreclosure action if you do not repay the loan.
  Reply to Michael
Neal
May 23rd, 2019

Hi there,
Do you have recommendations for 'letter of intent' for our bank to refinance a reverse mortgage.

Thanks! Great site.
Neal
Reply to Neal
- Michael Branson
  May 23rd, 2019
  
  Hello Neal,
  
  When a lender requests a letter of intent, it could be asking for the borrowers' intent for several things. Usually the underwriter will make the condition a little more specific and state "letter of intent re: - borrower's intent to occupy", or "borrowers' disposition of their current residence" or whatever it is that they are not quite sure about or that they want to be sure that the borrower is doing for their benefit and not being steered into something that is not beneficial for the borrower.
  If you are talking about refinancing a current reverse mortgage with a new reverse mortgage, they may want you to tell them in your own words why this loan is beneficial for you and what you intend to do once the refinance is completed. They obviously do not want to see that you are going to incur debt that would make you not qualify or that you plan to move out of the property afterward as that would be a violation of the loan.
  
  My recommendation is that you are honest with them, let them know why you intend to refinance and how that refinance will benefit your circumstances. I would, however, check to see if there is any further guidance on the request such as I noted above to see if there is a specific topic that the lender wants you to cover in your letter.
  Reply to Michael
Diana
May 20th, 2019

Thank you for this site - it is full of great information. Our mother passed away recently so we are selling her house and paying off the reverse mortgage. The mortgage company charged us $500.00 for an appraisal unknown to us. They said it is a HUD requirement to get an appraisal upon death of the homeowner. I've searched and can't find an answer - hope you can assist.
Reply to Diana
- Michael Branson
  May 20th, 2019
  
  Hello Diana,
  Really appreciate your feedback and I'm glad we can be of help! If you do not pay the loan off before the borrower passes, the lender is required to have the home appraised to determine the payoff amount. Heirs of reverse mortgage borrowers can pay off the loan at the lower of the amount owed or 95% of the current market value of the home. I personally believe that there ought to be an option to just contact the lender and agree to waive the appraisal requirement, especially if the heirs know that the value is well above the amount owed in order to save this cost, but I have never been given a good answer as to how or if this is, or ever would be, possible.
  I would be interested to know if you attempted to request a waiver of the appraisal in advance of the lender performing the report. I know the process is to protect borrowers and their heirs, I just don't know if the requirement is absolute. I can see where there may be times when family members "think" the value is higher than it is and then not performing the appraisal might leave lenders and HUD open to liability later if the value is not as high as they once thought. I will attempt to get more information and follow up if we learn anything that sheds additional light on the subject, but the appraisal is a HUD requirement for the reasons stated.
  Reply to Michael
Sean
May 14th, 2019

Hi, I believe I know the answer(s) but would appreciate any confirmation or correction. My parents took a reverse mortgage ~ 15 years ago. My father past 10 years ago. My mother is now 81 and has a serious illness. Round numbers - $200K loan and house appraised at $500K. If we (my sibling and I) want to keep the house, it is my understanding that we will need to take a mortgage of 95% of the appraised value ($475K) since that is higher than the loan. We will be responsible to pay our new mortgage and the reverse lender would be paid back the $200K. We do not need to take a mortgage out for $675K to pay back the $200K and account for the $475K. Correct? What if the appraisal is less than the loan? Can we still purchase the house? Will it be the lesser of the loan or appraisal?
Reply to Sean
- Michael Branson
  May 14th, 2019
  
  Hi Sean,
  
  No, you don't have that quite right. The 95% rule only kicks in when the home is worth less than the amount owing on the loan. In this case, the amount owing is $200,000 on a house valued at $500,000, so $200,000 is all you owe. If you want to keep the home, you would have to come up with the money to repay the loan and that usually means a refinance of the loan. You could also elect to sell the home and keep the equity of $300,000. I am not an accountant and cannot give accounting advice, but would encourage you to seek the guidance of a tax or legal accounting professional before you decide which way to go as the gain on the sale could receive different tax treatment in different situations.
  
  Bu the thing to remember here is that you don't have to "purchase" the house your family already owns. You have a loan against the house that will come due and payable when mom is no longer living in the home. The $300,000 equity in the home now belongs to your mom and not to the lender. You can sell the home and pay off the $200,000 loan, you can repay the loan with another loan or you can repay the loan with other funds available to you, but you own the home. Unless you walk away from it or the lender has to foreclose because you don't make arrangements to pay off the balance when mom is no longer living in the property, you only owe the balance of the loan (plus any funds advanced, if any, and any normal nominal fees to close and reconvey the loan).
  
  The 95% rule is for heirs of reverse mortgage borrowers who want to keep the home and the loan balance is higher than the value of the home. They can repay the obligation at the lower of the amount owed or 95% of the current market value of the home if they wish to keep the home. HUD knows that if they have to take the home back by foreclosure and resell it they will not sell it for more than market value so they allow the heirs to repay the obligation for 95% of the current market value with the loan balance exceeds that value. But in your case the value is much higher than the amount owed so you only must repay the amount owed, there is no 95% consideration.
  The only time an appraisal would make a difference would be if the value was less than the amount owed. Given your numbers, the appraisal is a moot point as it would not come in less than the $200,000 owed so it will not affect your payoff.
  Reply to Michael
Walter H.
May 13th, 2019

In a reverse mortgage if one person dies does the other have to move out of the home?
Reply to Walter
- Michael Branson
  May 13th, 2019
  
  Hello Walter,
  
  If there are more than one borrower on a reverse mortgage, the loan is still valid if at least one borrower is still living in the property as his/her primary residence.
  
  If 1 of 2 people on the loan pass, the loan is still just as valid as it was before if the 1 who is still in the home is on title, on the loan and continues to abide with the terms of the loan.
  
  This is true if the borrowers are spouses, siblings, parent/child or no relationship at all but were both on the loan at the time it was originated. The borrower(s) still on the loan, living in the home and on title when 1 borrower passes do not have to leave the home.
  Reply to Michael
Kim
May 13th, 2019

I'm a 3-year resident roommate of reverse mortgage homeowner. I also did house repairs, as well as caring for the homeowner. They passed away, and the family has been there every day without notice, and one refuses to leave. They said I must leave, do I? The one that's there has harassed me for years.
Reply to Kim
- Michael Branson
  May 13th, 2019
  
  Hello Kim,
  
  I am afraid you would have to seek counsel from a licensed attorney for guidance in this area. This has nothing to do with the loan and is all about your rights as a tenant and the family's rights as the heirs. This is a legal question that must take into consideration state and local laws, the fact that the borrower had a reverse mortgage. Since we are not licensed to give legal advice, I'm sorry but I would really have to refer you legal counsel in the area where the property is located.
  Reply to Michael
Claudia R.
April 26th, 2019

I'm an heir to parent's reverse mortgage. Trustee is not an heir. Neither Trust nor parent has much cash available for end of life expenses. Trustee personally has very little available cash. What cash expenses will be required to satisfy the reverse mortgage if family decides to pay it off or sell the house within a six-month period? Are taxes paid out of pocket? It seems I read something about maintaining utilities. Is that right? Are the utility accounts switched from parent's name to Trust's name? How do we plan for the expenses that we may encounter during the process of satisfying the reverse mortgage?
Reply to Claudia
- Michael Branson
  April 26th, 2019
  
  Hello Claudia,
  
  I do not know how your parents have their utilities now. Most often they are in the individuals' names, not the trust. The reverse mortgage is owed whatever was borrowed, the accrued interest and any funds the lender had to advance on behalf of the borrowers (if any). Additional fees would be incurred if the lender had to begin foreclosure, etc. due to the loan not being paid off and the lender had to protect their interest.
  
  Other property charges are not a part of the loan and I cannot tell you what they may or may not be. I imagine you would want to see what the property charges are at this time and continue any services you need to sell the home. Water, gas (if applicable) and electric are essential for the maintenance and sale of the home but other items such as telephone, cable tv and maybe even trash could be suspended until after the sale of the home. It all depends on whether anyone will be living in the home and what you will need to keep active to best represent the house to future buyers.
  Reply to Michael
Kristi
April 23rd, 2019

My sister & I set up a lady bird deed in Michigan which automatically transfer the deed of the home to our names upon the death of our mother. After the lady bird deed was completed, some time later we did a reverse mortgage. She just passed so the deed will be in our name now no probate. Are we still responsible for the loan?
Reply to Kristi
- Michael Branson
  April 23rd, 2019
  
  Hello Kristi,
  
  The reverse mortgage is a non-recourse loan so when you say are you responsible for the loan, you have no personal liability and the lender has no recourse other than the property. The loan is still a lien on the home though. If you choose not to pay it, the lender will foreclose on the property and Deed change or no, they will sell the property at Trustee Sale for the default on the loan.
  It is true, you have no personal liability and can choose to take no responsibility. You can choose to walk away and there are no ill-effects on your credit. And if you do, you will lose the property but with no other consequences.
  You just need to determine if there is any equity and whether or not it is in your best interest to sell the property or refinance the loan in order to retain the equity or whether you want to repay the obligation just because you want the house or if you would rather just let the lender take it and be done with it. And those are entirely your calls to make.
  Reply to Michael
Mary Lou
April 16th, 2019

When I die can my neighbor (who wants my property) contact the mortgage holder & pay off the reverse mortgage without the property ever being listed for sale? She is a realtor & has access to information that is not public.
Reply to Mary
- Michael Branson
  April 16th, 2019
  
  Hello Mary Lu,
  
  No, your neighbor cannot just pay off the loan and keep the house because the lender does not have the title to the home so they cannot give it to her. There are things you can do to direct who gets the title and under what circumstances if it is something you wish to do though.
  For instance, you could contact an attorney and ask about putting the property in a trust for which she is the successor trustee, you can add her to title now which would mean that she would retain title after you passed (but also gives her an interest in your home now, before you pass) or perhaps the attorney would advise you to use a will so that the title would pass to her in a probate action.
  There may be other ways to accomplish it as well but I would direct you to an attorney to make sure that you took the correct action that protected your title now, didn't create a taxable event in the meantime and would be the best method to protect your interests as well as achieve your goal. I don't know if your property would still have to go through probate or if there are things the attorney can do now, especially while you are still living, that would make that unnecessary.
  That would all come under the heading of legal advice and I would send you to a licensed attorney for this information. I'm only giving you some examples of possible actions and not advising anything; I must leave that up to the lawyers!
  Reply to Michael
Frank
April 13th, 2019

My dad recently passes away and he had a reverse mortgage we decided to turn the keys over to RM company they told my sister all the appliances have to stay there's four of us siblings and we took the appliances as they were new will the RM company have any legal recourse for us taking the appliances? Thank you
Reply to Frank
- Michael Branson
  April 13th, 2019
  
  Hello Frank,
  
  I hesitate to answer you because I do not want to give you wrong information. Typically, any of the appliances that are built in, are considered real property and would remain with the home. That would usually include built in ranges, refrigerators, dishwashers, etc.
  Free standing appliances, those that are not attached to the property (just plugged in is not attached) are considered personal property and you have no reason not to take any personal property that belonged to your father. Therefore, freestanding refrigerators, clothes washers/dryers, counter top microwave ovens, etc. are not attached to the home and there should be no issues with you removing these items.
  
  The part on which I cannot advise is the legal recourse question. I cannot give you legal advice, even if I did know whether you are referring to real property appliances as to what the law allows the lender to do in your area and our licensing does not allow me to give legal advice, even if I was pretty sure I did know the law in your area.
  If you did remove real property and you are not certain if you have opened yourselves to liability and you don't want to take any chances, you have two choices. You can return the items, or you can consult with an attorney and see if there is any possible liability. Remember, even if the attorney says there is little or none, you may still have to defend it in court which can also end up costing you money so ask yourselves how badly you really want/need those items if they are real property and should remain with the home.
  Reply to Michael
Marty J.
April 9th, 2019

My mother just passed away on 3/20/19. The reverse mortgage is current, and I am down as her heir. My husband is 65 and I am 62. We care for my 31-year-old disabled daughter in this home since we moved in in 2009. Where do I begin to transfer the ownership to us?
Reply to Marty
- Michael Branson
  April 9th, 2019
  
  Hi Marty Jo,
  
  I'm sorry for your loss. Your steps depend a little on what is in place for the transfer already. Is the home in a trust with you as the successor trustee? Is it in mom's name as an individual and does she have a will? Are there any other family members who might also claim heirship? When you say that you are "down as her heir", that leads me to believe there is some legal paperwork such as a trust or will naming you as the individual to inherit the home but you probably still have to go through probate.
  
  The first thing you need to do is to contact an estate attorney. I know that no one wants to pay attorney fees, but a qualified estate attorney can save you a lot of possible missteps and will know exactly what you need to do in the area in which the property is located. He or she will also need to know if mom had a will or trust and if mom did, then you may even want to choose to see the attorney who prepared that for your mom. That attorney is already familiar with your mom's situation and might be able to act more quickly since he/she would have a lot of the documentation already.
  Reply to Michael
- Michael Branson
  April 9th, 2019
  
  Hi Marty Jo,
  
  I'm sorry for your loss. Your steps depend a little on what is in place for the transfer already. Is the home in a trust with you as the successor trustee? Is it in mom's name as an individual and does she have a will? Are there any other family members who might also claim heirship? When you say that you are "down as her heir", that leads me to believe there is some legal paperwork such as a trust or will naming you as the individual to inherit the home but you probably still have to go through probate.
  
  The first thing you need to do is to contact an estate attorney. I know that no one wants to pay attorney fees, but a qualified estate attorney can save you a lot of possible missteps and will know exactly what you need to do in the area in which the property is located. He or she will also need to know if mom had a will or trust and if mom did, then you may even want to choose to see the attorney who prepared that for your mom. That attorney is already familiar with your mom's situation and might be able to act more quickly since he/she would have a lot of the documentation already.
  Reply to Michael
Will
April 3rd, 2019

Hi, 2-part question. Uncontested reverse mortgage foreclosure on a condo. What would be best estimate for the foreclosure to be completed? Also, of condo fees aren't paid will the reverse mortgage company step in to make to protect their interests? Balance due $125K appraised value $95K. I'm still living in Moms condo
Reply to Will
- Michael Branson
  April 3rd, 2019
  
  Good Morning Will,
  
  I honestly cannot tell you a timeframe. There are several things that could affect that time and it could be a little as 150 -180 days or could take longer if the lender has other issues that arise. The reverse mortgage is in first lien position and therefore they will not advance condo fees (taxes yes if necessary, condo fees no).
  If the HOA had to auction the property for non-payment, I cannot tell you how long that would take in your market but I can tell you that any purchaser would own the home subject to the existing reverse mortgage and if that mortgage exceeds that value of the home, they would most likely get no bids on the place at auction unless the individuals were unaware of the underlying mortgage (and we have had some people write us and tell us that they bought condos at HOA sales not knowing that there were existing loans on the units as well so it does happen).
  
  As the heir, you do have the right to pay the loan off at 95% of the current appraised value or the amount owed, whichever is less which in your case would be right around $90,250 if your value is correct. Have you considered looking into FHA financing and buying the place yourself? You may find that the mortgage payment may be lower than the cost to move and rent elsewhere.
  Reply to Michael
Jeff
April 1st, 2019

Father passed away and had a reverse mortgage. There is a will naming me the executor. I want to buy the home and am working with a mortgage broker to get a loan to pay off the reverse mortgage amount. I was just informed that the home would have to go into probate. The payoff amount is less than what the house is worth. There are no assets though. So, what happens with any medical debt incurred by my father when the house goes into probate and there are no assets? I don't want to lose the house and am afraid to send it to probate because of this fear. I can only qualify for what the reverse mortgage payoff is and nothing else. I can't afford a lawyer but make too much to qualify for free legal help. I just want to know about paying the amount owed on the reverse mortgage without worry of other debts that would delay the process and that I can't pay because of no assets.
Reply to Jeff
- Michael Branson
  April 1st, 2019
  
  Hello Jeff,
  
  I received your email as well as your question here so I will answer the question here with the only answer I can, and unfortunately, I'm not going to be much help. As you are already aware, the reverse mortgage may be paid off by paying the lesser of the amount owed or 95% of the current appraised value. As I understand, the amount owed is less than the current value so the amount required to pay the loan in full will be the loan balance. And you won't be "buying" the home, as the heir, the title will pass to you through the probate action. You would only have to buy the house if someone else owned the property but the property will become yours as the heir of the former owner assuming there are no others with more of a claim to ownership than you and depending on liens, debts, etc. (which you said there was a will and you were the executor but that does not necessarily make you the sole inheritor).
  
  Now here is the part I can't help you with because I am not an attorney and am not licensed to give you legal advice. I have no way to know how the law allows the hospital or any other creditor to collect a debt in this instance. I would not even want to guess what the possible steps are because I just don't know and would not want to give you bad information. I think you are wrong in your characterization about not being able to afford an attorney though, I think you can't afford NOT to see an attorney. I believe you could call an attorney and they can tell you what it would cost for an initial visit and they would be able to direct you, tell you any possible steps creditors can take and what you must do for probate in that initial meeting. If you choose not to continue with their services after that, that one meeting alone would probably be the best investment you can make but that is certainly your call.
  Reply to Michael
Jacqueline
March 28th, 2019

The owner of home I'm in unexpectedly passed away in December and there's a reverse mortgage on home. I have been living in home for 11 years and there is an executor of will whom says she signed home to mortgage company. I've never heard from mortgage company yet and now this executor is trying to force me to leave home.... not thru courts.... on own. My question if I contact the mortgage company how much time do the allow? And how do I find out exactly what company I need to call...
Reply to Jacqueline
- Michael Branson
  March 28th, 2019
  
  Hi Jacqueline,
  
  I am afraid I cannot answer your questions. You are not the owner or the heir of the owner and so your questions do not pertain to the mortgage but rather occupancy rights of tenants in the state in which the property is located. Therefore, your questions are really of a legal nature and not necessarily pertaining to a reverse mortgage.
  
  As for the current lender, you could start by checking the county recorder to see what lender is listed on the recorded Deed but there is no guarantee that the loan is still held by them and I do not know how you as a non-related party can track down the current lender. And then even if the same lender does still own the loan, you may find that due to financial privacy laws, they will most likely be unwilling to even discuss the loan with you or give you any information at all.
  I think you should probably speak with an attorney to determine your rights as a tenant under the law because whether it's the lender or the owner of the property if it has not been deeded back to the lender as of this time, sooner or later someone is going to present you with an eviction notice and you need to know what the law requires them to do and what timeframes are prescribed based on your circumstances.
  Reply to Michael
Mike
March 19th, 2019

My parents had a reverse mortgage on their home. They both passed away last year. I took out a mortgage to pay off their home which I have now moved into. My parents received a 1098 showing that there was $50,000 of mortgage interest paid, and 12,500 in points paid in 2018. Is that fully their expense for destructibility, or can I use it on my tax return as Mortgage Interest paid since I actually paid it?
Reply to Mike
- Michael Branson
  March 19th, 2019
  
  Hello Mike,
  I am sorry, you need to speak to an accountant or tax attorney to get your answer for this question. We are not licensed to give tax advice and therefore forbidden by law to give tax or legal advice. Aside from the legal prohibitions, I would always refer you to the best possible source for an answer. I'll be happy to answer reverse mortgage questions but I will leave the tax and legal advice to those experts!
  Reply to Michael
Judy
March 18th, 2019

I live in Cook county IL. Mom passed away Aug 2018. I lived with her for past 9-10 years. There is a reverse mortgage now owed of $143K. Condo worth $215K. My siblings want me to stay and am getting a refi for $180K to pay off some of my own debt. Mom's estate lawyer says her creditors must be paid (approximately $30K) or it's considered fraud. Her will said we (her children) are not responsible for her debt. How am I responsible to take a mortgage out for credit card debt when the will says we are not to be responsible? I cannot afford the full value of the condo plus assessments and taxes. Thank you for your response.
Reply to Judy
- Michael Branson
  March 18th, 2019
  
  Hi Judy,
  
  I am afraid I cannot give you legal advice. I cannot answer this definitively for you, your attorney will have to help you, but I think I might see the issue. The question will probably not be if you are responsible for her debt but whether the estate has the assets to pay them and therefore is legally required to do so. If the estate has real estate with over $70,000 equity in it, it would be the estate paying that debt not you. True, you would be inheriting a condo with less equity under the circumstances, but if mom owed the money, there is less of an inheritance to pass on.
  
  I think that he will tell you that you are not paying it, you are having to get a higher loan to keep the condo and to pay off your own debts due to the fact that mom owed more money that the estate will now have to pay leaving less equity to pass to you, her heir. I think he will tell you that you are not taking a mortgage out to pay her debt, that debt is being paid by mom's equity.
  But that if you want to keep the home it just means that it will take a higher loan because her estate has less money/equity available at the end of the reckoning. At least that is what I think he will tell you based on what I read here but I cannot tell you for sure. Your attorney will have to be the one to let you know if therefore those debts must be paid.
  Reply to Michael
Julie V.
March 18th, 2019

My mom has a reverse mortgage I am her daughter age 60 and live and take care of her. She wants to sign the deed to the house over to me so I can continue to live in the home, can we do that or what can we do so I can keep living here when she passes?
Reply to Julie
- Michael Branson
  March 18th, 2019
  
  Hi Julie,
  
  She can add you to the title now, but she cannot transfer the entire title over to you at this time. Her loan allows her to add anyone to title she wishes if she also remains on title as well. But I need to warn you, although adding you to title will make things easier for you at the time your mom passes, it will not change the fact that the loan will need to be repaid at that time.
  You would not have to worry about having to change the title later if you are added now, and it will allow you to refinance the home with other financing later since you would already be the owner, but it does not allow you to remain in the home under the terms of the original reverse mortgage. The loan will still be due and payable when your mom no longer lives in the property as her primary residence.
  
  There are two issues here. One is the title, that is who owns the home, and the other is the loan and when it becomes due. Changing the title now will make things easier later because it's much easier to do some things while your mom is still here and can sign documents but that does not change the terms of the loan she has on the property. The reverse mortgage becomes due and payable when the last original borrower on the loan is no longer living in the home as their primary residence.
  That is true whether the circumstances are since they move or pass. If you change title now by adding you to title with mom, that will probably make it easier for you to refinance the loan in your name later or sell the home if your feel you must, but it would not change the fact that the loan becomes due and payable when mom is not living in the home. And if you took mom off title completely, the loan would become immediately due and payable, so you want to be sure that any changes of title you make still include mom but add you rather than replace her.
  Reply to Michael
Ashley Clark
August 12th, 2013

Hi my question is we live in a row home attached to a home that has been abandoned for about 10 years now. No one has stepped foot inside that house since she passed there are still dishes in her sink. I have found out that the lady who lived there had a reverse mortgage. The lack of care is now effecting the house in which we rent. We have informed our landlords and they say they care but nothing has been done. I finally got someone from the township to come out and cut the grass, but there are bees and wasps and Mosquitos (cause all of the gutters are clogged and water just popes out when it rains) so I can't send the children out to play. As well we have had exterminators out but nothing they do can help the spiders and such that find there way over as well as our new addition a bat in the attic. We need to move but I have no idea who to contact what are my rights. We sleep in the downstairs cause we get eaten alive when we sleep. My children are afraid to sleep in their rooms. I as well being a single mother don't have they money to just pick up my kids and find another place to live. So my question is what are my rights if any and how would I go about this in the correct manor?
Thank you,
Ashley Clark
Concerned Mama Bear
Reply to Ashley
- Michael Branson
  August 14th, 2013
  
  Hi Ashley,
  I'm sorry but this really is not a topic concerning the reverse mortgage but rather tenant's rights and that is a legal issue that I am not qualified to address. Have you tried finding out who the legal owner of the property is now? Regardless of what type of loan the previous owner had, if the heirs did not step forward to pay off the loan at the time the owner passed, then the lender would have had to take the property back by way of foreclosure and then dispose of the property to pay the debt. If the owner passed 10 years ago, there is no way for me to know if the owner's heirs paid off the original loan and then they have left the property in disrepair in the meantime, if the lender took title to the property, was unable to gain title for some reason or what. I would suggest that you check public records to determine who owns the property now and then find out what recourse you have against the current owner. Possibly the Township can begin abatement proceedings against the current owner for the maintenance and health issues but again, that's a legal question that has nothing to do with the terms of the reverse mortgage.
  I do wish you luck.
  Reply to Michael
Steve E
July 25th, 2013

I am one of those heirs who inherited a deceased parent's home that has a RM with a balance that is 'underwater' compared to home value. This previously widowed parent passed in November 2011 at age 90, 2 years after taking out the HECM. A big chunk of the loan was an up front lump sum advance to pay off an existing HELOC, and after that he received monthly tenure checks. Of course the original appraised value is about twice what it could realistically sell for today. The property is in Delaware, heirs are in California and Arizona, so not only do we not have any interest in retaining the property, but are too far away to personally take care of the property and can't afford the costs of upkeep. Also the home has some repair issues, and sits on 2 acres that need to be mowed in the summer and leaves to be raked in the fall. I won't mention lenders' name, but after the borrower died we offered to sign deed in lieu but they refused, and said don't worry, we'll just foreclose. Never heard a thing after that for over a year. But instead of foreclosing, they just let it sit and run up more interest and fees, never contacting us again, then sold the note to another servicer last November, one year after the borrower's death and after the estate was probated. Then this last March they filed foreclosure in court, having never tried contacting us. So now we're in the middle of the foreclosure process. But there are two heirs involved. We own the property together in equal shares, named as 'co-defendants', and one, my sister, has so far refused to reply to the suit. So it drags on until either she replies or they rule by default. I get the non-recourse part, but I'm just concerned that we may get dinged for attorney fees and court costs. There were only enough other assets left in the estate to pay the probate lawyer and a few other small debts, so any assessment against the heirs will come out of our pocket. Am I right to be worried about those court costs?
Reply to Steve
- Michael Branson
  August 14th, 2013
  
  Hi Steve,
  I'm sorry, I'm not 100% sure I understand what you are asking. I think you are saying you used a VA loan to purchase your property and would like to know if you refinance now and later pass, would your wife have to sell the home, is that correct? If so, I have to assume that there is some reason you either do not want to add her to title at the time you do the refinance or cannot (perhaps she is not yet 62). If she is 62 and eligible for a reverse mortgage also, even if you purchased the home on your own you could add her when you got the reverse mortgage and then there would be no issues later if you passed, as long as either of the two of you still lived in the home it would be fine. If you could not add her now and she was still not on title, then yes, if you passed at a later date, the loan would become due and payable and if your wife had no way to refinance the loan with a loan in her own name at that time, then she would have to sell the property.
  Reply to Michael
Percy
May 6th, 2013

Hi. I am leaving in an apartment for almost 9 years with the owners living in the first floor, later on they took a reverse mortgage,now both of them passed, who should collect the rent? Since one of the heir contacted me and told me that the value of the loan is too high they cannot afford to repay it back, please help,
Reply to Percy
- Michael Branson
  June 14th, 2013
  
  Hi Percy,
  I really cannot advise you except to tell you from whom you should seek advice. If the heirs are not going to work with the lender to sell or finance the property, then the bank will be forced to either foreclose and take the property or take a deed in lieu of foreclosure from the current owners. Either way, they will have to market the property and sell it to a new owner. At that time, I do not know what your status will be. I don't know what the laws require, what the lender will want to do or what your goals are so I can only tell you the same thing I advise other folks - talk to a competent lawyer in your area. You may have rights as a tenant, you may want to start making payments to the lender as most Deeds of Trust also contain an assignment of rents but I don't know what the best procedure to follow in any case would be. An attorney can advise you of your rights and duties as a tenant and also may help you prepare for any eventuality before it is too late.
  Reply to Michael
Norman
April 2nd, 2013

What happens when Condo fees are due and they come after the heir(That is on the Deed) to pay them???
Reply to Norman
- Michael Branson
  April 12th, 2013
  
  Hi Norman,
  I am not an attorney and I would suggest you contact competent legal advice, but I would assume that it all depends on what the heir intends to do with the property. The heir did not sign anything to the condo association agreeing to make any payments so if the heir chooses not to exercise his/her right to take the property, my guess is that they would also be responsible for any amounts owed to others. If, however, there was no equity and the heir chose to allow the lender to take the property, then I cannot image any heirs being responsible for the debt.
  The reverse mortgage lender can only look to the property to repay the obligation. I cannot advise, nor do I honestly know, what rights other debtors might have with regard to seeking repayment from the borrowers' estate. This is where just a quick inquiry to an attorney licensed in the state where the property is located may save you a lot of grief and money once you know the laws.
  Reply to Michael
Kim
March 22nd, 2013

Mike..thank you I appeciate your response..I will for sure see what the attorney says
Reply to Kim
Kim
March 16th, 2013

Hello Mike,
I am hoping you can help.. upon my mothers passing 1 1/2 years ago..I made the decision to let her reverse mortgage property foreclose..I made it clear to the bank that i was not interested in buying or selling or going to probate court.(she had no will) I was told by doing this I would not have no further ties to property or repayment of loan...much to my suprise the property sold with a substancial surplus..I now have law office(saying they were in charge of the sale of my mothers home) and private investigators trying to locate me and telling me i am intitled to this surplus..The mortgage company still tells me i have no rights...I feel this may be a scam? They seem to be in such a hurry to get me my money and call 5 times a day..The last message they said that if i didnt let them distribute this $ it will go to the state and i will never see it...Seems shady..Do you know if it is possible that I am entitled to this surplus in this situation?
Reply to Kim
- Michael Branson
  March 20th, 2013
  
  Hi Kim,
  I can't comment on the foreclosure process in any given state but there is a possibility that you have money coming to you. The way that the foreclosure sales work that I am familiar with is that the starting bid is what is owed to the lender plus all costs incurred by the lender. If no one bids any higher, the property goes back to the lender and the lender takes title by Sheriff's Deed Upon Sale and there is no money left over for the property owners (or their heirs). However, if others attend the auction and bid on the property as well so that the final purchase price is higher than the amount owed to the lender, any money received over the amount owed to the lender would go to the property owner.
  If your mother's home sold for more than what was owed on it, then there would be more money that would be paid to your mother or to her heirs. If you are afraid that it might be a scam, it might be wise to have a local attorney check into the matter for you. I do not know what the amount of the proceeds from the sale equal and I do not know what the attorney would cost, but it would seem to me that an initial inquiry to see if it is worth your effort certainly shouldn't take more than a half hour so the cost might well be worth it to settle and you may have a tidy sum coming to you.
  Reply to Michael
Sandra McCarthy
January 13th, 2013

What a blessing to find this website and all of the helpful information it contains. I came here after a Google search looking for help with my situation. I did not see anyone else with the same problem (thank goodness they are not in my mess). I have a reverse mortgage and all the funds have been used up (paying off old debts of my husband and parents during illness and death. There was still a debt to the state for the last few months of my father's healthcare in a facility and the state is threatening to force sale of my property to pay the bill. Am I at all protected by the Reverse Mortgage so that I won't be homeless? Does the RM take precedence and perhaps discourage the court from allowing the judgement to the State to take this action?
Reply to Sandra
Paul
January 11th, 2013

This discussion has really been helpful. My father did a reverse mortgage some years ago while his wife was still alive. She has passed and he is 93 and his health is shaky. My sister and her family have been living with him since just before our mother passed. I am the executor of his will and want to not be surprised upon his passing. My sister's credit is not so good. My father has a simple will that basically leaves his estate to the 3 of us ( also have a brother) equally. Here's my question/s. My sister wants to stay in the house so the question is how long do we the heirs have to resolve her desire to stay. Will she bid on the market value or just the amount owed to the leader by the estate? What can be done about trying to be fair about splitting any proceeds equally among us three? And finally, because there is really no other real property in his estate nor is their much money in his bank account, how will the on going bills be paid until all this is resolved?
Reply to Paul
- Michael Branson
  January 11th, 2013
  
  Hi Paul,
  I think I should go at this question backward and start with the end of your question and work may way back to the beginning. I can't really comment on how you guys should allocate the expenses or a "fair split" of the proceeds. Seems to me that if one of you is currently living in the property that individual should be responsible for the expenses on the home while there since those expenses would be incurred on their home no matter where that individual lived, but you all have to agree on that. There are no provisions in the reverse mortgage documents to make that determination.
  When the time comes and your father passes, the loan becomes due and payable at that time. However, each lender is a little different in how they will work with the heirs regarding giving them time to pay off the loan or sell the property. If the loan is the HUD HECM reverse mortgage, the lender also has to contact HUD and obtain their permission before they can begin any actions such as foreclosure. At any rate, while speaking with servicers, they indicated that they work with borrowers typically in 3 month increments up to a year before they will take any further action as long as they are satisfied that the heirs are taking positive steps to retire the debt.
  Heirs can pay off the existing loan by paying the lesser of the mortgage balance owed or 95% of the current value of the home. In other words, if the house is worth $200,000 and due to the values dropping your reverse mortgage balance is $235,000, your sister can take the home for $190,000. HUD allows this because they know if you don't retain the home and they have to sell it themselves, they cannot sell it for more than current market value anyway and there will be costs they incur to sell the property. However, if the balance owed is $100,000 and the value is $200,000, then payment in full of $100,000 is required on the loan.
  My guess is that you would have to determine first the fair market value of the property and the balance owed on the reverse mortgage to determine what the equity, if any, is. I am not an attorney and I do not know how the will outlines the duties of the executor so I don't know if any monies owed from a sale would go to you for distribution to your siblings or if all three of you would be paid equally from the escrow closing. For that question I would advise you to seek competent legal counsel.
  Reply to Michael
  - Amy D.
    February 20th, 2022
    
    I want to buy a house that has a reverse mortgage the lady just passed away. I was approved for an FHA loan. Can I buy the house with that type of loan?
    Reply to Amy
    - Michael Branson
      February 22nd, 2022
      
      Hello Amy,
      
      There is no limitation on the type of loan you may use to purchase the home. You just need to make your offer to the current owner (presumably the borrower's heirs) and hope they accept your offer. If the property goes to foreclosure and you need to purchase from the lender or HUD, it could take a while before it is available.
      Reply to Michael
Donald Harper
December 29th, 2012

Hi Mike Banson, I have read the information that was provided to the website and the questions and responses. I am concerned that there is some contradictory information here and would like you to offer some clarification which will help me better understand what happens to my mothers home and the possible sale to grandchildren. Since the text on this website states in one paragraph that the loan is non-recourse and the balance is not due to the lender by the heirs of the estate for a shortfall on the reverse mortage, (appraised value of the home vs the loan amount), if the house is sold to a third party. However, in the same paragraph and in brackets it states that there are no restrictions on family members and that the home can be sold to family members at 95% of the appraised value. I have also noted that in some of your responses you have mentioned that grandchilden and heirs can purchase the home at 95% of the appraised value. Here is my situation: My mother passed away in August 2012 with a reverse mortage balance of 230k. The original mortgage could go as far as approximately 270k. I have kept in contact with the lender and have rented the home, kept up the property taxes and made improvements on the home and kept up the property. I cannot afford to purchase the home but two of the heirs (grandchildren) are in the process of gaining loans to purchase the property at 95% of the lenders appraisal of 140k. Due to the contradicting verbiage and due to the responses given to others questions above I am not sure if this home can or cannot be sold to my mothers grandchildren. Could you help clarify this for me. Best Regards, Don Harper
Reply to Donald
- Michael Branson
  January 16th, 2013
  
  Hello Donald,
  Great question. I've answered you in a new blog post you can find here.
  Reply to Michael
Wanda Arocho
December 1st, 2012

Hi Mike,

I am so glad I came upon your site. My dad passed away last month. I am his heir.
He took out a reverse mortgage in 2006 and now what is owed is 200k. I looked up my home's value and it is worth. 188K. You said that HUD will allow me to purchase my home at 95% of the current market value. When I contact the lender and send them the death certificate, do I write them and tell them up front I want to purchase my home for what it's worth on today's market? Should I have it appraised, or go by the real estate market? I am going to lender and apply for a loan. I am going to hire an attorney. I am scared I will lose my home. I am a wreck thinking about this, plus I am mourning my father's passing, it was sudden. Thank you for any advice you can give me regarding my situation. Sincerely Wanda
Reply to Wanda
- Michael Branson
  December 4th, 2012
  
  Hi Wanda,
  When you say that you looked up the value, I don't know what resource you used, but the lender and HUD will use a licensed appraiser. There is no sense in you paying for an appraisal now as they will order one themselves and so the additional cost is not needed at this time. The lender and HUD both know that they can only sell the property for current market value and that there will be a minimum of 5% or more in costs to market and sell the home anyway and the longer the home goes unsold, the higher those costs climb. They are only too happy to allow you to keep the home at this time for the 95% of the current value as it actually saves them time and money as well. Contact the lender as soon as possible (especially with a pre-approval letter showing them you have already been approved for the new financing if possible) and let them know of your desire to keep the home.
  As I said, they will verify the value and approve your request based on the payoff computed on their current value. If you believe that the value they assign is wrong, you can always look for an independent opinion later and counter their opinion of value. In the end, they do not want to manage the liquidation of property and so they should be reasonable with their value. As I stated, they know they can't sell a home for more than the current market will allow so there is no incentive for them to lose an opportunity to accept the payoff and move on.
  Reply to Michael
April
October 10th, 2012

So, my aunt is dying, and is the surviving spouse on a reverse mortgage. There's still approximately $3,500. on the line of credit. She will also be out of the house for 12months starting in January when the bank will call the loan payable and due.

Given the current market, I think I could advertise the house for approximately $20,000 -30,000 more than owed to-date. I don't want to pay any extra fees such as closing costs (and I noticed no funds were held in escrow at the beginning of the reverse mortgage), nor do I want to hire a real estate agent to sell the house.

Can I do all of this myself? And, if so, what hidden costs may I be missing in consideration of selling her house at this time instead of waiting until her death, or when the bank calls in the loan?
Reply to April
- Michael Branson
  October 29th, 2012
  
  Hi April,
  I'm sorry, I'm not trying to duck your question but I really can't answer it. You may have no hidden costs, but you may have repairs, low offers, problems in contracts that they just didn't know about or other things come up that you can't see in advance. Some people who sell by owner wind up doing great for themselves and some not so well. I really could not begin to know how it would work out for you. You might check some local blogs to see if people did well with "help you sell" type programs that help with contracts etc. but don't charge anywhere near as much money and see if they were pleased. I for one believe in letting a professional guide me through transactions of which I am not completely familiar so I would be hard-pressed to recommend that you do something on your own blindly. I'm sorry if this is not much help.
  Reply to Michael
Brian Schmelig
September 14th, 2012

Hello Mike,
Great site with great information. My situation is this, Grandma and Grandpa took out a reverse mortgage several years ago, I believe 2006 just before the down turn in real estate values. Grandpa died about a year after, and at the end of this month grandma is moving into an assisted living complex due to health reasons. My wife and I would like to buy the property, although the value is less than the mortgage balance by approximately thirty to fifty thousand dollars. Grandpa literally built the house 63 years ago, so you understand there is sentimental reasons behind our purchase. From what I have read if grandma is out of the house more than 12 months the mortgage balance is due. We would love to buy the house prior to this time but will probably only be able to get loan approval for appraised value. Will the reverse mortgage company require us to pay the full balance because we are family, or will they approve the sale at appraised value so they won't have to worry about foreclosure. Additionally, will grandma be liable for the balance if they do approve it. My father is the power of attorney and he stated they have a year to sell once she has moved and we would only have to pay appraised value, I am concerned he is mistaken and was told the third party purchaser rule.
Reply to Brian
- Michael Branson
  September 20th, 2012
  
  Hi Brian,
  I think you will be very happy with this answer! HUD will allow you to purchase the home at 95% of the current market value. If HUD had to take the property back and sell it, they would incur costs of 5% or more not to mention the time the home sat on the market. My advice to you is to start looking at sales of similar homes in the area and contact a lender to become pre-approved for financing in the amount you would need based on 95% of the sale prices of similar properties. Then you and your family can approach the lender with the offer to purchase and have everything ready when the time comes.
  The reverse mortgage is a non-recourse loan. Your grandparents paid mortgage insurance to guarantee that the only recourse the lender had was the property. The lender cannot seek repayment of any shortfall amount form any of your grandmother's other assets.
  These are some of the great benefits that so many writers for magazines, newspapers and other news sources often ignore. You see the sensational headlines of the borrower who got a reverse mortgage, invested the money in a risky investment and then was penniless when they had no equity in their home and all too often the writers blame everything on the reverse mortgage. I like to point out situations just like yours. Your grandparents took out the loan in 2006 and so they lived in the home for about 6 years and never had to make a monthly payment. The values and therefore equity in the homes during this time frame plummeted for all homeowners. However, your grandparents either had the money that they were able to take out of the property with the reverse mortgage or did not have to pay to their last mortgage lien holder and were able to live in the home he built and they loved. Now, with the values being down so much, all borrowers have lost significant equity - but that has nothing to do with the type of mortgages they have. But since your grandparents took out a reverse mortgage, you have a chance to buy the home for 95% of the current market value and your grandmother and your family will never have to worry about the shortfall of the reverse mortgage. Looks like everyone won as much as possible in a market where housing values dropped so significantly. I wish you folks all the best.
  Reply to Michael
Lorene Butler
August 6th, 2012

Hello Mike, First of all, Thank you for having this blog site I have been so stressed with all this reverse mortgage. My mother passed away in April this year and she had a reverse mortgage that I insisted she get for she could live more comfortably and without worries. I was happy that she could do this and told never to worry about later, I would be okay. Easier said than done and sooner than what I expected she was gone. This has been my home since day 1, I have left and came back but this is what my mother and father have left me. I understand more about the reverse mortgage after reading everyone's questions and your answers and I thank you for relieving the pressure a little. I wanted to ask you that if my mother left a will and everything goes to me, but I didn't work to care for my mother, so my husband is going to try to buy it for me do I still have to probate the will and do you know what that costs if I do? Also, since my husband is going to be a first time buyer, and has a good credit score, and has worked for his company for 18 years, is there going to have to a percentage downpayment and if so is there anyone that could help us with this? His credit score is good but he only has one debit on his report and there telling us that he doesn't have any credit so noone will finance us. Can you guide us in the right direction. Appreciate any information you give us and Thank you very much again.
Sincerely,

Lorene
Reply to Lorene
- Michael Branson
  August 7th, 2012
  
  Hi Lorene,
  I have not done any forward mortgages for quite some time now as we have been concentrating on the reverse mortgage product, but HUD always allowed borrowers to establish "alternative credit". In other words, for borrowers with only one existing line of credit, you could show other items that you regularly paid on time such as insurance premiums, utilities, etc. to also verify timely payment of obligation. The two of you should be able to qualify together and with his job stability, you should be a good candidate for an FHA loan. I would contact an FHA loan specialist in your area.
  With regard to any probate issues, I'm sorry, I do not know the laws for every state (nor even from what state you are writing), and am not allowed to give legal advice even if I thought I did know that answer. You should contact a local attorney and there are probably low cost legal counselors or clinics available that would be able to help with something as straight forward as probation questions if you check into it.
  I wish you the best.
  Mike
  Reply to Michael
Elena
July 28th, 2012

Hi Mike,

Thank you for your prompt reply. I'm relieved to hear confirmation of what I hoped was the case in the event she needs to vacate the house for different living arrangements. When/if that time comes, we will contact the lender to discuss the sale or deed-in-lieu of foreclosure to satisfy the terms of the reverse mortgage.

My parents were very fortunate to have taken out their reverse mortgage when they did.

Thank you again for your time, knowledge and advice.

Warm regards,
Elena
Reply to Elena
Elena
July 26th, 2012

Dear Mike,

First of all, thank you for all the information you have provided on this website. Your answers to others have been very informative. You have probably touched on aspects of my mother's scenario in various answers, but if I could get confirmation for her specific situation, I would be most appreciative.

My mother and father took out a reverse mortgage on their home in 2007 when property values were high. They took out a lump sum, began receiving monthly payments, and also had a large LOC available to be drawn upon.

Last year, my father passed away. At the beginning of this year, my mother took the balance of the LOC that was available to her in a lump sum. Those funds are in a money market account which she uses to pay her living expenses. Other than social security, and an annuity (which she hasn't annuitized), the reverse mortgage funds are all she has for living expenses. The upkeep on the house (taxes, insurance, maintenance, utilities, etc.) is expensive, and she also pays caregivers for help during the day. She is starting to feel like it's all too much and too expensive for her and would like to consider moving into an assisted living facility near one of my sisters (in another state).

Here's the issue and my questions: Because of the depressed real estate market, the value of her house is worth half as much as the amount she has taken for the reverse mortgage. I understand that the RM is a non-recourse loan. Does this mean, if she needs to move to an assisted living facility and does a deed-in-lieu of foreclosure, the bank cannot take any of the other funds in her possession -- even if the funds she currently has in an account came from the line of credit on her reverse mortgage?

We (her children/heirs) are not interested in preserving assets for an inheritance. We are only concerned with her having funds to pay for her care and living expenses.

Thank you for your time and all the information you have provided!
Elena
Reply to Elena
- Michael Branson
  July 27th, 2012
  
  Hi Elena,
  The bank can only look to the property for repayment of the loan. All borrowers who take the funds from their reverse mortgage and then either pass or must permanently leave the home for a care facility in the future are in the same situation if their property value has gone down, regardless of when then took the last draw available to them. HUD will have to pay the claim to the lender and that would not make your mother eligible for another reverse mortgage (or any other federally insured loan program) in the future, but let's be honest, will that make any difference to her now? If she is moving into a care facility, then she is not concerned with purchasing another home in the future and so she will not be looking to purchase another property.
  The terms of the loan were agreed upon at the time your mother and father first took out the loan. This is exactly why borrowers pay for the up-front mortgage insurance and why there is an annual renewal. We often have borrowers who do not believe the charges are warranted, but when you see a situation like this, where the value has dropped so significantly, the borrowers were able to live in the home without having to pay any mortgage payments and now regardless of any funds left over they cannot be made to pay more than the property is worth, the mortgage insurance costs were a very wise investment.
  Reply to Michael
Josh
May 8th, 2012

Hey Mike, first off, appreciate all the help you have been giving!

My question is this..
My grandmother passed away and had a reverse mortgage, and at the time of borrowing got a 275k loan, but got paid monthly. She had borrowed 210k so far of the loan, and the house now is only worth about 175k. Am I entitled to the last 55k that she was originally approved for? (I am the sole heir and estate) If we sell the house, we will only be able to get 170k, which is less than what she has already borrowed. I thought that the money was gone, but the reason I am asking is because we got a notice in the mail saying that the "Net Credit Line Set Aside + Net Principal Limit = 50k Total Funds Available". That was addressed to the "Estate of" and got me wondering. Thanks again!
Reply to Josh
- Michael Branson
  May 8th, 2012
  
  Hi Josh,
  Once the lender is aware of the passing of the borrower, no further disbursements are made. They will send the statement out addressed now to you, but it is probably a pre-printed form and thus it would still show the funds "available" as they would be available to the borrower even though your name is now inserted. Keep in mind that if you wish to keep the home, you can pay off the existing loan for 95% ($166,250) of the current value and not the $210,000 that you say she borrowed. If you choose not to keep the home, it is entirely up to you whether you want to sell the home at this time or let the lender worry about it. If the house will only sell for less than what is owed on it and you do not want to keep it, you may not want the work and responsibility and that would be your call.
  Reply to Michael
Stan Wisneski
April 26th, 2012

What document in the reverse mortgage paperwork specifically indicates that the mortgage is non-recourse and that the heirs are not responsible or liable for a deficiency balance when the property is sold?

Thank you,
Stan Wisneski
Reply to Stan
- Michael Branson
  April 30th, 2012
  
  Item 10 in the Deed of Trust and 4 (c) of the Note are the agreement between the borrower and the lender and both clearly state that there can be no deficiency judgment, that the loan is non-recourse and the property is the only recourse for the payment of the obligation.
  There is no verbiage in the Note or Deed that binds or fails to bind an heir. Borrowers could not legally bind any heirs and the borrower's promise to pay is clearly detailed in the Note and Deed.
  Reply to Michael
Lisa
April 8th, 2012

I am now 53 years old my mom is 82, and has a reverse mortgage,If she lives 10 more years and I arrive to the age of 62 will I her heir be allowed to pull another reverse mortgage over the same property?? the property now is worth less than the amount owed
Reply to Lisa
Lori
April 4th, 2012

My Aunt got a reverse mortgage maybe about 10 years ago and used up all her money then had to file bankruptsy. She has passed away 1 year ago and my sister who took care of her her last 2 months and (also my aunt gave her a place to live) still lives in the house!!!!! I am not sure how this works and need advise. I do not have contact with my sister and I do know my mom is the heir on the house and is afraid of my sister, what if the bank finds out she has been living there all this time? I do not know if she is paying taxes or insurance etc?? Thank you for your help!
Reply to Lori
la marina
March 31st, 2012

Very well written article. I agree with you and I had sold off 75% of my equity unit trusts for the past 2 weeks.
Reply to la
rose
March 20th, 2012

I would like to pay off my reverse mortgage, I have been told by the loan company that is not possible. I finally found it was within the loan documents. I also saw a law governing sale of reverse mortgage property that stated reverse mortgaged property can be sold for 5% less than appraised value. I cannot find that law number now. Can you help with that.
Reply to rose
Linda Cheramie
March 14th, 2012

My mom passed away on March 18th of 2011
She had a reverse mortgage
The house is valued at approx $ 239 with a bal of the reverse mortgage of $ 109,000
we have the house on the market and we have been communicating with the rms co that handles the mortgage.
My wife called today for another extention for selling the house and they told her that March 18 is the last day before foreclosure.
Is this correct since we are trying to see the house and no one from this company ever sent us or notified us that this was the last day before foreclosure starts
What are our rights?They never sent us one piece of mail or one phone call adising us of this pending date??????
Reply to Linda
Shelley Cobb
March 7th, 2012

I found this website and all the questions to be very helpful. If you pay attention to all of the questions and answers, you should be set.
Reply to Shelley
tom
March 5th, 2012

what are the pros & cons to an heir(s) just letting the bank foreclose on the property, rather than try a short sale upon the death of the borrower? the property is about $30K upside down, & the heirs don't want anything to do with it. also, is it the heir's responsiblity to continue paying the taxes, insurance, HOA dues, etc. until the bank forecloses? thanks in advance for your response & help.
Reply to tom
- Michael Branson
  April 20th, 2012
  
  Hi Tom,
  In all honesty, there are very few "Pro's" to the heirs stepping in and doing the short sale on their own. Once the borrower passes, there is no worry about the borrower's credit rating anymore and therefore, having the bank foreclose or take a Deed in Lieu of Foreclosure has no effect on anyone. The only real pro's are if the home is being used for housing for a family member during the time and the additional 9 - 12 months helps the heirs in some way.
  With regard to the "responsibility" for other debts, that gets a bit more tricky. If the property is ever deeded to the heirs, then it becomes their property and their responsibility. However, if the property stays in the name of the deceased relative and never passes to the heir, then it remains their debt. I am not an attorney and this is something that you should speak to an attorney about. The reverse mortgage is a non-recourse loan. In other words, the lender can never go back after anything other than the property to seek repayment - they cannot attach any other assets to repay the debt. I don't know if any of the other obligations have the same restrictions and therefore, I cannot comment on whether or not any of those creditors can seek repayment from the estate of the deceased.
  Reply to Michael
Linda
March 3rd, 2012

I have a friend that has a reverse mortgage so if his house with a reverse mortgage goes up for sale can a person over 62 buy it and keep the same reverse mortgage company?
Reply to Linda
- Michael Branson
  March 5th, 2012
  
  Hi Linda,
  Reverse Mortgages are not assumable. The property can be bought by a new purchaser over 62 on a new reverse mortgage loan, but they would not be able to just assume the existing loan.
  Reply to Michael
- Michael Branson
  April 20th, 2012
  
  Hi Linda,
  I'm not sure I understand 100% what you are asking but I think you are asking if his reverse mortgage can be assumed and the answer to that is no, it cannot. The new owner would have to apply for and get a new loan of their own. They can go through the same company if they wish, but they would not be limited to just that company.
  Reply to Michael
Lil
February 21st, 2012

My mother has a reversed mortgage and passed away a few months ago. My brother lived with her and in her will she stated he had a life time home there. He is disabled and draws disability. Can he refinance the home with Hud based on his income to pay off the reverse mortgage amount based on what he gets a month from disability?
Reply to Lil
- Michael Branson
  March 5th, 2012
  
  Hi Lil,
  I honestly cannot answer this question with the information provided. If your brother is over 62, he is eligible for a reverse mortgage himself. If he is not yet 62, then he would need to check into what programs are available to him through HUD or other programs to determine what may or may not work for his circumstances. There are many counseling programs that may be able to help your brother and would be knowledgeable about programs offered in his area.
  Reply to Michael
- Michael Branson
  April 20th, 2012
  
  Hi Lil,
  I honestly can't say whether or not his income and circumstances will qualify him for any set loan amount, but the general answer is Yes, he absolutely can refinance the loan in his own name as her heir and pay off the loan and continue to live there. Also, if the balance is higher than the property is worth, he can get the home for 95% of the current market value. As far as qualification, he needs to contact a lender who does regular forward loans (and I am sorry, I don't know who to recommend for any special disability programs but HUD may be able to help him there).
  Reply to Michael
Richard
February 2nd, 2012

Thx for prompt reply. Can the deed in lieu of foreclosure process be initiated prior to her leaving the home? I did speak with the lender today, but they could only provide general info since I don't have her power of attorney yet. They indicated we should request a non-occupancy ltr, fill it out and return it, when she leaves.
Reply to Richard
- Michael Branson
  April 20th, 2012
  
  You can execute a Deed In lieu at any time, the question really is: Why would you until she is fully moved and the property is vacant? Once you execute the Deed, they own the property and all your options are gone. I think they have given you a good path and things can move quickly once she has vacated and everything is fully moved out of the home.
  Reply to Michael
Richard
February 2nd, 2012

Very informative site - thx! My mother took a reverse mortgage on her home approx 10yrs ago, 50k lump sum that has been accruing interest, nearly double now. She had planned to stay in the home until death, but family conditions have necessitated moving her closer to me (from AZ to CA). As best as we can determine, the current reverse mortgage balance is possibly more, approx 5K, than the value of the home based on preliminary research. Mom contacted the lender and they stated she should contact them when she leaves and "they will take it from there". Can you elaborate on the process, that is, is she required to sell the home or can she do a deed in lieu of foreclosure or? I understand a reverse loan is non-recourse...does that mean she is not responsible for the difference between what the home sells for and balance (if higher) of the reverse mortgage. If that's the case, would it be simplest to pursue the deed in lieu approach?
Reply to Richard
- Michael Branson
  February 2nd, 2012
  
  Hi Richard,
  Do contact the lender and I'm sure they will go over all of this with you. The mortgage itself is a non-recourse loan and once she leaves the home, they will call the Note due and payable. If she owes more than the property is worth and cannot sell the home to pay the balance, then the only recourse the lender has is to foreclose and sell the property at foreclosure sale. It is in their best interest to work with you on a deed in lieu of foreclosure at this time to avoid the lengthy foreclosure process only to get the property later and incur additional costs.
  Servicers have had to deal with this situation time and again now that values have dropped so drastically and the call will not be a surprise to them. I think you will be happy with how helpful and informative most of them can be.
  Reply to Michael
Theresa
February 2nd, 2012

Where does on go for help on a reverse mortgage when the person passed away who took out the reverse. You have bad credit but want to purchase the home. The home is owed more now than what it is worth.
Reply to Theresa
- Michael Branson
  April 20th, 2012
  
  Hi Theresa,
  The heirs of the borrower have the option to keep the home, to sell the home or to let the lender have the property back and then they will sell it. Regardless if the heirs or the lender want to sell the home, they would get an appraisal or current market analysis of the value and list for current market prices...not the balance of what was owed on the reverse mortgage. The heirs may not want to sell though, so you may have to wait and see if a for sale sign goes up on the property.
  Reply to Michael
Nadine Martinez
January 31st, 2012

I wanted to know if my mom took out a reverse morgage on her home and passed away what would happen to my brother who has been promised the home and lives there.He doesn't have much income and bad credit. No one has told him this and I'm afraid he will be blindsided when she passes away with no where to go.
Reply to Nadine
- Michael Branson
  January 31st, 2012
  
  Nadine,
  Death of the last surviving borrower is a maturity event on the reverse mortgage and the loan then becomes due and payable as a balloon payment. If your mother took a reverse mortgage (or any type of mortgage for that matter) your brother would be in the same position. He should start to rebuild his credit now if he intends on refinancing the reverse mortgage into a conventional loan, otherwise he would have to sell the home assuming he has legal capacity to do so through will, trust probate etc. You generally get a grace period of up to 6 months to refinance or 12 months to sell (with extensions, depending on the reverse mortgage servicer and your communication with them).
  Reply to Michael
Karen9896
January 21st, 2012

What happens when you have bad credit and an unsteady work history and you live in a house that has a reverse mortgage on it and the person is dying that took out the loan. We have lived in the house with him, caring for him with many health issues for years. We have lived with him and his deceased spouse for 28 years and I am listed on the deed with him as well since I am his son. Now that his end is near what happens now. We want to keep the house, he has it in his will that he wants the house to go to myself and my wife and the reverse mortgage is for $120,000.00 but the house is still valued at around $280,000.00 according to the mortgage company which means the available balance is greater than the balance owed. Can I as part owner get an equity loan on the remaining available balance of the house to pay off the reverse mortgage so we don't lose the house??? Time is very short and we need answers now...Please offer advise, it is appreciated greatly...thanks
Reply to Karen9896
- Michael Branson
  January 23rd, 2012
  
  Hi Karen,
  If you are over 62 and on the original reverse mortgage as you should have been if you are currently on title, then nothing would have to be done. However, if you were added to title later and the lender simply did not notice the title change (since that would have triggered them to call the Note due and payable when the title changed), then you still have options as the property owner when you do become the full owner.
  Firstly, if you are over 62, you can see about getting a reverse mortgage in your own name. If the balance on the existing loan is just $120,000 and the value of the property is $280,000, you may be able to qualify for a reverse mortgage in your own name. If you are not 62 or over, then a reverse mortgage is not an option for you at this time.
  If your age will not allow you to apply for a reverse mortgage and you do not believe that your income and credit history will qualify you for a conventional loan even at a 45% loan to value, then you still have the same options as every other individual who inherits a property but cannot keep it for one reason or another. You have all the rights to the equity and can sell the home, use the proceeds to purchase another property or for any purpose you decide but the equity is yours and the lender should have no problem working with you as long as you communicate with them and take positive steps to market the property for a reasonable sales price.
  In this regard, the reverse mortgage is no different than any other loan. The equity is still yours but the loan becomes due and payable when the borrower passes. If you can obtain other financing (whether that be another reverse mortgage or a traditional loan), then you can do so and continue living in the home or you may have to look at other alternatives but the equity is still yours and the decisions are ultimately yours to make.
  Reply to Michael
  - Sandra
    October 9th, 2020
    
    Hi ARLO,
    My Mom went to heaven April 2020, she had a reverse mortgage and willed the house to me. I want this house and I can purchase the home, had all kinds of misinformation along the way since this Oct. I finally received an email from the reverse mortgage bank they came in Aug 14th for the appraisal just now getting that offer from them (she only borrowed $88,000 and the interest ballooned to $257,000). They sent appraisal offer of $160,000. They said appraisal is only good for 120 days and Oct is 6 months... Should I ask them for payoff amount of $130,000 because it needs a roof or is that over stepping and can I get an extension, and will that keep the appraisal still good?
    Reply to Sandra
    - Michael Branson
      October 10th, 2020
      
      Hello Sandra,
      The appraisal already takes property condition into account when determining the value. And I would advise you to take a good look at the terms of the loan when she closed it.
      I don't see how mom could have gone from $88,000 to $257,000 with interest accrual alone so I am willing to bet that if she only received $88,000 in cash, the lender probably also paid off an existing loan at the time (or mom received additional draws later).
      If they did pay off a loan at the time they closed, even though that was not cash in her pocket, it is still counts as money she borrowed because they paid off the other loan and she no longer had to make payments on it.
      Now, back to your other issues. If the appraisal came in at $160,000, as her heir, you have the right to repay the obligation at the amount owed or 95% of the current value, whichever is less. Obviously 95% of $160,000
      ($152,000) is less than $257,000. You should have the option of paying off the loan at that amount.
      HUD will not authorize the lender to go below that number though and if you try to haggle with them to get them to reduce the number further, I doubt seriously that you would be successful unless you have evidence that other homes of similar size and in similar condition are selling for less.
      In that case, you can challenge the appraisal with facts and state that you think the appraisal is over-stated based on the sales you have discovered and wish to use the value indicated by current sales.
      If you have no current sales to indicate a lower value may be more appropriate, I am afraid you probably would not be successful and would need to decide if you want to keep the property at the payoff they have given you. Given that you are already past their deadline, you need to act quickly if this is what you intend to do.
      As for the extension, if you are ready to move and only need a small amount of time, I think your chances are pretty good. If you tell them that only now you are going to try to go find a lender and will need 60 days or more in this market, they may require a new appraisal, or may begin foreclosure to protect their interest in case you are never able to close a loan.
      If that happens, there would be additional costs and charges to repay the loan.
      You should talk to them about that immediately if that is the direction in which you want to proceed.
      Reply to Michael
tonya
December 22nd, 2011

What if my father and step mother had a reverse mortgage and step mother passed away February 2011 and father passed away November 2011 who would be the heirs. Would it be both me or my stepsisters or both.
Reply to tonya

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