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Dear All Reverse, My husband qualifies but I am under 62 and unable to go on the reverse mortgage with him. (Age 55) I’m told that in order for my husband to be eligible for a reverse mortgage my name would have to be removed from the deed because I am not 62. As a spouse this concerns me. I would like to keep my name on this important legal document. My husband expects to close on his reverse mortgage soon. Should I demand to keep my name on the Deed? Thank you for your time and attention to this matter. – Phyllis
We get this question quite a bit and let me start by telling you that I am not an attorney and I cannot give you legal advice regarding protecting your “title” to the property. Different states have different laws with regard to ownership, what you can do with trusts, and Deeds, signing and not recording, etc. Some states/counties also trigger taxation issues when one spouse is removed from title that often is not discovered until after the change raising taxes on the property that no one expected. I would encourage you to seek legal counsel to protect your ownership rights should something happen to your spouse prior to ever removing yourself from the title of the joint home.
Now, having said that, you have the second issue regarding the loan itself. The reverse mortgage loan becomes due and payable when the last borrower on the loan permanently leaves the residence (moves, passes away, etc). If something were to happen to your husband in the next few years, and we all hope things like this never happen but accidents and illnesses never happen when we want them, and your husband were to pass away, the reverse mortgage would become due and payable at that time. If you and your husband have a set plan in place in this instance that would protect you such as an insurance policy that would pay off the reverse mortgage, a second home that you could move into if you had to sell this home, etc., then it might not be financially devastating as well as emotionally devastating at the time. However, if you had no viable alternate plan and you could not qualify for a loan by yourself to pay off the reverse mortgage at that time, you would be forced to sell the home and move at that time. Who can say what the market for selling would be like, how much you would be able to get and what you would be able to buy.
We have received too many letters from spouses under 62 who did remove themselves from title to complete the reverse mortgage, had no back-up plan and then when something happened to the spouse on the loan, they had the issue of trying to figure out where they would live in addition to trying to live with the grief of losing a spouse then they ask us if we can help them because they say they were never advised otherwise by their lender at that time. This is why we do not recommend this action unless borrowers have absolutely no choice and would lose the home to foreclosure anyway or have a viable plan in the instance the souse on the loan should pass away prior to the younger spouse (which theoretically will happen most of the time even without an accident).
I think you can probably set something up with the attorney to protect yourself regarding the ownership issue. Whether or not your name appears on the Deed, depending on the laws of your state, I believe they can devise a plan to protect your ownership rights but only the attorney can tell you for sure. However, don’t forget that the reverse mortgage becomes due and payable if something happens to your husband and you would be required to pay the loan in full at that time or to sell the home to pay off the loan. If you are not prepared for that eventuality, it would be a very bad time to find out that in addition to recently losing your spouse, now you have to move.
“Reverse Mortgage Spouse Under 62” by www.reverse.mortgage
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