Who’s Responsible for Property Taxes on a Reverse Mortgage

August 27, 2022

Who pays property taxes and insurance on a reverse mortgage?

The normal way is for the reverse mortgage homeowner to pay their own taxes and insurance EXCEPT if you do not meet the program’s residual income or credit requirements.

And then, instead of an automatic declination, if your income or credit does not meet the requirements like a typical loan, there is a second opportunity with a Life Expectancy Set Aside (LESA) wherein the funds are set aside to pay the taxes and insurance from the loan proceeds, and you can still get the loan.

Now, before you think that a LESA is a terrible thing, let me explain it a bit further. Then, you might see why several borrowers actually request it after they get all the facts. The funds that are set aside do limit the amount of money available to you by that much to use for other purposes, that is true.

So, if you planned on using every bit of your reverse mortgage for other purposes and you need the LESA to qualify, then the loan may not be for you with that requirement. But if you were going to use the funds for living expenses anyway, this enables you to truly eliminate all household expenses (except for your utilities and maintenance).

Because the lender would take over the payment of your taxes and property insurance, you no longer have a mortgage payment, property tax payment, or insurance payments to pay. The funds are not considered borrowed until the lender uses them to pay your payments. So only those funds used to pay that installment of taxes or insurance are added to the balance, and the other LESA funds remaining are not funds you have borrowed yet, and you do not accrue interest on funds you have not borrowed.

There is no fee to have your taxes and insurance paid for you, and they are paid on time for as long as you own your home (at some point in time, servicing fees may reappear on loans with LESA’s, but that is not the case at this time). The bottom line is that you don’t have to have a LESA if you meet the income and credit criteria of the program, but if not, take a good look at the program with it, and you might find out that it still meets your desired goals (and you might actually like it).

Property Tax FAQs

Do you have to pay property taxes on a reverse mortgage?

Borrowers always own their homes and are responsible for timely payment of taxes and insurance. Failure to pay the taxes and insurance in a timely manner is a default under the terms of the loan and can lead to foreclosure.

Can I claim a property tax deduction if I have a reverse mortgage?

A reverse mortgage does not affect the taxes you claim for property taxes paid. You will still be paying property taxes and treated the same as before you obtained your reverse mortgage.

Is there a reverse mortgage option that pays the property taxes and insurance?

You can voluntarily set up an account to pay your taxes and insurance for life using loan proceeds to pay the expenses. You do not accrue interest on this portion of your loan until the lender actually sends the money in to pay for the expense, and if you sell or refinance the loan before these funds are used, the unused portion of the account funds was never borrowed, and so they are not included in the amount needed to repay your loan. You must remember that once you set funds aside, you cannot change your mind later.

Can you get a reverse mortgage if you owe back property taxes?

All taxes must be brought current at the time of the loan, and if you have been late on property taxes, mortgage payments, or any other property charges in the past 24 months (i.e., HOA dues), the lender will require a Life Expectancy Set Aside per HUD guidelines to pay these expenses from your loan proceeds.

Can you do a reverse mortgage and then go into property tax deferral?

HUD requires that all property charges be paid when due. They do not allow deferral programs. If you qualify for an exemption, that is perfectly fine, but if it is a situation where amounts owed build up from non-payment, that violates the reverse mortgage agreement.

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44 Comments on this Article

Jim
June 25th, 2024

I missed some property tax payments & I'm wondering how many payments you miss before they foreclose? Also, I've been living in the same house for 55 years. Do I have squatter rights in Illinois?
Reply to Jim
- Michael Branson
  June 25th, 2024
  
  Hello Jim,
  I am very hesitant to answer for a couple of reasons. First and foremost, I think this boils down to a legal issue if I understand your question correctly, and if that is correct, I cannot give you legal advice. I'm not sure if you have a loan currently and you're asking me how long before your current lender will foreclose due to your missing tax payments, or if you're concerned about some other repercussions of missing tax payments because you also ask about squatters' rights and you obviously are not a squatter if you have a loan on a property and were paying the property taxes. You used the term "foreclose," which is a lending term; the tax assessor does not "foreclose" when you fail to pay taxes, but a lender will to protect their security interest in a property. So, I'm going to make some assumptions to answer what I can, and forgive me if I'm interpreting your question incorrectly.
  A lender would typically do one of two things if your taxes were unpaid, depending on the terms in your loan documents and the circumstances. They can advance funds if you have sufficient equity and add the amount advanced to your loan balance. The taxes are the senior lien, and the lender will not wait until the property goes to tax sale by the assessor's office, as that would endanger their lien.
  The second option the lender has is to foreclose on their loan as a result of the tax default. The lender can file a notice of default, which would require you to cure the default (pay the taxes), or they would sell the home at a foreclosure sale if you did not cure the default or pay the loan off. They would not wait until the home was lost to a tax sale due to the unpaid taxes, at which time both you and the lender would lose. With regard to how many payments they would be willing to wait before declaring the default and moving forward with the notice of default and foreclosure process, it really depends on your lender, your legal documents, how much (if any) money they are willing to advance, and their assessment of the risk.
  Finally, I can only guess that your question about squatters' rights pertains to a situation of what would happen if the lender or some other entity foreclosed due to the non-payment of the taxes and you refused to leave the property? To that, I must answer that I cannot give you legal advice and would recommend that you contact an attorney as soon as you are able. If you feel you don't have the resources, there are many free legal aid offices online. If you do a Google search, try the terms "free legal aid in my area" and "free senior legal aid."
  I don't know if you have considered selling and using your equity, but I would suggest you also contact a senior real estate specialist in your area to see what options you may have with a sale. If you've been there for 55 years, it's possible that you could have significant equity in the home that you can use, and it's always best to know all of your options.
  Reply to Michael
Brenda C.
May 5th, 2024

My friend passed away in Jan 2023 and I was the executor of her will, she had a reverse mortgage thru Compu-Link out of Tulsa OK. I let them know about this and explained to them that they could take possession of the property and that I would not be cleaning the house nor removing anything as it was filthy and unsanitary. They sent me a deed in lieu to sign off but it had misinformation in it that I was not going to sign as I had told them over and over again that the house was unsanitary etc. I discovered that my friend had not paid property taxes from 2 years ago forward which there is no money to pay it now. I rec'd the current property tax bill showing that it is going to a tax sale on June of this year. I notified the State of Md and Compu-Link about this and am awaiting a reply. Does a Tax Sale trump the reverse mortgage lender. People are telling me I could pay the delinquent taxes and I would own the house and property. But I don't agree and don't want to be put in a position to pay off the reverse mortgage since I didn't have my name on anything concerning it. By the way it appears it was originally for $141,000.00 and due to my friend not making any payments it is now over $315,000.00 owed and the house isn't even worth $140K. What a mess...
Reply to Brenda
- Michael Branson
  May 7th, 2024
  
  Hello Brenda,
  The lender cannot accept a Deed in Lieu of Foreclosure unless the property is vacant, free of all liens and encumbrances, is empty of all personal property, and is at least "broom clean." A property filled with personal property, tax liens, or other liens would not meet those requirements. Your options are to pay off the loan at 95% of the current appraised value of the property if the balance of the loan exceeds the current value of the property or just walk away and let the lender foreclose.
  If you do not plan to pay off the loan and keep the property, you should just let them foreclose and walk away without worrying about it. The loan is non-recourse, and the lender cannot look to you or the estate to pay any amounts owed on the loan. The lender would need to advance funds to pay the delinquent taxes and then include that total amount in the foreclosure as the total owed, then in their claim to HUD if the home does not sell for enough to cover the amount owed, including costs and any funds advanced.
  It must go this way because the lender is covered under foreclosure laws if they must remove personal property or if there are other liens behind the mortgage but can assume other liabilities if they accept a Deed in Lieu of Foreclosure on a property with personal property inside or with other liens on that property that are not removed through the foreclosure process. It may seem crazy, but the lender has no choice.
  Reply to Michael
Donna C.
July 1st, 2023

Hi Arlo,

My husband got a reverse mortgage in 2013. I was not old enough to qualify; I was 45. He was 67. He passed away 3 years ago. They said I could stay home since I provided all the required documentation. I have kept the home up; I have insurance. I have yet to receive anything about taxes in the 3 years. Then I got a letter from Compu link Corp. Saying they are a debt collector for HUD from Tulsa, Oklahoma, and that they paid $1,300 in taxes. They want me to pay all of it back in 30 days. I never received anything from anyone. I called the tax collector's office they said the government paid it 2 months ago. And I discovered my name has been missing from the deed since 2013, when the reverse mortgage started. What should I do? Is it true that Compu link pays it? I need help. I am running out of time on the deadline. Thank you!
Reply to Donna
Jan
September 18th, 2022

Hello Arlo,

My 56 year old brother is living with my father who has a HECM reverse mortgage but passed away 6/2021. My brother intended to buy the home and I did send them a letter telling them that, and that we needed an extension after we received the first notice saying we had 90 days to act. But I was not acting in an official capacity. And we didn't get any correspondence granting the extension and have received no correspondence from them since. I didn't pay this year's taxes as he wasn't going to buy it after all and I assumed they'd foreclose, the balance on the mortgage is close to what the house would sell as is, so it wasn't worth the headache, but I see that taxes are paid - would HUD do that before foreclosure?
Reply to Jan
- Michael Branson
  September 18th, 2022
  
  Hello Jan,
  
  There is a clause in the loan documents that allows the lender or HUD to advance funds on behalf of borrowers to keep certain things current (taxes, insurance, etc.). I cannot tell you if this is what happened in the case of this property but yes, they can advance the funds to pay the taxes and then add the amount advanced to the balance owing.
  Reply to Michael
ROBERT S.
September 14th, 2022

CAN WE PAY OUR OWE INSURANCE AND TAXES?
Reply to ROBERT
- Michael Branson
  September 14th, 2022
  
  Hello Robert,
  Unless you have a LESA or set aside account for taxes and insurance payments, borrowers must pay their own taxes and insurance and must pay them in a timely manner.
  Reply to Michael
Robert B.
August 28th, 2022

Hello ARLO and thank you for this insight. My Mom passed in June with a reverse mortgage, through NOVAD, owing more than the house is worth. It will have to go to foreclosure. We just got a $2,000 tax bill due at the end of August. The so-called estate has nothing, she passed broke. As the executor do I have to pay the tax bill? In a letter I received states the house must be clear of all debts. I don't think I should be forced to pay a tax bill on a home I don't own. Please help, thanks!
Reply to Robert
- Michael Branson
  August 28th, 2022
  
  Hello Rob,
  
  I cannot give you legal advice, but I can tell you a little bit about the Reverse Mortgage requirements. The lender or HUD (in this case, HUD has taken over as the lender and NOVAD is their servicer) requires that the property be free of all debt and liens in order to accept a Deed in Lieu of foreclosure. Your mom signed legal documents in which she agreed to make all payments of any property charges in a timely manner, but you never signed such an agreement, right?
  If your mom does not make the payment of taxes as agreed (which obviously she cannot) it is a default under the terms of the loan and the only remedy the lender has is foreclosure. The lender cannot look to you to pay a debt for which you never agreed to pay.
  
  Rob, what you ultimately do or do not is entirely up to you but there is nothing that can be done to force you to pay money for an obligation you never contractually agreed to pay. And if you choose not to pay those taxes, there is no negative ramification to your credit as the lender cannot report negatively to your credit that you did not pay for something you never obligated yourself to pay in the first place.
  The lender can secure the property in a default situation though so I would make sure that everything you wish to remove from the home in the way of your mom's personal property is out before you notify NOVAD that you have abandoned the property and do not wish to be responsible for the home.
  
  I would caution you to contact an attorney to discuss any possible legal issues regarding liability in the event of insurance claims etc. because if the lender must place insurance coverage on the home it would be a force-placed policy and would not cover anything but the dwelling until the lender became the legal owner and I do not know how that would affect the estate or any heirs (especially if the title has already passed).
  I have no way to know how things stand and I am not an attorney so I would suggest you speak to an estate attorney but about the house and the loan, if it was me and I didn't want the home, I would just tell NOVAD that I was not going to take the property and they should get on with their foreclosure.
  Reply to Michael
Bill
July 14th, 2022

Hello Arlo,

Can I deduct HOA payments from 1040 on a reverse mortgage? They pay water, insurance and maintenance.
Reply to Bill
- Michael Branson
  July 19th, 2022
  
  Hello Bill,
  
  I am not licensed to give legal or accounting advice and therefore I cannot by licensing law answer this question. And in all honesty, since I am not a tax professional, I would not want to give you bad information because I am not current on all tax laws. You really need to speak with your accountant or tax professional to determine how current and proposed tax laws affect your circumstances.
  You still own your home and you still pay your taxes, insurance and your home owner's association dues so I would not think that the fact that you do or do not have a reverse mortgage would not even come into the equation.
  If they were or were not deductible before the reverse mortgage, it would stand to reason that would not change but you really need to discuss with your tax professional as tax laws are constantly changing and I know I have been reading recently that there are changes being considered at this time (but I can't tell you what they are or how they may affect you so the same answer applies - you need to talk to your tax professional).
  Reply to Michael
Mabelle L.
March 21st, 2022

Hi Arlo,

I occupy my own home. It is a large home and I rent out 3 bedrooms. The fire insurance company requires the homeowner's insurance to be switched to a rental insurance if you have more than 2 tenants. My reverse mortgage company wants me to switch back to a homeowner's policy. I do not want to lose my rental income.

Can the reverse mortgage lender refuse to issue the reverse mortgage on that basis? I otherwise have met all other requirements.
Reply to Mabelle
- Michael Branson
  March 21st, 2022
  
  Hello Mabelle,
  
  Yes, they can. The loan is intended for primary residences of residential property.
  It is not intended for rental homes. Have you tried talking to other insurance companies?
  Reply to Michael
Allen S.
February 9th, 2022

Is it lawful for a reverse mortgage holder to charge $5,000.00 for lapsing on home insurance of a reverse mortgage property?
Reply to Allen
- Michael Branson
  February 9th, 2022
  
  Hello Allen,
  
  It would not be the lender who is charging the very high cost for the insurance. That is known as "force-placed coverage" and all lenders, both forward and reverse, must use it when borrowers do not maintain adequate insurance on the property in accordance with the terms of the loan.
  Force placed coverage is extremely expensive and it is never a good deal for the borrower because aside from costing much more than regular insurance, it only covers the dwelling, none of the contents. In other words, you pay a lot more for a policy that only covers the house itself and if a fire were to occur, none of your belongings would be covered - just the building.
  
  The lender has certain requirements it must meet before it can order the coverage and make you pay for it even though you agreed to this provision in your loan documents. The Consumer Financial Protection Bureau (CFPB) outlines the laws that govern lenders on their website.
  The best advice I can give anyone is to be sure you do not let your insurance lapse and if you ever receive a notice from the lender that the coverage has expired or is insufficient for some reason, take it seriously and contact your insurance agent immediately so that you do not incur a cost like this but if it has happened to you, check the requirements on the CFPB website to be sure that the lender acted in accordingly.
  Reply to Michael
Ses S.
January 2nd, 2022

My father died in April 2021. And it took me until September to speak to someone at NOVAD. After following their instructions to let them know when the property was vacant and to submit the tax bill, and homeowners' insurance bill via email they notified me that they would present them to be reviewed for payment and begin the Deed In Lieu process. Less than two weeks later the locks were changed and No Trespassing signs went up. I assumed that meant NOVAD had taken over the property. During this entire process I have received very little guidance. I just followed instructions as dictated.

When I received the Deed in Lieu contract was when I realized that I received misinformation and that they did not pay either bill nor had them transferred to NOVAD. They said that was the responsibility of the Estate. At no time did they mention this during the one time I got them on the phone, nor did they mention this in the email replies. Everything was current and paid up to date out of my personal funds when I spoke to NOVAD in September. I quit paying once I thought they took over since the Register of Wills said the bills were not my personal responsibility and what I paid up to that date was not reimbursable from Estate funds.

My question is since NOVAD is going to foreclose on the home and if there is not enough funds in the Estate account to fully pay the delinquent tax bill do I need to pay it? Taxes are #3 on the list after funeral expenses and probate fees. I need to know the answer to this question so I can recontact the creditors that I spoke with earlier to let them know they may not be receiving a payment. Haven't been able to find a lawyer or anyone who can direct me to the right person to answer this question
Reply to Ses
- Michael Branson
  February 8th, 2022
  
  Hello Ses,
  
  Maybe the question you should be asking is what happens if you do not pay them? I cannot advise you on what to pay or not to pay, but I can tell you that the reverse mortgage is a non-recourse loan.
  That means that the lender cannot seek repayment from you for any debt the borrowers had and in fact, cannot look to any other assets of the estate to repay the obligation. When a lender sees that insurance is not paid or that the taxes are unpaid, they typically advance funds to cover these expenses.
  After all, they do not want the home to burn down or the taxes to file lien due to non-payment. They include any funds they advance in their foreclosure amounts owed.
  My suggestion would be that you contact your estate attorney to determine how this would affect your situation if this amount was added to your foreclosure, whether Deed in Lieu or Foreclosure Trustee's Deed Upon Sale and your taxes to determine what course of action makes the most sense for your circumstances.
  Reply to Michael
Connie F.
September 22nd, 2021

If I have fallen behind on property taxes, what happens? I understand that staying current was part of the reverse mortgage, and there is no way I can catch up in the 2 weeks the mortgage company has just notified me that I have. So how much time do I have before I'm forced out?
Reply to Connie
- Michael Branson
  September 22nd, 2021
  
  Hello Connie,
  
  The lender must declare a default under the terms of the loan before they can do anything and then they send you notification of that default. If they have not done this and you know you are unable to pay the taxes, I would strongly recommend that you contact a real estate specialist in your area to see if you can sell the home before the lender can foreclose.
  If they do foreclose, you would have until the foreclosure was final and the lender became the owner based upon a Trustee's Deed upon Sale (or someone else if they outbid the lender at the foreclosure sale). That usually takes 6 months or longer so I would really urge you to see if you have any equity you can protect by selling the home first.
  Reply to Michael
Marsha
May 4th, 2021

Hello, my grandfather is 90 years old. His house is a reverse mortgage with Novad. His insurance company has dropped him because he needs a new roof. We have found a roofer and gave a deposit; however, they cannot start until June/July. My question is how long is he able to go without home insurance before he is ordered to move out?
Reply to Marsha
- Michael Branson
  May 4th, 2021
  
  Hello Marsha,
  
  You need to contact NOVAD and send them the information you received from the insurance company. Let NOVAD know that you are looking for another insurance option now and then begin looking in earnest. Do not take the one company's word for the fact that the home cannot be insured and be sure to look around.
  The last thing you want to is leave the home uninsured or take a chance your grandfather loses his house because one insurance company will not cover it. It may be more expensive to get it insured while the repairs are still outstanding, but you can always cancel that coverage and obtain insurance elsewhere later.
  Reply to Michael
Mark
April 13th, 2021

Hello ARLO,

Can I get a reverse mortgage with past due property taxes? My house is owned outright by me with no mortgage debt.
Reply to Mark
- Michael Branson
  April 13th, 2021
  
  Hello Mark,
  
  Yes, you can if you qualify in every other way but the chances are very good that you will be required to establish a Life Expectancy Set Aside (LESA or "Lee-suh") for the payment of taxes and insurance payments.
  The LESA is not a bad deal if you don't need all the funds at once anyway to pay off an existing loan. You are not charged interest on the funds until they are actually used to pay your taxes or insurance payments and from that time on, the lender pays them from your loan proceeds, and you don't need to worry about when they become due or where you will get the funds to pay them.
  If you sell the home or pay the loan off before all the LESA funds are used, those are funds you never borrowed so they would not need to be repaid.
  For instance, if the lender had to set aside $60,000 to pay your taxes and insurance for life but you only use $20,000 of that money before you sell the home, then only the $20,000 you used (plus any interest that accrued on those funds) would be included in the amount needed to pay off the loan.
  The other $40,000 were never actually borrowed and so that amount would not be included in the amount required to repay the loan.
  Reply to Michael
Sandra H.
March 19th, 2021

Does the lender have any way to assist me with my homeowner's insurance? I can no longer afford the costly insurance since the value of the house keeps going up!!! Any help would be greatly appreciated!
Reply to Sandra
- Michael Branson
  March 19th, 2021
  
  Hello Sandra,
  The lender/serviser is not able to pay your home expenses on your behalf. This is something that all borrowers need to consider before getting a reverse mortgage. As the homeowner, you are still responsible for the taxes, insurance, and maintenance on the home even though you have no mortgage payment.
  If the absence of a mortgage payment still does not allow you to live in the home comfortably with your remaining living expenses in addition to the insurance and taxes, then a reverse mortgage is not the right option for you. This is obviously a bit late now though.
  You do have several options and they may or may not be great choices this far into the game. If NOVAD is servicing the loan, it has been assigned to HUD and that could be because the original lender is no longer in business or because the loan has risen to almost 100% of the original loan to value of the property.
  The good news though is that it takes a long while to get there and depending on what the value was and how much the property has appreciated in that time, you may still have equity in the property. You can check out the equity position by comparing the amount owed on your loan to the most probable price a local real estate professional tells you the home could sell for.
  There is a possibility that you might be able to refinance the loan and obtain more money or even downsize into a more affordable property if this one is still too expensive for you to maintain.
  If those options will not work for you and you have no family you can fall back on for assistance, I suggest you contact a HUD counselor in your area to see what programs may be available for assistance. The HUD website that deals with counseling can be found here. I am not aware of any possible programs, especially nationwide, but they may be able to assist you with programs available in your area that can offer assistance or discounts for the insurance.
  Reply to Michael
F. J
March 2nd, 2021

I am soon considering a reversed mortgage and I need to know if taxes can be also paid by the bank doing the reverse mortgage - this will help due to my age. F. J
Reply to F.
- Michael Branson
  March 2nd, 2021
  
  Hello F.J.,
  
  Borrowers can opt for a LESA (Life Expectancy Set Aside) which is a set aside account to pay taxes and insurance so that they do not need to pay them, the lender will make the payments as they come due from the proceeds of the loan that were set aside for that purpose.
  The nice part about the LESA account is that the funds are not considered borrowed until they are used to pay for the taxes or insurance and therefore, you do not accrue interest on them until the lender sends them out on your behalf. If you decide to pay the loan off (or move) or pass before you use the funds, they were never used and therefore would not be required to be repaid.
  For example, if you had a LESA account of $25,000 to pay taxes on your home and the lender only used $5,000 of these funds before you decided to move, only the $5,000 you used (plus any interest accrued) would be included in the payoff when you asked the lender for the payoff balance.
  
  The one thing you need to remember with a LESA though is that even though you may set it up voluntarily, if you set it up, you cannot change your mind later and say you want to pay the taxes and insurance on your own.
  Once you have a LESA account, it will stay with the loan until the loan is paid in full and closed.
  Reply to Michael
Gail
December 17th, 2020

My dad has a reverse mortgage, and he is in default of nonpayment of taxes. There is an auction coming up in February to sell off the taxes, can this be done with a reverse mortgage and when the person wins the bid what happens to my dad's home as well as the property? He is no longer living in the house and it is all emptied out.
Reply to Gail
- Michael Branson
  December 17th, 2020
  
  Hello Gail,
  
  The lender will probably advance the funds to protect their interest in the home and then foreclose on their loan and include the amount advanced in their foreclosure amount, but I cannot say for sure.
  Texas has different property laws and rights of redemption than most states so I would hesitate to tell you for sure what rights or remedies the lender or the taxing authority might have.
  I have heard about up to two years to redeem your home after a sale for delinquent taxes in Texas, but I honestly do not know under what conditions or costs.
  
  I would strongly suggest that you contact an attorney because if dad is not living in the property, the lender will also be looking to call their loan due and payable due to the tax default as well as the fact that it is no longer the borrower's primary residence.
  There is no right to redeem on that foreclosure after it is completed so I would suggest that you talk to a licensed real estate attorney sooner rather than later.
  Reply to Michael
Donna R.
November 2nd, 2020

If one of owners moved out, are they responsible to pay half of taxes and insurance or is it left to the one staying in home to pay for all of it?
Reply to Donna
- Michael Branson
  November 2nd, 2020
  
  Hello Donna,
  
  This would be a question for the parties and their attorneys to discuss and settle.
  The reverse mortgage lender does not make such determinations.
  The taxes run with the land and the taxes must be kept current or the loan may be called due and payable by the lender.
  Parties separating should take all this into consideration especially if both names are on the current loan.
  The loan is non-recourse but if the parties separate and the one remaining in the home does default on the taxes and insurance, it could affect the other party's ability to get another reverse mortgage later if there is no court order which mandated the payment responsibility to the remaining party.
  Reply to Michael
Kathy Z.
October 12th, 2020

How many times a year do you have to pay property taxes when you have a reverse mortgage?
Reply to Kathy
- Michael Branson
  October 12th, 2020
  
  Hello Kathy,
  
  That is set by the taxing authority (usually the county tax assessor).
  Many tax assessors issue an annual tax assessment with the payments due in two installments while some others collect taxes quarterly (4 times a year).
  You should receive a tax notification stating the amount you owe and the dates the installments are due but if you are not sure and don't remember seeing one, go online and search your county tax assessor to verify both the dates and frequency to be sure.
  Reply to Michael
Bill
June 23rd, 2020

I was late paying my property tax last year; can I get a Reverse Mortgage?
Reply to Bill
- Michael Branson
  June 23rd, 2020
  
  Hello Bill,
  There may need to be a set aside account set up for the payment of future taxes and insurance, but you still can get the loan. To determine if this is the case, you really need to discuss your individual circumstances with your lender but be open about the tax issue from the start as the set aside account will affect the amount of money available to you.
  The Life Expectancy Set Aside (LESA) takes a portion of your reverse mortgage proceeds and sets them aside to pay your taxes and insurance in the future. The amount set aside depends on the age of the borrowers and the amount of these costs. A 62 year old borrower who pays $1,000 a year insurance and $5,000 per year in taxes would need a very high LESA while an 80 year old borrower with $400 per year insurance and $1200 per year taxes in another part of the country would have a very small LESA requirement.
  The good thing about a LESA is that the funds are not considered borrowed until the lender pays them to the insurance co or your tax assessor. You never need to save and budget for these expenses again and there is no cost for a LESA. If the account works for you, it is a good way to still close the loan.
  Reply to Michael
Shirley
June 10th, 2020

Hello ARLO, my parent died and left us property. I found out that the taxes were not paid, and my uncle paid them. Now it says it redeemed and owned by him. Can I do anything to get it? There is 5 people on deed.
Reply to Shirley
- Michael Branson
  June 10th, 2020
  
  Hello Shirley,
  
  I am afraid I cannot be of much assistance with this question. The taxes usually must be unpaid for quite some time before you lose the property from tax default and I honestly do not know what type of ownership your uncle received. I would strongly suggest that you contact a real estate attorney in your area to determine your rights and any actions necessary at this time.
  Reply to Michael
  - Michael Branson
    June 10th, 2020
    
    Hello Barbara,
    
    One of the biggest problems HUD had in the past was borrowers defaulting on their taxes and insurance, even after they had their reverse mortgage and no longer had a mortgage payment.
    HUD implemented the financial assessment guidelines to qualify borrowers and one of the steps is to review creditworthiness and borrower's payment history, especially their last 24 months' property charges.
    Rather than declining to allow borrowers with late payments on property charges access to reverse mortgages, HUD makes provisions for borrowers who have late payments on their mortgages, taxes, insurance or other property charges to still be able to qualify for a reverse mortgage with the use of a Life Expectancy Set Aside (LESA or Lee-sah).
    
    A LESA is when the lender sets funds aside from the money the borrowers have available to them to pay their taxes and insurance on the property. Most of the time, if you have had late payments on your property charges in the past 24 months, the LESA will be required.
    However, if you can demonstrate that the late payments were not within your control or that all credit has been good and one late was the result of something that will not recur, you can sometimes have the LESA waived but the general rule is that if you have had lates on your property charges in the past 24 months, you will be required to have the LESA account.
    
    If you are required to have a LESA, it is by no means the end of the world. You have access to less money, but you also do not ever have to pay taxes or insurance payments on the home for as long as you live in the property, the lender does it for you.
    No more saving up for the tax payments and no more making out the check to the insurance company. The money is not considered borrowed until the lender actually uses it to pay for your taxes or insurance and so you do not accrue interest on the funds until they are used for payments and then only on the portion used.
    If you pay off your loan early or pass before you use your LESA account, those funds were never used and therefore do not need to be repaid at the time you or your heirs pay off the loan. If you do not need all the funds from the reverse mortgage for other purposes, a LESA is not a bad way to go at all.
    Reply to Michael
  - Peggy P.
    December 3rd, 2020
    
    My mother in law was on a reverse mortgage. She passed away. WE tried to buy the property and they kept going up on the price. The home is now been empty 2 years has mold etc. We received a letter from tax assessor the taxes have not been paid since her death. Can we pay the taxes and take the home back? There is 3 companies involved in this so called mortgage and don not seem to communicate with each other. What can we do to get this property?
    Reply to Peggy
    - Michael Branson
      December 3rd, 2020
      
      Hello Peggy,
      Unless the lender has already foreclosed on the loan, they do not own it and cannot "sell" it to anyone.
      Your mother in law (actually, her estate at this point) owns the home.
      Have you already cleared title? If you are her heir, you probably need to complete a probate and have the court award you title to the home and then just pay off the loan with the lender.
      If you are not the sole heir, the court may need to do other things to award you the title.
      My suggestion is that you contact an estate attorney to determine what steps you need to take as an heir to obtain the title, then decide with the lender to repay the loan.
      If the property already went through a foreclosure action and the lender now owns the property, you would just need to negotiate a sale with them and that would be the same as any other sale.
      As a buyer, they can sell for any price and at any time they determine is best and as a buyer you do not need to accept their terms.
      However, based on just your comments here, I would be willing to bet the home is still in your mother in law's name and is still owned by her estate.
      Reply to Michael
Jason
February 19th, 2020

If you have a reverse mortgage but need to split the property taxes in 2 payments, will this result in losing the house?
Reply to Jason
- Michael Branson
  February 19th, 2020
  
  Hello Jason,
  
  If the municipality allows for two payments, you are certainly allowed to use whatever payment plans are available that they still consider on time payment of the assessment.
  If you feel that you cannot make the payments in a timely manner, my advice would be to find the best way to make one half of the installment in advance.
  If you are able to do this, with funds from your loan, help of family members, etc., you would always be fine when you paid the "second half" that paid the full installment due by the due date.
  HUD is touchy on late real estate taxes and I would not like to see anyone risk issues for this reason.
  Reply to Michael

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