Re: Reverse Mortgage

Can a relative of a deceased person who had a reverse mortgage sell the property? Is there something to look for in the contract language or is it pretty much a dead issue? No pun intended.....

Edited: 06/26/2010 at 05:10AM

Jason Cummins

Real Estate Investor · Katy, Texas

430 posts
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Icon_minipost May 11 '08, 02:39 AM

I am not a mortgage professional, but from what I know if someone with a reverse mortgage passes away, they give the option to the family to buy the house back before they take over the house themselves.

Edited: 06/26/2010 at 05:11AM

Daniel Durham

Real Estate Investor · Whiting, IN

17 posts
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Icon_minipost May 15 '08, 11:25 AM

I say definately talk with a real estate attorney and a probate attorney on this issue.

Best regards,

Daniel Durham

Edited: 06/26/2010 at 05:12AM

Charles Whitaker

Real Estate Investor · Amarillo, Texas

154 posts
98 Influence

Icon_minipost May 18 '08, 09:38 AM

the executor of the decedent is responsible for the estate. If money is needed to pay liens or creditors then the house will probably be sold. The mortgage company or lending program that carries the rev. mortgage should be contacted to find out information for assuming the loan(if possible) or the ability to sell. Either way, contact an estate attorney.

Edited: 06/26/2010 at 05:13AM

John Paul

3 posts

Icon_minipost May 21 '08, 08:55 AM

I wouldn't planning on off-ing any relatives any time soon till you talk to an attorney..

Edited: 06/26/2010 at 05:14AM

Jonathan Rundlett

· Silver Spring, Alabama

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Icon_minipost May 22 '08, 03:27 AM

Reverse Mortgages are like any other mortgage on a property. If the owner passes away, the asset becomes property of the estate. The person who is responsible for the estate will need to obtain new financing or sell the house to pay off the reverse mortgage. Most reverse mortgages are FHA mortgages so they are assumable but the person would be subject to the same requirements - namely being over the age of 62 and living in the residence for more than 6 months out of the year.

Edited: 06/26/2010 at 05:14AM

Will Barnard

Rehabber · Santa Clarita, California

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Icon_minipost May 22 '08, 04:16 AM

Perfect answer jrundy!

I am of the opinion that reverse mortgages are banks " new" way to steal money and assets from the uninformed, particularly, the elderly. They charge massive amounts of fees and the homeowner has nothing left to pass down to their children/grandchildren/etc.
There may be some instances where a program such as this would be beneficial, but I feel, from an investor's standpoint, that it should be a last resort. Let's inform our parents/grandparents/elderly/etc. and offer them more viable choices. Granted, investing is not for everyone, but it is certainly a better choice financially to take equity from the home and invest in cash producing assets to generate the income needed. Then, when they pass, they have assets to hand down and do not run the risk of outliving their home equity and being placed in the streets by the lender who sold them the reverse mortage.

Edited: 06/26/2010 at 05:14AM

Will Barnard, Barnard Enterprises, Inc.
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Bob McGee

Residential Lender · Baltimore, Maryland

3 posts
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Icon_minipost Apr 10 '09, 12:53 AM

The executor of the estate is responsible for resolving the affairs of the deceased. If there is equity in the home it can be sold, the mortgage satisfied and the remaining funds accrue to the estate. If the accrual of interest on the Reverse Mortgage used up all or most of the equity in the home, or if there is negative equity, the lender should be notified and you await further instructions. If it is a negative equity situation there is no recourse to the estate. FHA may allow a shot sale of the property. Reverse Mortgages are not assumable as suggested by a earlier writer.

Edited: 06/26/2010 at 07:53AM

Tonya Moye

Real Estate Investor · Harleysville, Pennsylvania

17 posts

Icon_minipost Apr 10 '09, 01:37 AM

The heir of the estate has the option of: paying off the balance of the reverse if they want to keep the property, selling the property-regardless of available equity, or simply walk away from the whole process by giving it back to the bank (foreclosure).

Before selling, a FHA appraisal is needed. If there is negative equity house, can still be sold, monies given back to bank, then HUD gives them the difference (to lender) which is owed them. If there is positive equity, after sale, bank receives their money, difference goes to heir.

There is a 6month time frame from the deceased death to sell the property. Extensions are given through HUD in 90 day increments after the 6month period-provided there is on going communications with Reverse Mortgage Specialists handling the estates reverse mortgage.

You DO NOT assume someone's reverse mortgage. You either pay balance due to keep the property or you sell it. If there is negative equity-I would sell to an investor. You're not getting anything anyway, why not help someone else get a great deal, you could be forming an alliance for future deals.

Edited: 06/26/2010 at 07:53AM