I'd like to hear from anyone who has successfully worked a short sale with a HUD insured reverse mortgage. Not all reverse mortgages are HUD insured, but in my farms easily 90% of RMs made during the Bubble were HUD insured.

The terms of the HUD insured deed-of-trust require that the loan is due and payable when the last borrower has died and/or is no longer living the property. The repayment terms are the lesser of 1) the amount due or 2) 95% of fair market value.

I'd like to hear from any agent or investor (or heir) who has shorted the lender in a typical short sale or worked with heirs in order to document FMV and then sell for 95%.

Most of the outstanding balances I'm seeing are in excess of typical Bubble refinancing balances. It's not unusual in my areas to see a $250K refinance in 2007 for a property now worth $100K. But the RM balances are much higher, more like a $350K line of credit for a similar property. It appears that the lines of credit were based on FMV at the time, plus projected appreciation and interest, based on how old you were when you took the loan.

Purchasing at 95% of current documented FMV may work for my purposes. But I'm seeing a lot of properties not held in a trust, which means heirs would have to pay to open a probate just to transfer title to a property with no equity. I've been contacted by a few and I'm just starting to strategize about what can be done.

Experiences? Suggestions? :)