Buying a reverse mortgage note from the bank.

[Ron K.]

Original owners passed away, house been abandoned for two years, some code violations. 

I would like to buy the property.  Is it feasible to offer the bank to buy the note at full price (not short sale) so I could foreclosed and own the property? 

[Rick H.]

Unless it's now owned by a very small portfolio lender, your chance about zero, 

Feel free to prove me wrong (I don't gave a horse in your race).

Good luck!

[Ron K.]

So only scenario is lender foreclosing? 

[Ron K.]

Just saw your website! very nice.  Being creative I started a probate on this property, only relatives are a sister and a brother both in their 90's, the sister agreed to work with me but the brother did not.  Any ideas? I'll buy you a year supply of coffee... :)  Thanks.   

[Rick H.]

Well, at least you have a creative deal making mindset. 

If FHA, they will require any short sale price to be at least 95% of their current appraised value.

Of course, a short sale appraisal could come in low, depending on the amount of deferred maintenance. Also, lender must deal with holding costs, insurance, taxes and C/E fines in addition to legal costs of foreclosure. 

Stated another way, you could be the solution the lender's dreams of having an exit plan or you could get a boneheaded for an asset manager.. Use your best charm!

[Ron K.]

Yes, FHA but house considered abandoned, I can't finish the probate because of lack of corporation from one brother. House is not on the market.

[Rich Baer]

@Ron K.

If it is actually a true reverse mortgage, foreclosure proceedings must be brought within 6-12 months of the death of the last owner. Someone may be paying on it. Or they received a line of credit reverse mortgage that they never used. Either way, a reverse mortgage is partially owned by HUD and it is impossible to buy it from the noteholder and HUD. Nice try though.

[Rick H.]

Nope. Someone gave you bad info.

The RM industry calls death of the last borrower a "maturity event" and it triggers a notice of intent to foreclose but not statutory requirement to initiate foreclosure by recording a notice of default or lis Pendens. 

The effect is the calling of the debt and treated as any other balloon payment. The collateral is the property and the creditor seeks the forced liquidation of the security interest, hence the foreclosure. Lender has no obligation to start foreclosure, however. 

[Ron K.]

You are a wealth of knowledge and I thank you for that! I have the last statement and it does say line of credit so it's reverse line of credit. I understand know that I might be wasting my time and money on this property. I should probably just wait and try buying it at a foreclosure. It's a shame that the house will have to be run down and get code violation before lender will do something.