Buying home with Reverse Mortgage from Heirs

[Mary Beth Groze]

Hello,

I am currently working on buying a property that has a mortgage and a Reverse Mortgage on the property.  The owner is deceased, the home needs substantial work and the heirs have been given an amount owed to the reverse mortgage company or an option to turn the home over to the RM company in lieu of repaying the "mortgage".  Can anyone tell me how this works?  The heirs have not gone through the probate process and the reverse mortgage company is urging them to do so "so that the property doesn't go into forclosure". 

What generally happens to these properties? Do they generally go through the forclosure process after the owner dies? Is the amount the reverse mortgage company gets negotiable? Does it equal the amount they have paid to owner plus interest? Or is there a FMV calculation in there?

Any help will be greatly appreciated!

Mary Beth Groze