Los Angeles, CA · Member since 2015 · 69 posts · 75 votes
Hello BP. We have a deal in Los Angeles in which an elderly owner wants to sell her home for $600,000. The area is low income, but high traffic and investors are actively converting homes into small multifamily units. The house has two beds and one bath, zoned LAR3, and 924 sq ft (Lot size 2,300 sq ft). We researched the home and found that the owner has a reverse mortgage loan on the property. Does this hinder our ability to purchase the house? What would you do in this situation?
Lender · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
10y
The sale will be fine and the reverse mortgage lender will receive there payoff from escrow. Seller will receive the remaining proceeds minus sellers share of closing costs.
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
10y
Wouldn't you be buying the home from the Institution that she "sold" her title to? Surely, the sale couldn't proceed without THEIR permission? I'll be interested to learn what happens.
For someone used to wide open spaces, that looks like a lot of money for such a small space!...
Lender · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
10y
The sale will be fine and the reverse mortgage lender will receive there payoff from escrow. Seller will receive the remaining proceeds minus sellers share of closing costs.
The sale will be fine and the reverse mortgage lender will receive there payoff from escrow. Seller will receive the remaining proceeds minus sellers share of closing costs.
Aah. Interesting. The reason for my confusion could be that I read another thread where it was the Reverse Mortgage Institution who was selling the "Owner"-Occupiers property, and the responses there suggested that was nothing out of the ordinary, since the Institution was already paying out that Owner per their reverse mortgage arrangement, and could continue to do so even if THEY sold the property to another party. Which kinda led me to believe: THAT was the norm!
But I do agree, those arrangements could be written to include the possibility of EITHER party paying out the other along the way WITHOUT the others approval - so long as the sale price covers the agreed payout figure? (But in reality, I guess BOTH parties still sign off?) Cheers...
Lender · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
10y
Property owners do not give up ownership of the home to the reverse mortgage lender. So the seller, is always the property owner, unless for some reason the home reverts to the lender (death with no heirs, heirs with no interest in the property, etc.)