My grand mother passed about 3 years ago. She had a reverse mortgage. Her son/my uncle whom was living with my grand mother when she passed in appointed the estate has been living there rent free and hasn't paid any taxes. So currently over 7k is owed in taxes. Most of the equity is gone because of the reverse mortgage. The bank owns it and some sort of community agency agreed to purchase it from the bank and give him a 100 year lease. But first he would have to pay taxes and closing costs. This all sounds crazy to me.
The single family home is in Newport RI
3/1 been on the market at 140k for a year
The bank wants more than the community agency has to spend so the last I was told that they are trying to appraise the house to get a lower value due to damages.
What I need to know is what are the possibilities of me saving this house that's been in the family for over 60 years and was once paid in clear.
What steps should I take. What do I need to convince my uncle of. Should I just let it go? Isn't help will be helpful
Ask yourself, " Would I want this house if it belonged to anyone else?" Financially, it is dead on arrival. It makes absolutely no sense, financially, to buy this house. You said there is no equity. You can't make investment/financial decisions based on emotions unless you want to throw money out the window, which sounds like he doesn't have any. If he were a multi-millionaire, it wouldn't matter.
Your uncle was irresponsible in failing to pay the taxes for 7 YEARS. This is not a clerical error. If he wants the house, he needs to pay the dues and pay off the reverse mortgage. If not, the bank owns it and they will sell it to the highest bidder.
If I were you, I would not contribute one dollar to this deal because it doesn't help you uncle. It enables him to keep living there for free. I think it's time Uncle started participating in his financial future.
@Donnell Durden Hello and welcome to BP. I have some experience with reverse mortgages from a previous job. I don't understand the part about the bank owning the property, usually the bank is only the lien holder and needs to go thru foreclosure proceedings in order to claim ownership. Has the bank already foreclosed on the property and is trying to evict your uncle? FHA guidelines will allow your uncle or the community agency to purchase the property for 95% of the appraised value. If the appraisal is lower than what's currently owed, this becomes a short sale situation and the following closing costs can be deducted from the sale proceeds(realtor commission up to 6%, title search, owner's title insurance, property taxes, transfer taxes and even closing attorney fees, if needed). I saw this exact situation happen all the time with family members and it usually does not turn out well, especially if your uncle is not in a position to try and purchase the property.
Please feel free to reach out with any other questions.
@Donnell Durden What neighborhood is the house in? I've found anything that price that doesnt need a ton of work and is moderately close to down town sells in a heart beat. That being said you could think about flipping it. Renovated single family's in Newport command a very high price even if they are small. You might want to talk to a local agent if that might be a possibility for this place. Plus you have access when any other flipper has much less access.