Professional · Upper Darby, PA · Member since 2016 · 11 posts · 13 votes
I have a friend who knew we were REIs and had a neighbor who lived in Drexel Hill who past away. Her daughter is now deciding what to do with the house and came to us. Unfortunately her mother had put a reverse mortgage on the house and owes $123K on house where the As Is value is probably in the $135 range. Would anyone know if the Daughter would be able to go back to the bank and ask for a Short Sale and what the chances of getting a positive response would be - and if Yes what should an expected value be? The mortgage was completely in the Mother's name so the daughter could just walk away and let it go into foreclosure but she said she does not want to go this route. Suggestions?
Lender · Playa del Carmen, México · Member since 2014 · 2k+ posts · 1k+ votes
8y
Hi @William Strehse. I thought the whole point of a reverse mortgage was that the bank gets ownership of the property when the borrower dies, in exchange for the borrower not having to make monthly payments. If the debt is $123K and the value is $135K, then it appears the bank will make out OK. I don't see any reason for the bank to consider a short sale. Am I missing something?
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
8y
That is sort of the idea of a reverse mortgage. The borrower gets the funds and then the lender gets the house when they pass if the heirs cannot or don't want to pay off the balance due. There's no real equity here, but the value is high enough to cover what's owed. Doesn't seem like the lender would have much incentive to settle for much less than they're owed.
Professional · Upper Darby, PA · Member since 2016 · 11 posts · 13 votes
8y
Thanks for the replies. I was hoping someone may have had experience in this - was thinking if the bank did not need to go through the cost of a foreclosure and also have to put it back up for sale they may be an option to offer them less.