Chattanooga, TN · Member since 2012 · 12 posts · 0 votes
I have an executor who would prefer to sell to me rather than pay for listing. The reverse is about 100K over market value in current condition. He wants to be able to pay off the grandchildren named in the will too. Can anyone share their insight on the short sale of reverse mortgages? I've been told they are easier to do than regular mortgage, but do all the same rules apply when it comes to the families being able to walk away with some cash? Things change every week in this industry, I'm just looking for the most up to date knowledge I can find so as not to steer anyone wrong.
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
4y
@Maurice George, wow. So as well as the Buyer having to cough up at least 95% of the home's actual value, they have to pay off any Owner IRS Bill as well?
[This directly from the FHA Site regarding HECM: "If the loan balance is more than the home is worth, the estate or heirs may sell the home for at least 95-percent of the current appraised value and the lender will accept the net proceeds as satisfaction of the loan"].
I didn't see the bit you mentioned about all Liens having to be paid out before the actual first mortgage Lender gets anything!
I thought the concept of FIRST mortgage actually meant something!
This from Investopedia: "A first mortgage is a primary lien on a property. As a primary loan that pays for the property, the loan has priority over all other liens or claims on a property in the event of default".
Apparently you're saying that ANY Lienholders actually get priority over HECM, even though HECM are the bunnies who lent the owner $950k on a home later only worth $700k (to use your earlier example). Go figure...
[Of course I know that lots of Liens can be paid out of deceased Estates. I just didn't know that first mortgages could ever be put at the bottom of the payouts regarding proceeds of the sale of a specific home a Lien is placed against].