Reverse Mortgage Foreclosure

Member since 2019 · 3 posts · 0 votes

Hello to all,

We are new to REI and have a unique opportunity to begin our journey. We are interested in a vacant property that has been vacant for 6 months. The unique piece is that we have access to the property and can inspect all aspects. The challenge is that the property has a reverse mortgage on it. The owner has passed and there are no heirs, no will, and no designated executor of the estate. The one surviving sibling wants nothing to do with it bc the loan amount is higher then what property would be worth, plus he is older and not interested. How can we keep track of what stage of the process is this property? We would have an advantage over other bidders because we been to the house many times and we know what to expect inside. Does anyone know of any creative way to get ownership of this property/deal and is it even worth pursuing?

0 Reply

25 views

Most Popular Reply

Lydia R.

Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes

@Alex Kalyan The one sibling is legally the heir to the property. Speak with that person and tell them that you are interested in buying the house and that it will not cost them any money to sell it to you. You will need to get the heir to sign an authorization to release information form which you will submit to the loan servicer so you can find out what the mortgage balance is. If the property is upside down you can request a short sale and the servicer will send out an appraiser. Bank will accept 95% of the appraised value of the property. The process is actually pretty straight forward depending on the loan servicer and not as long and as much of a pain as a traditional short sale. I would definitely say go after this one. You also need to determine ARV and repair costs.

1 Reply

See this reply in the discussion

9 Replies

Jump to latestLatest

Sort by

Account Closed
Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
7y
Originally posted by @Alex Kalyan:

Hello to all,
We are new to REI and have a unique opportunity to begin our journey. We are interested in a vacant property that has been vacant for 6 months. The unique piece is that we have access to the property and can inspect all aspects. The challenge is that the property has a reverse mortgage on it. The owner has passed and there are no heirs, no will, and no designated executor of the estate. The one surviving sibling wants nothing to do with it bc the loan amount is higher then what property would be worth, plus he is older and not interested. How can we keep track of what stage of the process is this property? We would have an advantage over other bidders because we been to the house many times and we know what to expect inside. Does anyone know of any creative way to get ownership of this property/deal and is it even worth pursuing?
In most states the one surviving sibling would be an heir. How could anyone know how much is owed on it? Only the person on the loan has access to that information. No way to know if it's worth it, too little information. And since we don't know what state the property is in we don't know the foreclosure process. Too little information.
You could hire a skip tracer to find out the information you need.
0 Reply
Lydia R.
Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
7y
@Alex Kalyan The one sibling is legally the heir to the property. Speak with that person and tell them that you are interested in buying the house and that it will not cost them any money to sell it to you. You will need to get the heir to sign an authorization to release information form which you will submit to the loan servicer so you can find out what the mortgage balance is. If the property is upside down you can request a short sale and the servicer will send out an appraiser. Bank will accept 95% of the appraised value of the property. The process is actually pretty straight forward depending on the loan servicer and not as long and as much of a pain as a traditional short sale. I would definitely say go after this one. You also need to determine ARV and repair costs.
1 Reply
Alex Kalyan
OP
Member since 2019 · 3 posts · 0 votes
7y
@Mike M. Thank you for your time. I really appreciate your reply. I am going to think about this a little more ad come back with more details.
0 Reply
Alex Kalyan
OP
Member since 2019 · 3 posts · 0 votes
7y
@Lydia T.thanks for your reply. That was very helpful and thought provoking.
0 Reply
Account Closed
Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
7y
Originally posted by @Lydia R.:

@Alex Kalyan The one sibling is legally the heir to the property. Speak with that person and tell them that you are interested in buying the house and that it will not cost them any money to sell it to you. You will need to get the heir to sign an authorization to release information form which you will submit to the loan servicer so you can find out what the mortgage balance is. If the property is upside down you can request a short sale and the servicer will send out an appraiser. Bank will accept 95% of the appraised value of the property. The process is actually pretty straight forward depending on the loan servicer and not as long and as much of a pain as a traditional short sale. I would definitely say go after this one. You also need to determine ARV and repair costs.
@Lydia you are mostly correct. The heir has to be appointed by the court before the bank will talk to them about the loan.
0 Reply
Lydia R.
Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
7y
@Mike M. Not necessarily. Title company can have heir do an affidavit of heirship.
0 Reply
Account Closed
Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
7y
Originally posted by @Lydia R.:
@Mike M. Not necessarily. Title company can have heir do an affidavit of heirship.
That works for some things but banks are forbidden by law from discussing a loan except with the borrower, an authorized person by the borrower (in writing, signed and SSN included), or by a court order. I have a little bit of experience with this issue.
Call your title company and ask if they can do as you suggest.
Plus, he says he is the only heir. Maybe, maybe not. Just because he hasn't spoken with his sister in 30 years doesn't make him the "only" heir. That has to be proved in court (probate). Title companies aren't going to touch it.
This is one thing that makes wholesalers so dangerous, (I'm not picking on you) but they don't use title companies, escrow companies and they don't know the laws regarding transfer of title. The poor scmuck who buys the wholesale property is left holding the bag. That's not a nice spot to be in when you're trying to get a flip going. ALways get clear title before you pass it on to someone else. This one will not easily get clear title.
0 Reply
Lydia R.
Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
7y
@Mike M. I agree, title company should always be used (except in states where they use closing attorney instead)
My suggestion is based on personal experience, I just recently closed a deal that was extremely similar to this situation. Father passed away, three kids and no will. No one wanted to probate the estate because the property was upside down and none of the heirs wanted to be responsible for the property. So in order to be able to speak with the reverse mortgage company on their behalf the title company had them fill out heirship questionnaires and title company completed an affidavit of heirship which I was able to submit to loan servicer (Novad—biggest pain in the you know what) and the loan servicer spoke with me about the loan and was able to explain the short sale process and I was able to buy the house for less than what was owed.
Deals like this are obviously not the best for a brand new wholesaler, but its a great learning experience for people like the OP so that when they come across a similar situation they are able to handle it properly.
0 Reply
Lynnette E.
Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
7y
Just so you know, with reverse mortgage loans that have certain insurance there are very strict requirements for how much they can sell for.
One near where I live has been offered for sale for quite a while. They are unable to sell it under the appraised value, and the appraisal was too high for the busy street it is located on. It is good for the next block over on a quiet street.
Buying reverse mortgage houses will not give you a 'good deal'.
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.