Curious about a Reverse Mortage in Foreclosure. Any tips?

7 Replies

Hi BP Community,

I'm a REI newbie looking at/for opportunities. I ran across a house in foreclosure with a Reverse Mortgage.

What questions should I be asking? What research should I be doing? It looks like the owner is deceased. The reverse mortgage was for $625k. Market value is around $781k. It is going up for auction in two months. It looks to be in great shape.

Thanks for any pointers, suggestions.

Originally posted by @Brett Goldsmith :

you'll need to get in contact with the owner or the heirs in this situation if you want to have any chance at purchasing it prior to a foreclosure auction.

 & keep in mind that $625k might have been the original balance, but reverse mortgages go up every month. Very probable that it's underwater and the heirs aren't in a position to do anything but let it go to auction.

Another FYI is that "has a reverse mortgage" is strongly correlated with "has heirs that are not financially doing so well and/or aren't financially savvy." You will have a hard time finding someone with a middle class (or better) income and/or with an average (or better) understanding of basic personal finance that lets their parents take out a reverse mortgage... better to write mom/grandma a $2k check every month than to let a reverse mortgage "pay" her $2k/mo!

@Brett Goldsmith and @Chris Mason ... Thanks for the insight.  I'm curious. When the house goes on the foreclosure fire sale...is an investors goal to buy the house as inexpensively as possible? For example, if $625K is owned and investor could bid and win at $300k??  Is that how that works?  

Hi, I am thinking of bidding on a foreclosed house with reverse mortgage. I got the title search done and the title company said there are no Leins on the property apart from the reverse mortgage.

I am not very confident as I see two Deed records regarding the reverse.

Questions 

Why there are two records on county records?

Is it safe to bid on the property with reverse mortgage?