Reverse Mortgages (NPNs) Pros & Cons
We're looking at a tape consisting mostly of defaulted reverse mortgages. The borrowers have passed away and no heirs have showed up to take care of the estates. Most are underwater but some have equity. All are vacant.
We've never acquired reverse mortgages before and are reaching out to our various sources to learn more and understand the risks. I thought I'd reach out to the group as well to see if someone could share their experiences.
What are the pros & cons of reverse mortgage NPNs?
It seems like the risks are low:
The payoff increases with time
Borrower has passed with no heirs to interfere since oftentimes the estates are insolvent
Vacant
Cons:
The rare heir who might raise issues after you purchase the defaulted reverse mortgage
Dealing with probate (we already do this regularly on other loans)
Having less tools to work with a borrower (not really our business model)
Higher chance of getting an REO (not an issue for us either)
Other thoughts out there?