Reverse mortgages in the state of Wisconsin

[Lamar Rhodes]

So I’m working on trying to close a wholesale deal where the owner is deceased, but took a reverse mortgage out on the property. The children are now trying to close out the small estate by getting rid of the home. I did a propstream search and the house is showing negative equity due to the reverse mortgage balance. The daughter is saying that the mortgage company is saying she still owes the value of the home to them. However, she’s saying that if she were in Texas, where the mortgage company is from, this would be true, but since we are in Wisconsin, Texas law shouldn’t apply. She also stated another investor who knows how to deal with these reverse mortgages has made her an offer, which she hasn’t accepted yet because she wants to see what I can offer. Does any have experience dealing with situations like this one? Is there a contract I can use with the seller to protect myself in case I’m unable to sale the home due to the large reverse mortgage?

[Scott Schultz]

FHA Insured reverse mortgages have 2 recorded mortgages, both at 150% of the appraised value, One for the actual Mortgage, and the second as essentially an Insurance piece from FHA, the release is dependent on the balance being paid, so unless you know how much has been drawn, you simply will not know. since the borrower has died, Foreclosure will start, as Death or Moving out of the mortgaged property are both triggers for foreclosure. good luck