Reverse Mortgage Information

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In a reverse mortgage what are the responsibilities of the heirs?

 

In a reverse mortgage what are the responsibilities of the heirs?

Most importantly, right now before they're gone - ask your parents if they have a trust or a will. Consult with a qualified attorney to find out your responsibilites if you are named as successor trustee or executor.

Once they're gone - You can find some direction from HUD and from the actual loan documents and agreements, but let me answer this as the pending executor for my own parents who happen to have a reverse mortgage.  I’m not giving you any kind of legal advice, just saying what I’m planning to do.

My parents do have a Trust and a Will, so I know that we will have the proper authority to legally sell or refinance the home.  Reverse mortgage servicers reach out to borrowers at a minimum of once per year to make sure they are still living in the property and they also rely on reporting agencies that monitor deaths.  So - I will be calling the lender very soon after my parents are gone to let them know that they have “graduated”.   Heavenly

I will also be looking to see if there is equity in the property, meaning - is the balance on the reverse less than the value.  That will be easy to do because every month the lender sends them a statement showing the current balance.  I will use my contacts in the real estate world to help me to determine the value of the home.  

If there is money there, then I will let the lender know that we are going to sell the house and they will be paid off at closing.  If the house takes awhile to sell, I will take advantage of the allowable extensions to the foreclosure by writing the lender and requesting it.  

If there is no equity, well, then I will let the lender know that too and ask them if they would prefer a “Deed in lieu of foreclosure” or would they just like to foreclose?  They will want the deed, as it is less costly and time consuming, and so will I.

Here’s the rub - Many reverse mortgage borrowers will die without a will - then what? If that happens in your parents case, who has ownership of the property?  I don’t know.  I imagine you would need to talk to a probate attorney to find out who will have the power and authority to transer title, and how that is done.  A judge’s order may be required.  In anycase, without proper end of life and estate planning on your parents part - you may not have any authority to sign a listing agreement, a deed, or any other document on behalf of the estate.  You will want to seek advice from a qualified, knowledgeable attorney.

One more note - direct from FHA - prior to obtaining a reverse mortgage:
This blog reflects only my thoughts and opinions and not necessarily those of my employer.


 

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By Deborah Nance

NMLS#202003

Your Local Southern California Reverse Mortgage Professional

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Equal Housing Lender

iReverse Home Loans, LLC, NMLS#810502 originates reverse mortgages in Alabama, Alaska, Arizona (MB-0919584), California, Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon (ML-5378), Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont (1164-MB), Virginia, Washington and Wisconsin. 

Important Information: Reverse Mortgages are neither "endorsed" nor "approved" by the Federal Government. The FHA (Federal Housing Administration) provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate loans. The owner(s) retain title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurance, maintenance and related taxes. Failing to pay these amounts or failure to maintain the condition of your property may cause the reverse mortgage loan to become due immediately. A reverse mortgage is a complex loan secured by your home. Whether such mortgage makes sense for you depends on your financial situation and needs. For these reasons, we strongly recommend that you consult with a qualified independent housing counselor, family members and other trusted advisers before making this decision. This website is not from HUD or FHA and was not approved by HUD or any government agency.

Comment balloon 6 commentsDeborah Nance • March 08 2011 09:30PM

Comments

Good Morning Deborah, great input on an issue we are seeing more of with falling home prices.

Posted by Dan Edward Phillips, Realtor and Broker/Owner (Dan Edward Phillips) over 7 years ago

Thanks for your comment Dan, I hear from kids/heirs all the time about "what now" because their parent has passed away and had a reverse mortgage.

 

Posted by Deborah Nance, Southern California , Reverse Mortgage Specialist (Orange County, Corona, Riverside, Los Angeles) over 7 years ago

Deborah:  Got here through Dan's re-blog.  This is a very valuable post.  For seniors having a reverse mortgage is one way to be able to afford staying in the house.  The inheritors, if there are any, and especially the exectors need to know the options available with the mortgage.  Good article.

Posted by Valerie Zinger, Home Organizer (House Proud Ottawa-Ontario-Canada) about 7 years ago

Hi Valerie,  Thank you for the comment on my article. I know that reverse mortgages are available in Canada, but do not know any of their guidelines and terms.      Deb

Posted by Deborah Nance, Southern California , Reverse Mortgage Specialist (Orange County, Corona, Riverside, Los Angeles) about 7 years ago

Deborah,

If parents have a reverse mortgage, this is definitely food for thought.  My parents had been advised not to go that route, that there were better ways to handle their financial needs so don't have to worry about what to do with a reverse mortgage personally.

Posted by 1 ~Judi & Don Barrett & Chassy Eastep - Integrity, BS Ed, Integrity Real Estate Services -IDABEL OK (Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745) about 7 years ago

Judi, thats so great theat they do not need to use a reverse mortgage to handle their financial needs.  I know that my parents have been very careful about using theirs.  The originall got it to set up the line of credit in order to have funds available should something happen to my stepdad.  As a second wife, my mom would not be entitled to any of his pension should he pass away.  So their answer was a reverse mortgage. Like most guys he wanted to protect her.  In the event he should pass away, she will begin to take draws from the reverse mortgage line of credit (which has grown over time!) in order to replace as much of his income as she needs.  The deciding factor though was that she is living in her dream home and NEVER wants to leave it.  I think that is the most important criteria.  Is this the home the senior is planning to remain in for the rest of their life?

Thanks for your comment and sorry about the rambling response.  Have a great day!

Posted by Deborah Nance, Southern California , Reverse Mortgage Specialist (Orange County, Corona, Riverside, Los Angeles) about 7 years ago

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