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Dave Z
Dave Z, Mortgage Co. Operations Manager
Category: Finance
Satisfied Customers: 697
Experience:  Operations manager for a mortgage company, Member of OAMB & NAMB, 10+ yrs experience in mtg industry
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reverse motgage on a house owner dies with living son who wants

Resolved Question:

reverse motgage on a house owner dies with living son who wants to keep the house. Can he redeem it some how and how long does he have?
Submitted: 8 years ago.
Category: Finance
Expert:  Dave Z replied 8 years ago.
Good afternoonCustomerand welcome to Just Answer!

Different mortgage lenders have different policies in regards XXXXX XXXXX they handle reverse mortgages and their policies and procedures after the last surviving homeowner passes. Many lenders will allow the heirs or the estate to keep the home as long they are able to pay off the amount which is owed to the reverse mortgage lender. However, if they do not have enough funds to pay off the home, they may have to sell the home or the lender may even sell the home to pay off the loan balance and then if there are any funds left, they are supposed to go to the estate or to the heirs. With some lenders when the last co-owner dies, the reverse mortgage holder gets the house as payment for the loan. The estate is never subject to payments to the bank. Different lenders do things a little differently than the next. It would be a wise decision to have whomever is in charge of the estate or an attorney contact the bank where the reverse mortgage is with to express the intentions or desires of the heir(s) of the property. See the bolded statement in the next paragraph.

When the loan ends

The loan ends when the homeowner dies, sells the house, or, depending on the loan conditions, moves out of the house for 12 consecutive months (for example, to go into an assisted living home). At that point, the reverse mortgage can be paid off with the proceeds of the sale of the house, or be refinanced by the heirs of the homeowner's estate. If the proceeds exceed the loan amount, the owner of the house receives the difference; if the owner has died, the heirs receive the difference. For cases where the proceeds are not sufficient to pay off the loan, then the bank (or insurance which the bank has on the loan) absorbs the difference. In most cases when the borrower moves out of the property or dies, as long as the borrower (or his estate) provides proof to the lender that he is attempting to sell the home or obtain financing to pay off the outstanding debt, the investor will allow him up to one year to do so. After the one year extension period is up, the lender cannot provide any further extension of time to the borrower (or estate).

When Do You Pay Back A Reverse Mortgage?

The reverse mortgage becomes due when the last surviving owner dies, sells the home, or permanently moves out of the home. When the loan is over, you or your heirs must repay the loan plus interest, generally by selling the house.

If your debt is less than the selling price of the house, your heirs keep the difference.

It is not possible for you to owe more than your home is worth, and your lender cannot seek payment from your estate or heirs.

Please let me know if I can be of any further assistance with this matter. Thank you for using Just Answer and please remember to leave feedback after you click the Green Accept button. Have a great weekend and best of luck with everything.
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Customer: replied 8 years ago.
What are the going intrest rates now?
Expert:  Dave Z replied 8 years ago.
Good evening and welcome back. While it is very difficult to provide an accurate rate as to what you might qualify for because there are many factors involved in determining interest rate, I can tell you that rates are currently around 4.9% on a 30 year fixed rate conventional loan and 4.5% on a 15 year fixed rate conventional loan.
Customer: replied 8 years ago.
Would it be possible to turn the outstanding loan into a regukar fixed mortgage or is that the descretion of the lender?
Expert:  Dave Z replied 8 years ago.
Because of the way a reverse mortgage is structured the lender will not allow you to simply turn the loan into a regular fixed rate mortgage. However, they may be willing to extend the financing to you on the property if you discuss this with them. This will be up to the lender though.
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Customer: replied 8 years ago.
My exhusband being an only child is very afraid at this point. I want to help him. How should we approach this delima? If he can't redeem the house can I try.
Expert:  Dave Z replied 8 years ago.
The best route would be to contact the lender directly, or preferably have an attorney contact the lender on your behalf to explain your intents on wanting to finance the home yourselves. The lender should be fine with this, especially in this market because any property can take a considerable amount of time to sell. If he can't get financed for the home due to poor credit or something along those lines, you are more than welcome to try as well. If there is any other money left in the estate you can both try to use this money to pay the amount owed down significantly as well. The best thing to do at this point is to make contact with the lender so that you can begin negotiations and get the ball rolling. The longer you wait the worse your chances will be to being able to work with the lender.
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