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Ely, Counselor at Law
Category: Real Estate Law
Satisfied Customers: 102584
Experience:  Qualified attorney in private practice including business, family, criminal, and real estate issues.
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Our mother took out a REVERSED MORTGAGE; however she never

Customer Question

Our mother took out a REVERSED MORTGAGE; however she never put her second husband on the mortgage for various reasons. My mother passed last April and her husband is currently living in the home. The bank is now asking to either SELL the home or we give the the money taken out. We have to come up with 50K to keep the house. I plan to buy the home so he (My mother's husband) can live in the house. However, we are trying to figure out how to forward the mortgage. A friend suggested we SHORT SELL the home to save cost. My question is:
How do we go about SHORT SELLING the house where I can purchased and is this the best option? The house is in Cleveland Ohio.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Ely replied 1 year ago.

Hello and welcome to JustAnswer. Please note:This is general information for educational purposes only and is not legal advice. No specific course of action is proposed herein, and no attorney-client relationship or privilege is formed by speaking to an expert on this site. By continuing, you confirm that you understand and agree to these terms.

I am sorry to hear about this situation. Please tell me what state this is in?

This is not an answer, but an information request. I need this information to answer your question. Please reply, so I can answer your question. Thank you in advance.

Customer: replied 1 year ago.
Expert:  Ely replied 1 year ago.

Thank you.

I am going to assume she had no will. Reply and let me know otherwise if I am not correct. And I am also going to assume that all parties in the family are in agreement as how to split the home (let me know if you want to know how it would be split if the parties were not in agreement).

First of all, probate need to be filed. When someone passes away, then their estate has to be distributed. The problem is that without probate - with assets such as titled property or bank accounts (those that do not have a pay on death clause) - this is hard to do. This is because you cannot switch over the assets without an order from the probate court, and simply a Certificate of Death will not do. A Certificate of Death simply states that someone has passed on, but does not give you the right to really do anything in the deceased's name.

So one files probate. Once probate is filed, the Executor of the estate gets something called a Letter of Testament/Administration (hereinafter "Letter"). This Letter will allow the Executor to switch over the assets from the deceased individual to whoever will own the property. It is like a "Power of Attorney," but from the Court. Without that Letter, there is no way to transfer titled property and switch the assets into the names of the beneficiaries. (If there was a Will, the beneficiaries are decided per the Will. If there was no will, the beneficiaries are decided by default succession law of the state.)

Second of all, him living in the house and being her widower gives him an advantage. The problem is that once probate is filed, many lenders have an ACCELERATION CLAUSE which means that once the owner passes, the loan is accelerated and everything must be paid. In addition, even if there is no acceleration clause, the lender may be hesitant to move the property into your name - they never qualified him as an owner... only him. They may not want to refinance the property into his name. The way to overcome that part is with the federal Garn–St. Germain Depository Institutions Act. See HERE. "When title is transferred by inheritance to a related owner-occupant. When a relative inherits and occupies a residence, the Garn-St. Germain Law bars the lender from enforcing the due-on-sale clause. However, some lenders will try to coerce the heir into paying an unnecessary mortgage assumption fee."

A lot of times, doing this is not possible without probate first. So probate has to be filed for her, either a full-blown probate or just an small probate action to transfer the deed. However, the Garn St. Germain Act helps to keep the reverse mortgage from foreclosing.

An attorney is recommended for this, as it can be rather complicated to do this without one, and often, the Court outright requires an attorney in probate cases.

I hope this helps and clarifies. Please use the SEND or REPLY button to keep chatting, or please RATE when finished. You may always ask follow ups at no charge after rating. Kindly rate my answer as one of TOP THREE FACES/STARS and then SUBMIT, as this is how experts get credit for our time. Rating my answer the bottom two faces/stars (or failing to submit the rating) does not give me credit and reflects poorly on me, even if my answer is correct. I work very hard to formulate an informative and honest answer for you; please reciprocate my good faith with a positive rating.