How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Richard Your Own Question
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55605
Experience:  29 years of experience as a tax, real estate, and business attorney.
Type Your Tax Question Here...
Richard is online now
A new question is answered every 9 seconds

My payoff exceeds the appraised value, the borrower has died

Customer Question

My payoff exceeds the appraised value, the borrower has died and now the property is in foreclosure. Is there anything the heirs can do.
JA: Thanks. Can you give me any more details about your issue?
Customer: The heirs are living in the home, the want to payoff the mortgage, however the appraised value is less than the payoff. the original principal limit was $80,875 and the growth on principal limit is $26,009. the property appraised for $95,000. Can a reduction in the payoff be negotiated.
JA: OK got it. Last thing — Lawyers generally expect a deposit of about $36 to help with your type of question (you only pay if satisfied). Now I'm going to take you to a page to place a secure deposit with JustAnswer. Don't worry, this chat is saved. After that, we will finish helping you.
Submitted: 1 year ago.
Category: Tax
Expert:  Richard replied 1 year ago.

Good afternoon. My name is ***** ***** I look forward to helping you.

Yes, you can work with the bank on modifying the loan to reflect the fair market value That's because none of the heirs has any personal liability for the loan which means the bank could not get any more from the heirs than from anyone else. The bank's only recourse is to foreclose and sell the property. A foreclosure costs money and typically no one bids at the foreclosure sale resulting in the bank having the risk of ownership and then paying closing costs, including a 6% brokerage commission to sell the property later. Thus, who is their best bet to limit their losses? That would be the heirs! So, yes, the bank is likely to work out a modification with the heirs to reduce the principal balance to its fair market value and/or reduce the interest rate because doing that with the heirs is a far better business option for them than going through the foreclosure route.

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as OK, Good or Excellent (hopefully Good or Excellent). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

Customer: replied 1 year ago.
This is a Reverse Mortgage, so would the above apply as well.
Expert:  Richard replied 1 year ago.

Thanks for following up. Yes, the same would apply. No one has any personal liability for a reverse mortgage. And, the lender wants to get the most value for the property as possible given that they can't pursue anyone for any shortfall. Thus, they have every incentive to make a deal with the heirs because that's their best bet to maximize their recovery.