Reverse mortgages are a unique type of loan that requires an experienced MLO to navigate. I refer prospective clients to Paul Scheper, owner-broker of Loangevity Mortgage.
Paul is a trusted friend & colleague of many years. Please contact Paul with questions at paulscheper@live.com.
Paying Off a Reverse Mortgage!
As more seniors have turned to reverse mortgages, surviving spouses or adult children often become overwhelmed when the mortgagor suddenly (and permanently) “vacates the residence.”
The heirs must sell, pay off, or refinance the loan within six months. The heirs can consult a HUD-approved housing counseling agency or an attorney for more information.
If the heirs choose to sell, they can choose any real estate broker and keep any amount over the loan balance, and closing costs are paid.
According to HUD guidelines, if a home is underwater, heirs may purchase the house from the lender at 95% of the appraised value.
The remaining balance of the loan is covered by the mortgage insurance that the reverse mortgage borrower paid during the loan’s duration.
Note(s): The last mortgagor’s borrower’s personal belongings and furnishings can be removed before the sale. Fixtures, as defined by law, can’t.
Any “caregivers” living in the home have the right to protection of Calif. state law as they are considered “tenants.”
By the way, if there are “rent-paying” tenants in the property after the owner vacated, the owner (or their heirs) MAY have been committing fraud because the loan became payable when the last owner (on the title to the loan) vacated the premises.
“Notice of Occupant” ‘s Demise.”
FBI: Housing Fraud – What We Investigate!
If a lender becomes aware of the fraud, lenders “call the loan” and begin foreclosure with a “Notice of Occupants Demise.”
A reverse mortgage servicer uses several resources, including the Social Security death index, proprietary databases, and annual occupancy letters, to determine when a borrower last vacated.
