Estate Sales with Reverse Mortgages
UGH! It happened AGAIN… Listen up folks, you need to know this: If you have inherited (or are in charge of managing) an estate that includes a home that has a reverse mortgage you can NOT hang on to the house until you feel like selling it. You need to act FAST. Faster, even, than if the house had a regular mortgage. Reverse mortgages say that once the owner passes away or no longer resides in the home (ie the move into a nursing home or elsewhere) the reverse mortgage must be paid immediately (immediate may be defined or not – and when it is, it usually says something really generous like 90 days). So unless you have enough cash hanging around somewhere, or you want to purchase the home with a “regular” mortgage, then you are going to need to sell it. Those are your only options, and it shouldn’t take you that long – a few days tops – to explore those.
And please do not be confused or allow your estate attorney to confuse you – these people aren’t kidding. You don’t pay they will take that house. That’s what I meant by “it happened AGAIN”. In the last 2 years I have had people who contacted me to sell a home after someone they loved died; and the two cases were far too similar. The decent had a few bank accounts but most of the wealth was wrapped up in the home – the belongings in the home and the equity in the home; and there was equity, even after the reverse mortgage was paid off. That is, if the property was sold. Unfortunately, in both cases the people managing the estate did not feel any financial pressure since monthly payments were not due so they were taking their time trying to get every red cent they could for the toaster oven and each pair of shoes in the house. Meanwhile, they were defaulting on the terms of the mortgage and ignoring notices from the mortgage company; and the next thing you knew – the home was no longer theirs and the equity on the home was lost with it.
Can you prevent a foreclosure? Sure, maybe, if you are acting in good faith and have the home on the market. Well YOU probably can’t stop the foreclosure, but I can. I have stalled many foreclosures long enough to get a sale through. But you must be acting expeditiously in good faith to be in compliance with the mortgage documents; not trying to think of reasons why you can’t be in compliance with them.
In this latest case, apparently the estate attorney was even involved and the estate attorney was surprised. I don’t know why, so I will share this:
(a) Consumer protection laws that are in place on many mortgages do not apply to reverse mortgages.
(b) Virginia is a non judicial state (in other words, a lender does not need to go to court to foreclose on a home in Virginia)
So if you are in the Dulles area of Northern Virginia and you have inherited a home that has a reverse mortgage on it, you need to be in touch with me right away. One way or another you need to get that mortgage paid off if there is equity in the house, otherwise the equity will be lost. This is an example of one of those times where procrastination will cost you more than you can imagine. Please, I don’t want to see one more example of this. Please, let me help you keep what your loved one really wants YOU to have.