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How can my sister stay in the house Mom had a reverse mortgage on after Mom dies?

12 answers | Last updated: Jul 23, 2014
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Q
An anonymous caregiver asked...
My mother at age 83 took a reverse mortgage last year and died last month. My sister who is 55 years old is the remainderman of her estate and has been living in the house with her for many years. She still lives in the house. Will she be forced to sell the house or can she continue living there?
 

Answers
Caring.com User - Denis Clifford
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Denis Clifford is a lawyer specializing in estate planning. A graduate of Columbia Law School, where he was an editor of the Law Review...
65% helpful
answered...

The bank holding the reverse mortgage will want, and be legally entitled to, repayment of the money it is owed under that mortgage. Your sister needs to determine how much See also:
What are reverse mortgages?

See all 106 questions about Reverse Mortgages
money is owed to the bank. Then the question becomes how she can pay that money to the bank. This would depend on:

  • What financial assets, aside from the house, your sister has;

  • The terms of the reverse mortgage. There are different types of reverse mortgages, with varying repayment requirements

  • What the bank is willing to do regarding repayment. Will it accept repayment spread over time, or will it insist on prompt full payment?

I surely hope that your sister can continue to live in the house. That's certain how it should be.

 

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40% helpful

I agree with the prior answer as it is unfortunate that after a death of a loved one the heirs are forced to face the reality of a Reverse Mortgage that may not have been understood initially. This is one of the harsh consequencess that can come with a Reverse Mortgage,.. the price and terms paid for the financial benefits. You will likely have to pay off that which is due $$ now which frequently is shockly much higher than expected because of the effect of the negative compounding of interest and principle build up the longer you hold it. Hopefully your sister will be able to possibly refinance as these type of situations commonly are accompanied by limited other assets. The longer you wait the more it will cost as time works against the heir in this situation.

This may prove to be one of those additional difficult financial decisions which conflicts with personal choice of both the heir and the decendent.

 

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60% helpful
An anonymous caregiver answered...

Though not a professional expert on the subject of reverse mortgages, I am responding because I have a sister whose situation was very similar to the one described and who has been a 'casualty'. My sister lived in the family home with our mother for many years. In 2003 - when our mother was in her early 80's she signed up for a reverse mortgage to make some repairs/improvements to the house. She passed away in Sept. 2008. My sister - who was left the house in our Mother's will, had no way to pay off the money owed the bank (which had grown substantially as a result of fees, interest, etc. etc) and as a result has been forced to sell and move out. Tragically the bank is walking away with most of the money from the sale of the home, my sister has little to show from her time/investment while living there and in later years looking after our mother. At age 64, she is ill and unable to work. The experience has been devastating. I wish your sister good luck.

 

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25% helpful
An anonymous caregiver answered...

Oct 28,2009 - When the borrower (YOUR Mother) of the reverse mortgage passes away, so does the reverse mortgage, it was for your Mother, she signed for it. The borrower of the reversed mortgage usually gets a lump sum up front that goes as a lien on the property. In California, there are No FREE rides for the ESTATE allowed upon the death of the borrower , the reverse mortgage must be paid off ASAP after death. That lien along w/the HIGH interest rate must be paid in full thru the ESTATE. What happened to the reversed mortgage money? May be there is some left to help the ESTATE to pay the reverse mortgage off. The money was for your MOTHER to live in comfort for the remainder of her life, not for the ESTATE to live comfortable"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦.

 

83% helpful
rainmand answered...

These are the ways to pay back the Reverse Mortgage Lender:

  1. Refinance the Reverse Mortgage with a traditional Forward Mortgage

  2. Refinance the Reverse Mortgage with another Reverse Mortgage (assuming age and equity qualify)

  3. Use the proceeds from the Life Insurance policy to pay the Reverse Mortgage (if one was available)

  4. Sell the house. The equity that's left over goes to the Estate.

  5. Let the Lender foreclose. This option only makes sense if the Reverse Mortgage is upside down.

  6. Include the Reverse Mortgage in a Chapter 13 bankruptcy and pay if off over 5 years, as this Daughter did when her Mother passed:

http://tinyurl.com/2dtgdy2

 

75% helpful

RAINMAND YOU GOT IT!!!!!!!!!!!!!!!!!!!! I KNEW THERE WAS A WAY.. I WAS THINKING AND MULLING OVER IT AND TURNING IT AROUND IN MY BRAIN.. YOU ARE ABSOLUTLY RIGHT. AND YOU GET THE PRIZE. THIS IS A SMART INTELLIGENT. INTELLECTUAL ANSWER THAT THE ATTORNEY'S DO NOT KNOW AS AS USUAL AND WELLS FARGO THAT IS OUT IN CALIFORNIA HAS TO BE CAREFUL TO ABIDE BY THE LAWS OF THE STATE WHERE IT HAS A REVERSE MORTGAGE.

PRAYERS FOR YOU!!!!!!!!!!!!!!!!!!

 

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67% helpful
An anonymous caregiver answered...

Many are unaware ..family can pay off secured or hemc reverse mortgages at 95% of Current Market value..it doesent matter what the current debt is....with todays economy this can help many, allowing the house to be bought at a great price since the market is so low.. but the mortgage holder will never tell u this..this is fact

 

33% helpful
sjolley2 answered...

Hello, If the property is held in a life estate the remainderman was required to sign the deeds at loan closing and give up her future interest in the property. If that didn't happen the property is your sisters free and clear and the lender has no standing for their loan. I bet that didn't happen. Call me I can try to help. I have another consumer in the same situation. Sandy Jolley Reverse mortgage suitability and abuse expert adn elder consumer advocate.

 

25% helpful
sjolley2 answered...

Sounds like the property is in a life estate. If so, your sister would have had to sign the deeds at closing and give up her interest in the property. If she didn't sign the deeds at closing she is now the sole owner of the property free and clear according to HUD regulations regarding a life estate. I am a reverse mortgage suitability and abuse expert. You can contact me for additional information. Sandy Jolley

 

chrisapple answered...

My sister is in the same situation. She signed a quit claim deed and my mom had to get a reverse mortgage after her stroke for living expenses. My sister hasn't worked for 11 years because she was the sole caregiver. My mom passed away in October, and now the reverse mortgage has come due. I'm wondering if there is anything I can do to help. She has no money, no credit, no job, and is getting evicted shortly if we can't find a way to save the house. Any help would be much appreciated.

 

Eric2014 answered...

A lot of great information here. I was living with my father for years. I gave up my life to ensure he stayed in his home, where he belonged rather than wind up placed and forgotten in a skilled care facility. When I moved in with him I had a very large nest egg. Over the years I spent that on him mostly, taking him nice places, investing in an luxury RV with him, and helping pay for this and for that. Eventually my resources dried up and he began supporting us both as he had a nice pension Including the help from his Reverse Mortgage. He understood nothing about it, only that the bank would pay him every month, nothing more. Sad, I know I can't do a darned thing about that.

He died on 09 April of this year 2014.

I am left here with NOTHING, no income, I'm 52, I won't procure any kind of employment at my age and with no skills, degrees or decent job history I'm knowing I'm pretty well screwed.

I have no friends, no family, no place to go. The house is FULL of things, nothing of financial value, however, we've lived here a very long time, my Daddy since November of 1982, I joined him here in 2008. I don't want to have to leave my fathers home, the only place I can go is under the local bridge or to a gosh darned homeless shelter. I've lived too good for too long to have to succumb to this. No, we had no will, no nothing, I've lectured everyone all my life on investing in a Living Trust, it dawned on me when my Daddy took his last breath that we never made one out. Siiiggghhh. The house is worth circa $250k now, the bank or banks rather (the note has been sold a time or two since inception) have paid out $300k. Home is located in SoCal.

How long can I expect to be able to stay here before the bank shows up with the police and kick me out to the curb keeping all the contents of the property.

I may not like reading what you folks have to type, however, your comments will nevertheless be appreciated.

Please view my blog where I share more about my current situation and please share it as much as you can. www.EricsNewLife2014.Blogspot.Com

Thank You Mr. E. Vogt

 

 
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