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

16 answers | Last updated: Jan 13, 2016
A fellow 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?

Expert Answers

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 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.

Community Answers

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.

A fellow 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.

A fellow 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"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦"¦.

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:


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

A fellow caregiver answered...

Many are unaware can pay off secured or hemc reverse mortgages at 95% of Current Market 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

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.

HECM. < yes that is correct. I have been in the house since 2011 today is 3//13. I am working out buying the house on a short sale, Foreclosure came in but Wells Fargo is working with me, and most attorneys and realtors don't tell you about options. Like everything else in this country dig deep enough and find a way!

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.

Hrtbroken-daughter answered...

I found out my father did a reverse mortgage several years after he paid off his house. My father became very ill about 5 years ago and asked me to stay with him, and unlike previous years, I have lived at home with my dad for the last 5 years. He passed away March of 2014, and recently received mail that a Reverse Mortgage loan is due in full. I am totally devastated because he really didn't need the money, their was a very nice IRA savings and monthly pension and SSI . There were no home repairs needed, everything had been done years prior, and no astronomical hospital bills .I am so saddened that the home he worked so hard to keep and then finally pay off, now goes away, and not stay in the family. Also, I cared for him practically 24/7 the 8 months of his life. I don't understand this Reverse Mortgage thing, I guess for some it is beneficial and then there are the others that really don't need it, but do it because someone approaches them dangling large check amounts and they are eligible because of their age and own their property. Actually, I think it is a legalized scam aimed at the elderly because they are somewhat vulnerable. However, I do realize that it's was my dads money and he was free to do whatever he wanted!!! the upsetting part is that the home I grew up in, and his grandchildren played in, family parties, reunions, wedding, and all will be no more be in the family. This has been a very difficult year. I think he was depressed, from the lost of his close brother and don't think he really understood completely the ramifications attached. This has been a very difficult year. I am looking to understand the options of repayment of a reverse mortgage.

Hmptnvlr78 answered...

Well dad has house I'm his only daughter he not married how do I get the house if something happen to me .but I'm married

Leftinthecoldincc answered...

To heart-broken daughter, I would lay a bet that your father was approached by his bank for this reverse mortgage. Bank of America was notorious for doing this to their aging customers. My mother took out a reverse mortgage to cover things that she had let happen to the house over 20 years of neglect, that had to be addressed. She owned her house outright, and they gave her 62,000, and the mortgage after 6 years has climbed to 95,000. She was told that the mortgage could not exceed the value of the house, however, the houses in her area go for about 85,000, and the reverse mortgage has valued the home at 130,000. There is no way that, when I have to sell the house, that I will be able to get 130,000! I was told that I could stay in the house, until it is sold, as long as I can prove that I am actively, trying to sell the house. I have no intention of keeping it, as I would not be able to pay the utilities, electric, etc. on it. I will have to let them foreclose on it. What I am concerned about is the reverse mortgage taking what they want from any other assets that are separate from the house, to pay for their full amount owed. Does anyone know about this? I have been living with her for the past 10 years, taking care of her (she is 93 now), and I am deaf (bi-cochlear recipient, now), and have tumor growing on my spinal cord, which is not possible to operate on. I will be without a home after she passes. There is not enough money from her other assets to pay for the reverse mortgage, so that is not an option for me. I am 63, get my SS due to my disability, and get less than $900. There isn't much that the government has done to help people like me when you stay at home for 17 years taking care of your children, your husband divorces you, and depending on what state you were divorced in, may not get any more than 1/2 the assets, no alimony, no way to prove he hid assets with his parents and boss. I left with only what I needed and left the rest there. He took back my engagement ring and anything he had given me, which wasn't much. There are a lot of unfair things that happen to you when you don't have the money to hire lawyers to help you, and the less you have, the less they are willing to do for you. Reverse Mortgages are in some ways very helpful, however, they are designed to benefit by taking the house from any heirs that are in the will. Not the most noble of designs, but a creative way to take houses that are worth much more in the end than they gave to the owner. She was told that the longer she had it the cheaper it would become, but I am not seeing this from what I have been reading from the contributors here.

Sjolley2 answered...

NEW UPDATE: If you are a Non-Borrowing Spouse (told to take your name off title by the reverse mortgage company) HUD has issues a Mortgagee Letter on June 12, 2015 that give you the option to remain in the home for life once your borrower spouse passes away. Advocates have fought for this for years! One catch is the Servicer has the choice to offer this option or to foreclose. If you are a Non-borrowing Spouse read HUD ML 2015-15 and know your rights.

Melio36 answered...

so does that meen that a non_borrowing spouse would that be a child living in the home takeing care of the mother? my parents really need help with this.