My mom is 65 and did a reverse mortgage. Are her kids responsible in any way?

9 answers | Last updated: Dec 01, 2016
A fellow caregiver asked...

My mom is 65 and did a reverse mortgage. Are her kids responsible in any way?


Expert Answers

If your mother took out a reverse mortgage on a home that she owns in her own name, you and your siblings have no obligations.

You don't say whether your mother's home is partially owned by any of her children (she wouldn't have been able to get a reverse mortgage if any of the homeowners on the title were under the age of 65.) If you or your siblings are on the title, you would have been required to sign off on the reverse mortgage as a co-applicant. In that case, you would be legally obligated by the terms of the loan.

If your mother sells her home or if the home is passed on to you or your siblings when your mother dies, you will then be faced with the task of paying back the reverse mortgage. You can do this either by selling your mother's house or taking out a traditional mortgage and paying off the reverse mortgage with the proceeds of that loan.


Community Answers

Ned answered...

What if the property is worth less than the mortgage balance? Can the heirs simply give the lender the keys and title to the property without being hit with a deficiency judgment?


Rainmand answered...

Can the heirs simply give the lender the keys and title to the property without being hit with a deficiency judgment?

Yes. The Lender will foreclose on the property, and recover as much as possible from the sale, and file an insurance claim with HUD to recover the difference.


A fellow caregiver answered...

Fred Thompson is forever on TV trying to sell the reverse mortgage. I don't see any benefit to homeowners. Is there any? It seems after paying costs to obtain this monthly check for outstrips any benefits. Please, can you explain benefits, if any?


Rainmand answered...

The primary benefit is being able to convert equity into cash without a monthly mortgage payment obligation. And costs have come down dramatically. Last Summer, for many of my clients, I paid 100% of their fees. And HUD recently launched the "Saver" program, reducing the FHA insurance premium substantially.


Sjolley2 answered...

There is one reason to get a reverse mortgage: Use as a tool in your financial strategy, meets your financial goals, and provides financial security through retirement. A reverse mortgage is a complex financial instrument with lifelong consequences for seniors. You need financial and legal advice to understand those consequences and if they are acceptable to you because once you sign on the dotted line it is very difficult to recover from the financial damage. I welcome calls from consumers, consumer advocacy agencies, legal and financial professionals. Sandy Jolley, Reverse Mortgage Suitability and Abuse Expert.


Sjolley2 answered...

Response to the heirs/children - you are not responsible in any way for the reverse mortgage your mom took out. However; you do have legal rights. Most are FHA insured and governed by HUD/federal regulations. It's important to know what the borrower's rights and the heirs rights are so you are making the best financial decision for your circumstances. Sandy Jolley


Hrtbroken-daughter answered...

I think the commercials are misleading. However, when an elderly person has 10-15 mortgage payments left, hospital bills, medication charges, increased insurance premiums, plus food then the reverse mortgage is a good choice. However, if your home is paid off, and there are no huge hospital bills, nor increases on health and life insurance premiums them taking a reverse mortgage is not a good option. If home repairs are needed the a bank would probably loan the home owner the money at a low rate. at any rate reverse mortgages should be avoided....Seniors are being legally railroaded and all options are not being explained to them... all they hear is that they will get a check for the built up equity of their home to help pay their bills and that they will not have to pay their mortgage anymore. This is not a good idea when they parents want to leave their home to their heirs. Dementia and Alhezimers patients sometimes make bad financial choices.


Rainmand answered...

(she wouldn't have been able to get a reverse mortgage if any of the homeowners on the title were under the age of 65.)

Actually, the age is 62, not 65.