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Reverse mortgage – how quickly do family members have to leave the house after the owner dies?
My grandfather has a reverse mortgage on his home. One of my aunts lives with him as his caregiver. He’s in the hospital now and may not survive. We’re all wondering how quickly she would have to move/we would have to clear the house of belongings. No one in the family intends on refinancing or buying the house and I believe it’ll be fully under bank control.
Immediately? 30 days?
...asked on December 6th, 2011 @ 6:00 pm in Loan - Home
If the reverse mortgage has reached the end of the line, they still need to give you 30 days to move out, and you can probably push that out another 30 or even more. Of course if you do that, you should get any valuables and furniture out that you don’t want to be damaged, as the bank will bring in their thugs to move any remaining stuff outside.
If the bank still has some payments to make, then you should have that time period to take care of things. Unless of course there’s something in the reverse mortgage contract that ends the deal if the owner/beneficiary dies.
...answered by HyperDog on December 6, 2011 @ 6:50 pm
This varies by lender, but how I have seen it work goes something like this:
Shortly after grandfather passes, the lender will be in contact with the executor of his estate. When they find out that no one plans on satisfying the reverse mortgage, the lender will begin foreclosure proceedings. The lender will most likely send someone to talk with your aunt about taking possession rather than going through the eviction process.
There will be notice, she will not be immediately required to vacate.
...answered by godged on December 6, 2011 @ 7:15 pm
READ the reverse mortgage agreement
Pretty quickly the house must be sold to pay off the reverse mortgage
...answered by chatsplas on December 6, 2011 @ 7:23 pm
It won’t be immediate. Technically, you are supposed to notify the lender within 30 days. Otherwise, they have service providers who keep track of death records and they will find out within 1-3 months. Regardless of what you plan to do (refinance, sell or turn over the keys), the lender will most likely begin foreclosure proceedings right away. Since it typically takes about 6 months to foreclose, they need to start the clock running; so don’t be upset when you get nasty form letters. It is unfortunate, but it gets sent out automatically, even when you are working with them. Many a lender have been burned as well from relatives staying on or folks dragging their feet.
If you don’t intend to keep the home but you need the time, your Aunt could theoretically stay on for the 6 months it will take to foreclose. However, if your Aunt chooses to stay through the final foreclosure, she will, in essence, be evicted. If you don’t need much time and the lender is willing to work with you, then you can sign a Deed in Lieu of Foreclosure wherein you give the bank the title to the house and they will be responsible for selling the home and all it entails. The family is not liable for the loan, nor is the estate.
If the house is worth more than what is owed, even if you don’t want to refinance and keep it in the family, you may want to consider selling it so you can keep the net proceeds. If the heirs have any huge tax bill for 2011, you may be able the write off the interest paid to date on the reverse mortgage. Check with your tax advisor. As long as you are making a good faith effort to sell it, the bank will give you at least 6 months to sell it, with maybe two 3-month extensions, for a total of one year. But you need to be communicating with the bank to get these extensions.
Sorry to hear your grandfather is not doing well. If he has a line of credit with funds available, you may want to consider withdrawing money now to help pay for any of his future expenses. Once he passes, you will no longer have access to it.
...answered by MRA on December 6, 2011 @ 8:15 pm