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My grandparents both deceased earlier this week, and they have a reverse mortgage. How long do we have to pay it back?

by gtigger27121 from , California. Sep 1st 2017 Reply


Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,553 contributions

Generally the loan becomes due and payable upon death. But it usually takes a bit for the lender to realize this, and of course the lender knows you can't sell the house of payoff the loan the next day. Once the lender becomes aware, you would usually see a letter explaining what timelines the lender expects for paying off the loan and asking what you intend to do about the loan and property. If you want to keep the home, you must pay off the loan. You won't owe more than 95% of the home's appraised value, even if the loan balance is more than that. If the home is worth more than the amount owed, you may sell the home and keep the difference. You may sign a deed-in-lieu of foreclosure and give the house to the lender if you don't want the home and the loan balance exceeds the home's value.

Sep 5th 2017
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,000 contributions

If the reverse mortgage was FHA insured (95% are), then per the guidelines, you have an initial 6 months.. after that, there is a possibility of an extension.. but it's not guaranteed. However, the benefits of a reverse mortgage gives you several options.. if the home is not worth what is owed, then you just call the lender and let them know that the owners have passed, and you do not want the property.. If however, there is equity, then you have 6 months to sell it and pay them off. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893

Sep 5th 2017
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Sara Deere (Saraloveshomeloans)
#1 ranked lender in Kansas - 511 contributions

Sorry to hear the news! Please get in touch with the servicer who was sending them monthly statements. The clock actually starts the day of the last eligible borrower(s) death. The servicer representing the lender will talk you through several options. Keep in mind the reverse mortgage loan is a non-recourse loan. If the loan balance is higher than house value, the heirs do not pay the difference. If the loan balance is less than the house sells for, the heirs of the estate keep the difference. The servicer will give the heirs time to remove any personal items. The heirs have the option to purchase the home, hire a Realtor in the area to help the heirs sell the home, or sign a deed in lieu so the servicer can contract a Realtor in the area to help sell the home. If the last option is the choice, if the home sells for me than the current principal loan balance at the time of closing the sale, the servicer will release the difference back to the estate. Again the servicer will give the heirs some time to work through the decision to sell or not to sell. Generally at the 90 day mark, the servicer will want a firm decision. If after six months, the servicer will require monthly updates until the house sells. The balance is still get higher each day the current loan is not finalized.

Sep 5th 2017
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