Posted by karce on 7/2/06 10:40am
Msg #130335

Question on R.M. upon the owners passing, does the property

go to the state (or some other agency), OR can the beneficiarys sell it or then take ownership of the property? Is it also possible that while still alive, the owners can sell the property or not? Thank you for input!

Reply by Grace Westlund on 7/2/06 11:11am
Msg #130341

It is my understanding that upon the death of the property owner(s) or if the property owner(s) do not live on the property for more than 12 months (ie nursing home) the loan must be paid in full.

You only owe what is borrowed (plus interest). Upon the owners death the beneficiary may sell the property, payoff the RM, and the balance will go to the beneficiaries. If the beneficiary wants to keep the property they must payoff the RM.

The payoff can never be more than the Sales Price of the home, which must be sold at market value.

Also, you may sell your property at anytime without penalty (at least all that I have done there is no prepayment penalty).

Reply by Grace Westlund on 7/2/06 11:13am
Msg #130343

Brenda TX is the expert on RM's so hopefully she will be able to respond.

Reply by BrendaTx on 7/2/06 11:23am
Msg #130346

First of all, thank you for elevating me to expert status on RMs, Grace. I am not an expert. I researched them carefully to make sure I felt okay about them. I have shared my notes in my book but it is not to be construed as legal advice.

Because I love the older people I work with I wanted to make them feel comfortable in the signing of the docs.

What I put together in my book is the info that a notary needs to know to

(1) close the loan efficiently without making the signers feel apprehensive

(2) start learning all they need to about rev morts to become well informed

I learned all this from reading HUD.gov, and perusing consumer publications from AARP, and from talking to LO's. My information is currently sold in preview edition at a very low price of $9.95 and will address #1 and #2. The original poster is asking one of the questions in my Notary Quick Start Guide. You can find my book for sale on my website.

Reply by Kevin/Ct on 7/3/06 7:50am
Msg #130484

By RM, I assume you are talking about a reverse mortgage. The answer to your question may be state specific depending upon whether you are dealing with a title theory state or a lien theory state for mortgages.

In a title theory state such as Connecticut the title is split between the mortgagor and the lender. Legal title is conveyed to the lender. Equitable title is retained by the mortgagor. In lien theory states the mortgage constitutes only a lien on the title.

My understanding of reverse mortgages is that the borrower cashes out a percentage of the equity in his property, and the mortgage becomes due and payable upon his death or the sale of the property. If he and his wife or other joint tenant with right of survivorship hold title nothing changes until the death of the last joint tenant. By the way all joint tenants must be over age 62 at the time the reverse mortgage is filed. Upon the death of the last joint tenant the mortgage becomes due and payable or the bank can foreclose on the mortgage. In title theory states the title holder's equitable title to the property must go through probate. If the last joint tenant had a will the property's title will pass to a legatee through a testate succession in which the equitable intestest will be conveyed to the legatee of the will subject to his payment of the mortgage. If the last joint tenant left no will the property will pass through an intestate succession which relies on a statutory formula for division of interests among the decedent's heirs. The legatee under a will or the heir under an intestate succession has the option of refinancing and paying the reverse motagage and retaining the propert, or deeding the property to the lender in payment of the reverse mortgage, or the lender can foreclose for non-payment.