Posted by Kevin/Ct on 5/15/13 1:52pm
Msg #470087

Just heard a rather strange story about a reverse mortgage

With all the celebrity advertisements for reverse mortgages...it seems to be a viable idea. As I understand it the borrower's obligations are

1. Pay the real estate taxes
2. Pay the homeowner's insurance
3. Live on the property as a primary residence

I was just told a story about a local couple that put a reverse mortgage on their property. Apparently the husband died, and the bank foreclosed on the wife.

I am wondering if it had anything to do with the way title was held. You can hold property as joint tenants with right of survivorship. In which case the decedant's interest is transferred to the other party instantly unpon death without need of a will or probate of an estate.

The other method is to hold title as tenants in common without right of survivorship. I n which case the decedant's interest does not pass automatically to the other party. It needs to go through probate and pass title by an intestate or testate succession.

If any of you are considering a reverse mortgage...make sure you are represented by an attorney, and that all such questions are explored with the attorney.

Reply by Lee/AR on 5/15/13 2:15pm
Msg #470094

Have seen it a couple of times & they seemed to know

Happy to see you posting again! If one spouse (usually wife) isn't 62 or over, she can't be on the RM and they do a QC Deed to get her off title. In one I did, they knew what would happen and apparently needed to get out from under more than anything else.

Single man took out RM and got married a couple years later. New wife never on title or RM.

Also, they'd better be darn sure they will never want/need to move or that RM will have to be repaid upon (IF) sale--big ouch.

Reply by Kevin/Ct on 5/15/13 2:33pm
Msg #470098

Re: Have seen it a couple of times & they seemed to know

Hi Lee

Yeah...you have to be kind of careful when you do a reverse mortgage to make certain all questions are answered to the borrower's satisfaction. There really is no point to putting a reverse mortgage on the property unless both parties are protected. Otherwise one party is out of luck if the other one dies

Reply by jba/fl on 5/15/13 3:51pm
Msg #470115

And it is the grieving party that has to scramble.

Then again, perhaps insurance will cover? They do get one year to accomplish the necessary nitty gritty.

Reply by Linda_H/FL on 5/15/13 4:41pm
Msg #470118

We had a lady call our office last year

(when I worked for the attorney) - she and her husband had married, she put the house in both their names. He got to be over 62, she's under, he took a reverse and took her off title. He passed away. She does not qualify for the reverse mortgage and she can't qualify to refinance - she was about to lose the home she'd lived in almost her whole life.

Very scarey...need to be very careful with these.

Reply by MikeC/TX on 5/15/13 4:53pm
Msg #470121

That's unfortunately not uncommon when one spouse is under 62 - that spouse has to be QCd off the deed, and too often they don't bother to reverse that when the spouse reaches the minimum age.

I recall reading that there is either some legislation or some FHA rules changes in the works that will attempt to correct this problem, but I haven't heard anything more about it in months.

An RM is definitely not for everyone, and here's a perfect example why. No one bothers explaining to the younger spouse that the house may be foreclosed on if the older spouse dies before the deed can be corrected.

Reply by SueW/Tn on 5/15/13 6:00pm
Msg #470129

I too am glad to see you posting again Kevin and I agree with your post. My Aunt was seriously considering an RM until she began digging into all the what if's. You're right on about the celebrity ads, they're always the guys that we "trust".

Reply by JanetK_CA on 5/16/13 4:48am
Msg #470185

Re: celebrity ads... There's one that just slays me every time I hear it. Right after Fred Thompson finishes saying that he didn't know anything about RMs, he says "take my word for it"... What a stunning endorsement - NOT! I guess they figure that no one pays any attention to what is actually said - and sadly, they're probably right!

Reply by MW/VA on 5/15/13 6:44pm
Msg #470135

That kind of story has been all over the press. RM's aren't

a bad product, but IMO anyone can find themselves unprepared for a change in circumstances. Even without a RM, a surviving spouse might not have the means to refinance in their own name, for instance. I've heard stories of people losing out on pension funds, etc., because of the way they were set up.