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Reverse mortgage loans, probate,

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#1 Rkdeptawa


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Posted 05 April 2012 - 05:53 AM

This is a question for a friend that resides in the state of California. Recently her father has passed away,left no Will.. She along with her brother currently reside in the home of their deceased father,their father had a reverse mortgage on the home,how will that effect them, when the court goes into probate for his estate will they take the property from them.?He also has rental properties, that he may have taken another loan out from a bank and used the home as collateral? Where does does that leave them, if they continue to pay the mortgage can they take the properties from them? She said she believed he no longer had to pay taxes on his home where he resided, he was age77 at the time of his passing last week. If no one files for probate, can they continue to pay the bills and keep the property if the siblings agree.??? lots of questions, I know..

#2 Fallen


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Posted 05 April 2012 - 06:22 AM

The terms of the mortgage no doubt require that upon his death the mortgage be repaid.  In this case, sounds like the children would need to refinance the debt if they expect to keep the house.

The court doesn't initiate probate, and I'm not sure who you mean by "they" as to "take the property from them." 

"He also has rental properties, that he may have taken another loan out from a bank and used the home as collateral?"

I trust you didn't intend this to be a question to us.

You talk about "contiue to pay the mortgage" and I presume you are referring to the mortgages on the investment property.  Not sure why you'd think anyone would be in a position to take property if the mortgages are being paid.

"If no one files for probate, can they continue to pay the bills and keep the property if the siblings agree.???"

As a practical matter, sure, but they need to address probate of their father's estate.  They can't reasonably pretend indefinitely as though he never died.

Someone needs to sit down with an estate-probate attorney.

I'll echo PG's advisory "warning" with a twist: (Many) legal issues are complicated. Explanations and comments here might not fully identify or explain the ramifications of your particular problem. I do not give legal advice as such (and such is impermissible here at any rate). Comments are based on personal knowledge and experience and legal info gleaned over a quarter century, and every state has differing laws on and avenues to address most topics.  If you need legal advice, you need to consult (and pay) a professional so that you may have someone to hold accountable.  Acting on personal and informational advice from a stranger on the internet is a bad idea -- at least not without your own thorough due dilience/research and confirmation as it applies to your situation.  :)

#3 RetCopPrlgl


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Posted 06 April 2012 - 07:53 AM

Addressing only the reverse mortgage -

When the borrower dies (let's assume, for simplicity, this is the only borrower) the mortgage has to be paid off.  There are no payments.  If the home has to be sold to pay off the mortgage, that's what has to happen.

The estate will owe the balance of the reverse mortgage, along with any accrued interest and fees.  If the home is sold, and the sale price exceeds the reverse mortgage, interest, and fees, the equity remains with the estate.

A reverse mortgage is a non-recourse loan, which means that, if the property sells, but doesn't bring enough to pay the mortgage, plus interest and fees, the lender takes the loss.  Most of these mortgages carry insurance to cover that loss.

A restriction is that the sale of the home has to be a bona-fide third-party sale.  It cannot be sold to a family member at less than market rates for less than what is owed on the reverse mortgage (plus interest and fees).

That's not to say it CAN'T be sold to a family member.  There are no restrictions on sales to family members, just
in the case of a balance of the reverse mortgage being higher than the
value of the property.

I am not an attorney. My comments are made based on my training and experience as well as diligent research.  I am also not perfect, therefore, I will accept constructive criticism, if tendered with respect.

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