![]() Walk away from the home (which would result in a foreclosure action by the servicer).Pay the loan balance in full (this could be done thru refinancing, existing assets, or selling the property and keeping any remaining home equity).The options for the reverse mortgage after death include: “The sooner you can contact the servicer, the more time you’re going to have, which means the more options that are on the table,” according to LaRose. So keeping in close contact with the servicer can actually be a benefit to the heirs or those responsible for the borrower’s estate. “If we don’t know what’s going on, we have to assume the worst - that they have no intentions of paying off the loan.” “The biggest thing is knowing that your best resource is to pick up the phone and call the servicer,” LaRose says. Maintaining regular communication with the borrower’s reverse mortgage servicer is imperative during this process. Keep Open Communications With the Reverse Mortgage Servicer This letter provides information to the heirs and borrower’s estate about the options available to them for satisfying the reverse mortgage loan balance. What Happens to a Reverse Mortgage After the Death of the Borrower(s)?įollowing the death of the borrower, the reverse mortgage loan servicer will send a Condolence Letter to all known heirs. Just as reverse mortgage borrowers are required to adhere to guidelines under the terms of their loans, heirs must also abide by certain requirements following the death of their borrowing parents. Once the reverse mortgage is due, it must be paid back in full in one lump sum, LaRose says. However, the most common reason a reverse mortgage becomes due is when the borrower has passed away, says Ryan LaRose, president and chief operating officer of Celink, a reverse mortgage servicer. “Failure to pay taxes and insurance is the number one reason behind most of the foreclosures,” says Dan Larkin, divisional sales manager of Schaumburg, Illinois-based PERL Mortgage, Inc. While reverse mortgage holders don’t have a monthly mortgage payment, it’s important to remember the loan also becomes due if you stop paying your property taxes or homeowners insurance, or if you fail to maintain the property in good repair. The reverse mortgage loan balance becomes due and payable when the borrower either dies or otherwise permanently vacates the home for a period longer than one continuous year, which includes moving to a different home, as well as moving into an assisted living facility or nursing home. ![]() However, borrowers are still required to pay real estate taxes, utilities, hazard, and flood insurance premiums while they have a reverse mortgage.įailing to maintain these payments and keep the house in good repair may be grounds for calling the loan due and payable. Reverse mortgages do not require borrowers to make monthly payments toward the loan balance as they would under a conventional “forward” mortgage. Department of Housing and Urban Development (HUD). These products are insured by the Federal Housing Administration and regulated by the U.S. Most reverse mortgages available today are known as Home Equity Conversion Mortgages (HECMs). Optimize your trades with advanced portfolio insights, fundamental analysis, enhanced charting, and more.Reverse mortgages allow homeowners aged 62 and older to convert a portion of their home equity into tax-free loan proceeds, which they can elect to receive either in a single lump-sum payment, in monthly installments, or through a line of credit that allows funds to be withdrawn as needed. Discover new opportunities with expert research and investment ideas backed by technical and fundamental analysis. Yahoo Finance Plus: With a subscription to Yahoo Finance Plus get the tools you need to invest with confidence. At Yahoo Finance, you get free stock quotes, up-to-date news, portfolio management resources, international market data, social interaction and mortgage rates that help you manage your financial life.
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