what happens to a reverse mortgage when someone dies and there is a will?
June 1, 2010 by
Filed under reverse mortgage
Need help…Here is the situation…nonworking Family member lived with mother who did a reverse mortgage on house and has now passed away, in her last will and testament she left the house and any money to this nonworking family member. There was no money and This family member has no money to live on. What do we do next? Do we need to get a lawyer, does the house have to go to probate? Does this family member have to sell taxes?
This is in the State of California. Any information will be helpful. thankyou
The mother couldn’t leave the house to anyone, because she didn’t own it. The bank did, and still does. If the family member can come up with enough money to pay back the bank the balance of the mortgage owed to them, then they can keep the house. Otherwise, it must be sold.
If mom was the sole owner of the house, the reverse mortgage has reached it’s logical end.
If the the family member has no money to pay off the reverse mortgage, it will get foreclosed on. If the house can be sold for *more* than the mortgage balance, the excess will be returned. Given current housing prices, that is unlikely.
Getting a lawyer isn’t goint to change this.
The house will have to be sold to satisfy the outstanding debt. Anything remaining goes to the benficiary- after laywers fees and such.
So, basically, they can not keep the house and can not sell the house on their own to have the money, the estate has to do it and the mortgage gets first crack at the money.
Usually, it is impossible to overturn in court unless you can prove that the family member was not of sound mind when the mortgage was taken out, but that might throw the will into question as well, which would be another headache.
Sorry if its not what you wanted to hear