QUESTION
Can someone continue to live in a house that has a reverse mortgage after the legal owner is deceased?
Asked on Jul 21st, 2014 on Estate Planning - California
18 ANSWERS
William M Stoddard
Was the person there before the person that died? Possibly, but the monthly payment on the reverse mortgage must be kept current.
Answered on Jul 28th, 2014 at 3:24 AM
They must pay off the mortgage by refinancing the loan if they wish to retain possession of the property.
Answered on Jul 24th, 2014 at 4:03 AM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Only if you're really friendly with the new owners! After the death of the borrower(s) in a reverse mortgage, the bank gets the house and the bank will sell it to get their money back.
Answered on Jul 24th, 2014 at 4:01 AM
Taxation Attorney serving Charleston, WV
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C. Page Hamrick III
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IN WEST VIRGINIA ONLY: A reverse mortgage is like any other mortgage, however the "due" date on the loan is usually some number of days after the death of the borrowers. The property is still inherited by the heirs or devisees of the decedent, subject to the mortgage; the new owners can pay the loan off and keep the property if they desire, or sell the property and pay off the mortgage loan with the proceeds.
Answered on Jul 23rd, 2014 at 3:13 PM
2 Awards
Potentially, for a short period of time. The company who did the reverse mortgage will perfect their lien sooner or later however, and that person will be forced to leave.
Answered on Jul 23rd, 2014 at 2:56 PM
Litigation Attorney serving Wendell, NC
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Kirk, Kirk, Howell, Cutler & Thomas, L.L.P.
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I would need more facts to determine if the actual person in question can stay living in the house. But, in general, the decedent's house automatically passes at death to his or her heirs . . . either those named in the decedent's Last Will and Testament or the heirs per North Carolina intestacy law. By operation of law, with very limited exceptions, the decedent's heirs who inherit the house have the right to live in the house even though there is a reverse mortgage. With that being said, the reverse mortgage is still owed and, if not paid off, then the mortgage holder can and will foreclose on the house. But, until the mortgage holder forecloses on the house, the lawful heirs can continue to live there. As an aside, the reason I cannot give you an exact answer is because I do not know who the person is that is living in the house.
Answered on Jul 23rd, 2014 at 2:53 PM
Business Law Attorney serving Bingham Farms, MI
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James T. Weiner, P.C.
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Yes but they have to pay off the mortgage. Any equity goes to the estate of the deceased.
Answered on Jul 23rd, 2014 at 2:53 PM
Yes but with no ownership rights and (I assume) no valid lease the person is risking eviction. The mortgage has to be paid or it will eventually be foreclosed. It sounds like there is a potential estate to be administered too.
Answered on Jul 23rd, 2014 at 2:52 PM
No, the bank owns it unless you buy them out.
Answered on Jul 23rd, 2014 at 2:45 PM
You have to look at the terms of the loan agreement, but normally when the owner sells the house or dies, the unpaid balance of the loan becomes due. If that balance is paid off, then the home would be free and clear of the mortgage. If the person dies, I would think that the home has to be sold in order to pay off the loan. Obviously, if the home is sold the owner has no right to live there.
Answered on Jul 23rd, 2014 at 2:41 PM
Trusts Attorney serving Sacramento, CA
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Law Office of Victor Waid
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Generally no; the reverse mortgage needs to be paid in full by new financing, or the lender can foreclose.
Answered on Jul 23rd, 2014 at 2:40 PM
It will depend upon the terms of the mortgage. Usually the property reverts to the mortgage holder upon the death of the owner. They may be willing to rent the property but it's more likely they will choose to sell it.
Answered on Jul 23rd, 2014 at 2:38 PM
Thomas Edward Gates
The owner enter into a contract for a reverse mortgage such at the time of her death the mortgage would be paid back. If the estate has enough liquid assets to pay back the mortgage than the Personal Representative follows the directions the will concerning the house.
Answered on Jul 23rd, 2014 at 2:34 PM
Commercial Attorney serving Chicago, IL
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Ashcraft & Ashcraft, Ltd.
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Every reverse mortgage has a provision that the residence that secures the loan must be sold when the borrower no longer resides in the residence. This means that the house must be sold when the borrower dies. Every year the borrower receives an affidavit requiring a sworn response by the borrower that the borrower resides in the property. Failure to respond to the affidavit triggers an investigation and ultimately will result in the forced sale of the home.
Answered on Jul 23rd, 2014 at 2:32 PM
Probate Attorney serving Newport, OR
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Minor, Bandonis & Haggerty P.C.
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For a little while. The mortgage company has a right to be paid; there are extensions of time that are available in some cases, but eventually the mortgage company will foreclose. If the house can be sold prior to that happening, you're probably better off.
Answered on Jul 22nd, 2014 at 6:00 PM
Business Planning Attorney serving Livonia, MI
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Frederick & Frederick Attorneys at Law
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CAN someone? Yes. Is it likely that the lender will allow them to remain there? No. The lender would need to evict them, if they refuse to leave. In any event, in order to prevent fraud charges, the lender should be notified of the death, as should the insurance company.
Answered on Jul 22nd, 2014 at 5:59 PM
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Probably not. The lender will sell the residence as the loan is due and the manner in which it is paid is from the proceeds of the sale. The decedent no longer has a right to be in the property so neither does the tenant. This information is only intended to give general information in response to an inquiry. It does not establish an attorney client relationship. This response is only based upon the limited facts presented and is merely intended to assist you in determining if you should contact an attorney to provide you with legal advice.
Answered on Jul 22nd, 2014 at 5:59 PM
Edwin K. Niles
We would have to review the mortgage, but generally the balance becomes due upon death. The lender will usually extend for 6 months or more to allow for probate. Tenancy is not directly related to ownership, but as a general rule one could reside in the property until there is a change of ownership. If there is a probate, the executor or administrator would have the final decision during probate. We can't give a better answer without more facts.
Answered on Jul 22nd, 2014 at 5:58 PM