19th Sep 2017
Increasingly, we are seeing estates where the decedent has run up a significant reverse mortgage such that it exceeds the value of the home and the few other assets that remain. We had such a situation a few years ago. We advised the decedent’s daughter to hold a quick estate sale of the tangible personal property in the home. The proceeds from the sale, plus a few refunds, and what little cash that was laying around were used to help pay the funeral bills. Immediately after that, we dropped the home keys off with the lender (after turning off the water to the home). We told the bank it was now their problem. We then cancelled the insurance on the home. We filed the decedent’s will at the court house indicating that we were not going to undertake any probate of it. About 9 months later, the bank applied for special administration so it could obtain title to the property. Nothing ever came back to hurt the daughter. There were no further claims made against her or the estate. The bank never foreclosed on the property but more likely than not it merely did a deed to itself in lieu of a foreclosure so it could sell the home and write off its loan loss.
If you encounter this situation regarding a reverse mortgage, be sure to seek out an experienced attorney to advise you of your options.
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