With a reverse mortgage if owner stays in house and ends up with excessive equity does lender go after estate?
antiquesalejunky asked:
With a reverse mortgage, If owner stays in house for longer than expected and with interest, etc. ends up “upside down” — in other words, more is owed on the house than it’s current value, (of course, after the death of the owner), and after the bank sells the house can it then come to the estate to make up the difference?
This entry was posted
on Sunday, March 29th, 2009 at 4:02 pm and is filed under Reverse Mortgages.
You can follow any responses to this entry through the RSS 2.0 feed.
Both comments and pings are currently closed.
With a reverse mortgage, If owner stays in house for longer than expected and with interest, etc. ends up “upside down” — in other words, more is owed on the house than it’s current value, (of course, after the death of the owner), and after the bank sells the house can it then come to the estate to make up the difference?
March 31st, 2009 at 8:43 pm
Reverse mortgages are tricky and prone to lots of misinformation. But do not worry in this case. First, the bank doesn’t own the house so they don’t get to sell it. The heirs have a year to refinance or sell.
If the proceeds are not enough to satisfy the loan, the lender (or their insurance on the loan) absorbs the difference. This is a “non recourse rule” which entitles the lender to only the market value of the home and nothing more.
The other assets are safe.