Ask Terry Questions Deceased mother’s Home Equity Conversion Mortgage

Deceased mother’s Home Equity Conversion Mortgage

By Terry Savage on March 21, 2024 | Wild Card

Mom died in November 2023, with a whopping $280,000 owed on a house worth maybe $160,000. Mom was 97 when she died. How could HUD lend her this much money?? It’s insane. I would like proof they actually paid her. My mom scrimped by.
Second, what is the difference between flat out foreclosure and Deed in Lieu of Forclosure? We lose the house either way.
I am my Mom’s executor and have gotten the run around from CompuLink and HUD. I am very frustrated. Help? Thank you.

Terry Says

I am just about to write another column on Reverse Mortgages. Your mother was a big WINNER in this deal — even though it looks like too good to be true! Yes, the terms of the RM say that no matter how much she takes out of the house, through a reverse mortgage guaranteed monthly payment, the survivors cannot owe any more on the house. The RM lender took that risk, paid out over the years, and they are “stuck” with the loss, when they take the house and sell it!

The exact same thing happened with my Dad’s reverse mortgage. My dad didn’t die until age 05. In fact, they sent investigators out to see if he was really and truly still living there! And when he died, he had taken out far more than the property was worth. (Most RMs are made through the FHA/HUD –a HECM RM, which insures lenders against this loss.)

You don’t have to do anything with the property. The lender will just take it over. You are entitled to her personal property. Bet it out of there now, any antiques or photos, or clothing you want to donate. Then, contact the Reverse Mortgage lender and ask they when/where they want the keys.

If she had a RM you don’t have to deal with this. It does not affect YOUR credit. And you don’t have to worry about her credit, since she has passed.
As executor, you just deal with the other things she might have had — a checking accoount or savings bonds. And be sure you notify Social Security of her death.
Time to move on.



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