Talk to the lender ASAP to see if they’ll allow the son to execute a deed granting Mom a Life Estate. That way he does not take himself off title, he just adds her right to occupy the property. That may preserve the existing lenders rights and help gain more cooperation, but it also allows the HECM application and underwriting to begin. As the earlier comment noted, there is no seasoning requirement on HECM loans, so this presents no problems for the HECM lender; they deal with Life Estates all the time.

If the lender agrees, get Mom into counseling NOW. Explain the situation to the counselor to get the appointment accelerated.

If the lender balks, the son doesn’t even have to execute this change before closing; he can go ahead even if it’s only a conditional plan – telling the existing lender that if he can show them the money, would they agree to consider permitting the change in the very near future?. The HECM underwriter will accept a copy of the proposed Deed with the Life Estate before it is recorded; they’ll just list the recording the new Deed with Life Estate as a condition to be satisfied at closing. That way, the son can show the existing lender that the reverse mortgage will close and they will get their money without the additional foreclosure costs and time delays. I wouldn’t want to be the lender that refused to accept this payoff and went ahead with foreclosure.

Make sure the lender does not send the file to a foreclosure law firm while you are executing the reverse mortgage. This means you stay in direct communication and provide them with regular updates and time frame estimates. Otherwise, if it goes to a law firm, the payoff may be refused since you’re dealing with an entity hired to execute the foreclosure instead of the lender who just wants their money.

Definately talk to the lender, but see if they’ll allow the son to execute a deed granting Mom a Life Estate. He does not take himself off title, he just adds her right to occupy the property. HECM underwriters deal with these all the time, so it’s no problem for the HECM lender.

If the lender agrees, get Mom into counseling NOW and explain the situation to the counselor to get the appointment accelerated.

If the lender balks, the son doesn’t even have to execute this change before closing; the HECM lender will accept a copy of the deed with Life Estate and list it as a closing or funding condition. That way, the son can show the existing lender that the reverse mortgage will close, that the lender will get their money, and the lender reduces their potential loss by allowing the change in title.

So, here are two alternatives to resolve this scenario. Both assume the proceeds from the HECM will be enough to satisfy the lender.

First, if the lender is willing to wait for the new regulations to become effective, proceed as if this is a short sale.

Second, have the mother added to the deed. In FL it costs about $10. Then, as owner, she can get a HECM under current regulations provided the son is deeded off the property at closing.

Before investing too much of your time, make sure there are no other factors that can sour the deal. (Speaking from experience here.)

If the HECM proceeds cover the current outstanding balance, it should be relativiley simple.

If they don’t, make absolutely sure the lender is COMMITTED to this transaction.