CNN Money: Kids Not Responsible for Parents’ Reverse Mortgage

CNN Money this week featured a reader question and answer regarding the heirs’ role in a reverse mortgage transaction. “Are we responsible for our parents’ reverse mortgage?” the reader asks. 

Because it is a non-recourse loan, CNN writes, the answer is most often no. 

The question and answer follows: 

Advertisement

Q: My parents, now deceased, had a reverse mortgage on their Florida home. The total paid out exceeds the current value by at least $40,000. What are my brothers’ and my financial obligations regarding the house? We do not want it and are in the process of allowing the bank to take it through foreclosure. — William M.

A: The bank’s claim against your parents’ estate is limited to the house, because reverse mortgages are considered non-recourse loans, says Keith Amburgey of Rutherford Asset Planning in Tampa, Fla. The bank should have no claim against you or your brothers unless you were originally part-owners of the home or co-signers on the loan. If not, you can allow the bank to foreclose upon the house.

“However, if you are part-owner of the home or the loan, be proactive in contacting the lender,” says Connie Brezik, a financial adviser with Asset Strategies in Scottsdale, Ariz. Banks are inundated with foreclosed homes in the aftermath of the housing crisis, and they are unlikely to want to take on another property. You may be able to work out a deal where you end up paying little or nothing on the remainder of the mortgage, says Brezik. In the end, you may find that holding on to the home is an unexpectedly good investment.

See the original on CNN.com.

Written by Elizabeth Ecker

Join the Conversation (2)

see all

This is a professional community. Please use discretion when posting a comment.

  • “‘You may be able to work out a deal where you end up paying little or nothing on the remainder of the mortgage,’ says Brezik.” 
    Is Brezik berserk?  Why would anyone pay for something they do not owe?  How does the quotation relate to nonrecourse?  Connie must be giving great strategic advice when it comes to the assets of her clients.  LOL.   

  • The Critic is right! Is Brezik berserk? Further more, if one of the children were on the deed/mortgage they would have been over 62 years of age. If that is the case, the death of the parent would not effect the loan at all. This makes this scenario a mute point!

    In the example CNN uses does not make much sense. Further more if the loan balance is $40,000 more than the value, the children would simply walk away from the home. no co-signing would have been allowed and it would not be reasonable to think the children would be part owners of the home, discussion closed!

    John A. Smaldone

string(104) "https://reversemortgagedaily.com/2012/09/11/cnn-money-kids-not-responsible-for-parents-reverse-mortgage/"

Share your opinion

[wpli_login_link redirect="https://reversemortgagedaily.com/2012/09/11/cnn-money-kids-not-responsible-for-parents-reverse-mortgage/"]