Dallas News: Reverse Mortgage Deal Raises Inheritance Concerns

“Why give my inheritance to the bank?” asks one daughter worried about her mother’s reverse mortgage.

While the answers can vary by lender, The Dallas Morning News replies by saying reverse mortgages are treated similarly to other debts.

“You have the option to repay the debt or relinquish the property that is collateralizing the debt, which in this case would be the home,” The Dallas Morning News says in a Q&A column featuring the question posed by reverse mortgage borrower’s daughter. 


In addition, the lender will typically allot a certain amount of time for heirs to sell the property for repayment of debt, the news outlet explains.

“You are entitled to sell the home for whatever the market value is at the time and use the proceeds to repay the debt that was paid to your mother from the reverse mortgage,” the news source advises.

Read the full article here.

Written by Cassandra Dowell

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  • It always amazes me when I hear that line. The children in many instances feel “entitled” to an inheritance. The parent is taking a reverse mortgage in most instances to improve their quality of life in retirement after working in many cases for half a century. I feel like saying: “maybe your parents are entitled to your financial help in retirement after working most of their lives supporting you.” I usually do get that point across in a more politically correct way. That usually helps change their minds.

    • treverse,

      The primary tone of your comment is one of frustration when it comes to dissenting children but even children have some funny ideas about reverse mortgages. Presenting a positive view about the fit of the reverse mortgage to the needs of the parent while not troubling the financial situation of the child is crucial.

      Many times, sitting down with the senior and the child and carefully reviewing the amortization schedule can calm things down. When the review does produce the desired results, all is well but when it does not, things can get out of hand. Fortunately in nine plus years I have only lost three loans due to the concerns of heirs.

  • I tend to agree with The_Cynic. It appears the daughter is under the impression that the bank/lender automatically takes the home, which we know is not the case!

    The daughter, I am sure is thinking of the parents, not her inheritance. Explaining all the options to the children and most definitely remove the stigma that “The Lender Automatically Takes The Home” is of the up most importance in this case. Once that concern is put aside, explaining to the heirs all their options can usually put them in a comfortable position and then they can see the benefit to their parents!

    John A. Smaldone

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