Communication is paramount when it comes to the end of a reverse mortgage, writes The Wall Street Journal in a column this week.
The WSJ details the correspondence received by reverse mortgage heirs when the loan becomes due, at which point they will want to “act fast,” the article states.
“Reverse mortgages give older homeowners income by tapping into their home’s equity,” the WSJ writes, “But when the homeowner dies, heirs must act fast or they’ll risk foreclosure.”
If there are extenuating circumstances, however, the borrower’s heirs should contact the lender as soon as they are contacted to explain those circumstances, explains Security One Lending reverse mortgage specialist Diane Masucci.
Further, she explains, new non-borrowing spouse rules are designed to allow those spouses to remain in the home even after the borrower has passed away.
Lenders are generally cooperative on extenuating factors, says Ronald J. Chin, a partner with estate planning firm Rose Munns & Chin.
“We’ve had very liberal cooperation from all the lenders we’ve used, allowing us ample time to accurately market property so we can sell it at the highest price,” Chin tells the WSJ.
The article also points to several other “tips” to avoid reverse mortgage surprises including talking to heirs in advance; checking home values; and understanding that rates accrue over time until the loan amount comes due.
Written by Elizabeth Ecker