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  • Reverse Mortgage Foreclosure - Why It Happens

    Jun 22, 2015
    0
    Reverse Mortgage Foreclosure - Why It Happens
    in Foreclosure Law

    Surviving spouses and heirs of recently deceased reverse mortgage borrowers are often shocked when a lender attempts to foreclose immediately after their loved one passes away.

    It's an all-too-familiar scenario: a senior family member passes away, and their surviving spouse -- or heirs -- are surprised to learn that the entirety of the home loan has suddenly come due. Indeed, there is such a thing as a reverse mortgage foreclosure.

    This situation can be extremely stressful and confusing for a number of reasons. Often, family members are unaware that a reverse mortgage was ever taken out in the first place. However, even if the family is aware of the reverse mortgage, they are usually shocked to find out that the lender can send over a bill for the remaining loan balance immediately after their loved one's death.

    Families sometimes rightfully feel like the lender is adding insult to injury by aggressively threatening to foreclose on what is often a cherished family home so soon after their loved one has died.

    Under the rules of a reverse mortgage, family members are left with three options in this scenario:

    • Pay the debt in full - Of course, the option exists to simply pay the remaining balance on the loan, in which case the property may be purchased outright and the debt is settled. Unfortunately, few families are in a position financially to consider this a viable option; and even fewer are able to complete a transaction of this size on such short notice.
    • Deed the property to the lender - To escape the negative financial and credit-based ramifications of foreclosure, families often feel pressured into simply deeding the property over to the trustee. In this instance, the family is absolved of the debt and the impending foreclosure, but they relinquish the home entirely.
    • Sell the property for at least 95% of the appraised value - Finally, the family can also conduct a sale of the home for at least 95% of its appraised value, either to a third party or (unlike a short sale) to themselves.

    Unfortunately, lenders often do not spell these options out in a clear and timely manner to the families facing this situation. Additionally, in the case of heirs who have to simultaneously navigate probate while weighing their options, the advantage shifts to the lender who can capitalize on a confusing and stressful situation.

    If you are facing this scenario or a similar one, you should consider retaining the legal services of a top real estate litigation firm such as JT Legal Group. The attorneys at JT Legal Group have a wealth of experience in foreclosure defense and probate matters, and can be your advocate against overly aggressive lenders to help keep your family's property.

    A free consultation with an attorney regarding your specific reverse mortgage foreclosure situation is available by calling :

    1-888-LAW-3111 Monday-Friday, 8am to 6pm.

    -- Michael Avanesian, Esq.

    Note: Attorney advertising. Nothing posted on this blog is intended, nor should be construed, as legal advice. Blog postings and hosted comments are available for general educational purposes only and should not be used to assess a specific legal situation. Nor does any comment on a blog post create an attorney-client relationship. The presence of hyperlinks to other third-party websites does not imply that the firm endorses those websites, their contents, or the activities or views of their owners.

     
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