Can you walk away from a reverse mortgage?

Question

My parents have a reverse mortgage and they need to be in assisted living. The house is not worth much more than the mortgage because they have lived longer than they thought they would! (87) Can they leave the house to go into asst living and simply let the mort co have the house? What would happen? Also, the taxes and insurance have increased to the point that they can no longer pay them.

Answer 1

That's how a reverse mortgage works.  You agree to slowly sell the house.  When you are done living there, you have to satisfy the mortgage with proceeds from the sale.  If there is excess money to satisfy the reverse mortgage, your parents will get it.  If there isn't any money left over, tough luck for the reverse mortgage company...

I think it's time to tell the reverse mortgage company that they are leaving and need to sell it.  

good luck!

Answer 2

The rules to a reverse mortgage are set in stone.  If both husband and wife no longer live in the home, do NOT keep up with taxes and insurances the holding mortgage company WILL take over the home.

You should immediately pull any remaining equity monies left in the home.

Reverse mortgages are designed to legally steal the home out from under the elderly for the cost of the equity.  

Example: Joe and Jane Smith work all their lives to have the American Dream; a home in an area with better schools for their children Etc.  

Joe and Jane Smith are now retired and have 150,000 Dollars equity in their home which is valued at 300,000 Dollars

With a reverse mortgage Joe and Jane will have access to all of their equity with NO monthly payment on the loan.  However, they will have added on interest and insurance costs added to the amount of the loan on a monthly basis.

  

When Joe and Jane die or leave their home the holding mortgage company legally takes over the home for the cost of the equity.  Simply put, the bank now owns the home worth $300,000 plus for the cost of 150,000 Dollars.

I only covered the basic wow-es to a reverse mortgage, The closing costs, added on interests, monthly fees and added on insurances are staggering.

I would never recommend a reverse mortgage to anyone.  

This is another prime example how our politicians allow the banks to take advantage of our elderly.

NOTE: If the heirs want to take over the home they will have to pay the current market value of the home plus added on fees.  Simply put their is NO inheritance left for the children or heirs.