Reverse mortgage to save house?

Question

My 72 year old mother is a gambling addict.

She has a $30,000 mortgage on her home (she took it out and gambled the money away in a month last year!!).

She has an $838.00 SS check and a renter in the downstairs who pays $450.00 a month.

I KNOW she will default on the mortgage in the ext few months.

Would a reverse mortgage help her keep the house? I know they are bad in most instances, but this instance may be one where it would be better for her?

What do you think?

Answer 1

Noooooooooo, she will just gamble it all away and be in bigger trouble. Not much you can do with an addict unless they want to change.

Answer 2

Not going to solve your mother's gambling problem just give her more cash each month to blow at the casinos.  

Better if you have her declared incompetent and takeover her affairs.  Harsh but the alternative of being homeless and losing all equity is harsher.

Answer 3

I agree, unless the home is worth $150,000 and she has not other debts and in a good neighborhood, she might not qualify for a reverse mortgage.  Since she is 72, you both should discuss some type of trust that puts you (and brothers and sisters) in charge which will also avoid probate.  It may be that instead of a reverse mortgage, just a refinance of a new loan with the proceeds put in the bank which you control.

Answer 4

I would have to say that you will need to get a court to give you power of attorney over her finances unless she is willing to sign one.  That is first.  Second is looking at the big picture.  72 and active or 72 and not so mobile.  If she is going to stay in the home well enough then a reverse mortgage can help save her home just like my in-laws home is going to be reversed mortgage as his money is disappearing and the small fixed income is being eaten up by the mortgage.  If your mom is going to be better off in a "retirement community" it might be better to sale the home with you controlling the proceeds of the sale.

Gambling addicts need that money and that is what you need to keep away.  See if Gambler's anonymous has a seniors help shop.

Answer 5

Here is some food for thought.

Given your mother's inability to manage her own finances, have you given thought to pursuing a power of attorney over her?  That would give you the legal right to make most of her financial decisions for her (you can't change her life insurance or account beneficiaries, but a general POA covers almost everything else.

A reverse mortgage would provide her extra income, but would result in the sale of the house after a fixed period of time, or at the time of your mother's death.

Given the presence of the renter downstairs, this could get complicated, because the renter does have certain rights under the law if the house defaults.

If you don't care about what happens to the house after she is gone, then this may be your best bet.  While not the greatest financial decision, it will result is a greater peace of mind, knowing that your mom can't dig her hole any deeper.

Answer 6

How much is the house worth?  The $30,000 would have to be paid off first with the reverse mortgage proceeds & then only a certain percentage of the value of the house will be given.  I doubt she can get a reverse mortgage.  Try to get her help for her addiction.  Start by calling Gamblers Anonymous.  Getting her extra money is just giving her more money to gamble away.  You can only get POA if she says she will make you POA.  Please...get her help before she loses everything.  Good luck.