Are children responsible for parent's reverse mortgage?
Children are never financially responsible for their parent's reverse mortgage. The reverse mortgage provides that, when the parent dies, the children have a period of time to sell the home, pay off the mortgage and keep the net proceeds. This may require that the children spend money to probate the house. If the house is worth less than the balance due on the reverse mortgage, then the children may not want to go to the expense of probating the home. In that case, the children will be named as defendants when the lender forecloses its reverse mortgage.
John: Good morning. Thank you for taking my call.
Attorney Tom Olsen: Sure.
John: In December of 2007 my father-in-law and mother-in-law took out a reverse mortgage on their home in Miami.
Attorney Tom Olsen: All right.
John: Mother-in-law and father-in-law were the only people that signed up for the reverse mortgage.
Attorney Tom Olsen: Right.
John: A couple of years ago father-in-law passes away and then six months ago mother-in-law passes away.
Attorney Tom Olsen: Right.
John: Now this week the bank has sent a summons to each of the siblings, be my wife and the three other right here of the estate. They're giving us 20 days to file a written response and if we don't respond we-- according to the pages as we may lose the case and they could confiscate our wages and money and all that.
Attorney Tom Olsen: John, they have named you as defendants because you are the owners of the property. They are trying to take this piece of property away from you, and as a mortgage foreclosure if you do nothing then it will be granted. They will take this piece of property away from you. You guys will never be financially liable to this lender. It will not affect your credit, they'll never ask you for money, they're only asking to take the piece of property away from you John.
Attorney Tom Olsen: Do we need to respond to them in writing like they're saying in the [unintelligible 00:01:19]
Attorney Tom Olsen: This would be this would be one of those rare circumstances where I feel comfortable telling you that you could ignore it and let them get their default judgment. Now if you want to file a little handwritten notice letter to them what it'll do is it will slow them down a little bit, but it also means that they will give you copies of everything as they proceed into foreclosure over the next few months. If that means something to you then you can put a little handwritten answer into the court file.
John: Something I can just do myself.
Attorney Tom Olsen: Yes, you can do it yourself. John, by the way I'm assuming there's no equity in that property. Meaning the mortgage of the balance is greater than what the value of property is.
John: We believe that. The balance is like 320 and we don't feel the house is worth that.
Attorney Tom Olsen: John I can understand why you guys want to let it go.
John: Yes. All the siblings are all in agreement that they don't want to stand in the way of the bank. The bank can have at it and they can have the house.
Attorney Tom Olsen: Tom: If you guys do nothing then that's going to happen.
John: One other quick question was regarding the 20 days, one of the siblings was wanting to empty out personal property out of the house and she was concerned about them like locking the doors and not being able to have access to the house.
Attorney Tom Olsen: John they will not have control over this piece of property until the end of the mortgage foreclosure. Even if you guys do nothing do not file answers, there are at least 60 days away from that. There's no problem with your sister going in there and getting things out of the house.
John: Okay. Very good. Thank you very much. I really appreciate it.
Attorney Tom Olsen: You're welcome John. Bye bye.