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Mom owns a home and did a reverse mortgage years ago. She is now in a long-term care facility. Can

Mom owns a home and did a reverse mortgage years ago.  She is now in a long-term care facility.  Can she gift the house to me?  Can I refi at the current market value or will I have to qualify to refi the loan at the value of the house when she did the reverse mortage, as the house is upside down?
  • August 17 2012 - Sacramento
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Answers (5)

Best Answer

If the home is underwater then I would contact FHA about what to do next.  If she will not be returning to the home it is effectively FHA's property since there is no equity.  If your mother can return to the home she can do so and stay there as long as she is able regardless of the equity situation.  The good news is your mother – or your mother's estate is not responsible for any repayment to FHA.  That's what all that mortgage insurance you paid was for.
  • August 17 2012
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Thanks Wayne for clarifying.
  • August 17 2012
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To clarify Bob's remark.... any deficit after property is sold is not required to be paid as the reverse mortgage is a non recourse loan. If property sells for enough to pay balance owed, that amount is due the lender. The loan is due in payable typically with in 12 months if owner is not occupying the property as primary residence. If she gifted property to you now or later, you would need to refinance the property or sell it.  Being gifted a property that is upside down is probably a gift you would not want. Seek legal advice before you do anything.

  • August 17 2012
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Thank you Bob Willett and Elizabeth Weintraub for your responses.
  • August 17 2012
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You would have to pay off the existing mortgage in order to refinance. If it's underwater, unless the mortgage is held by Fannie Mae or Freddie Mac, I don't know of any programs that will let you refinance under those circumstances.
  • August 17 2012
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