Home Buying in Camp Verde>Question Details

Kitty, Home Buyer in 86322

can anyone tell me about reverse mortgage short sales?

Asked by Kitty, 86322 Sat Nov 3, 2012

This would be a For sale by owner (still living). How would this work?

Help the community by answering this question:


Actually its not clear to me what do you want to know.But i want to say u something about reverse mortgage.A Reverse Mortgage is designed to be the last loan you may ever need. It works opposite a traditional mortgage. Rather than making monthly payments to pay off a loan as is the case with a traditional or forward mortgage, with a reverse mortgage the equity in your home pays you. Since there are no monthly payments, there is no income or credit qualification required.

10 votes Thank Flag Link Thu May 2, 2013
A reverse mortgage is regulated. The owner will never owe more than the currently appraised value. The payoff cannot be under 95 % of that. if the loan is for more the pay off is still 95% of the appraised value for the borrower or the borrowers heirs. It's fairly cut and dry. So their really is no such thing as what you know as a short sale. If their were set asides in the loan and they were unpaid that may make a difference in the pay off. It's basically a revolving line of credit to the borrower.
0 votes Thank Flag Link Sun Mar 23, 2014
It depends on how much equity the bank has invested into your home. The reverse mortgage means that the bank sends you a payment on the equity in your home. If one passes away or the property is no longer eligible, then a refinance, sale to third party, or the bank will take the deed status.

Short sales come as an option before foreclosure of mortgage or deed of trust sales. It means that the owner has found a buyer who will pay the bank less than the amount owed to the bank by the homeowner. It is a negotiation to avoid higher costs of foreclosure and property management afterwards.
0 votes Thank Flag Link Tue Aug 20, 2013
OK, now that all of us understand the situation, the Seller should hire a Seller's Agent experience in short sales or a real estate lawyer to get the Short Sale approval . In my opinion, this is not something the Seller can or should handle on their own.

Likewise you should work through a Buyer's agent or hire your own real estate lawyer. Also make sure you use a competent Escrow Agency and be sure the Owner's Title Policy you receive from the Seller is issued by a Title Insurance company that has a Demotech.com financial rating of "A" Double Prime (i.e Fidelity National, Chicago, Old Republic Title).

There are may other items to look out for that a good Buyer's agent will be able to bring to your attention.

Loren Hoboy-Realtor
Your Local Expert
Central AZ Real Estate
0 votes Thank Flag Link Sun Nov 4, 2012
OK, Kitty. I work with a number of Reverse Mortgage providers, but, of course, focus on the origination side of the transactions. I will get in touch with one or two to delve into "the other end" of the process (will be good to know, for myself and my future Reverse Mortgage clients).

No one is open for business today, so I will be back in touch as soon as I have a definitive answer for you.

Take care.
0 votes Thank Flag Link Sun Nov 4, 2012
Thanks everyone.

Yes Bill, you are correct. We are hoping to buy a FSBO property that has a reverse mortgage. As far as we understand the situation the latest FHA appraisal is apparently substantially less than the original reverse mortgage amount.

The owners of this property are still living...wish to move to another state. As far as I know the only reason they wish to move is to be closer to family. They are under the impression that they can sell the property to whomever they wish, at the appraised value of the property, resulting in a short sale.

We understand that any short sale can take an extended time to close but are there any other pitfalls that we should be aware of?
0 votes Thank Flag Link Sun Nov 4, 2012
I worked as a National Curative Director then underwriting consultant. The reverse mortgage amount is calculated from the age of when the owner takes it out and it is amortized backwards...for example, the reverse is for $120k, the bank has sent $6k in payments, the mortgage is actually $6k to pay off, plus closing,etc. If they have not had the reverse for long, then the payoff will not be very high. You are not trying to pay the entire amount. that is just the credit limit the bank will pay into the home. This is not a short sale.
Flag Tue Aug 20, 2013
Hi Kitty:

I am a bit confused by your question and the answers below. Could you please verify I am understanding what you are asking?

From the tag line "Home Buying in Camp Verde" I believe you are looking to buy a home owned by someone whom has a reverse mortgage on the property, and owes more than the home is worth. You want to know how the holder (the bank) of the reverse mortgage will react to an offer in such a situation.

Is this correct?

Bill Parker, Loan Officer
AZ Lic# 09011570
NMLS #223607
CPA--Licensed, no longer practicing

GenCor Mortgage, Inc.
15730 N. 83rd Way, Suite 103
Scottsdale, AZ 85260
(O) 480-525-8496; (M) 602-565-3646; (F) TBD
EM: Bill.Parker@GenCorMortgage.com
Website: http://www.GenCorMortgage.com
LinkedIn: http://www.linkedin.com/in/billparkercpa

MISSION STATEMENT: To create an unbelievably enjoyable experience for my clients, while guiding them through the most important financial transactions of their personal lives. My clients know me as their Mortgage Lender for Life. I truly appreciate your referrals.

If you think it's expensive to hire a professional to do the job, wait until you hire an amateur.
Red Adair, Oil well firefighter
0 votes Thank Flag Link Sun Nov 4, 2012
I have had a client purchase a reverse mortgage short sale. Although the process was lengthy it did close. Actually, I fought the appraisal(too high & appraisals were to be done every 90 or 120 days). When the same appraiser came back(buyer had to pay after first appraisal) I pointed out many discrepencies and appraiser lowered the value significantly(believe $60,000). Also,think Buyer must pay within 5% of Listing/Appraisal price as well. Hope this helps and best of luck!
0 votes Thank Flag Link Sun Nov 4, 2012
I forgot to mention, with the reverse mortgages most allow three options for payment plans.
1) no payment of principal and interest
2) interest only
3) principal and interest.
It should be ok to make no payments with our a problem. If you are upside down, this would be the way to go. To make a change is usually as simple as no longer making payments. Check the fine print. Check the fine print. Check with the lender. Check with a lender you trust.

0 votes Thank Flag Link Sun Nov 4, 2012
Well, what you're asking for is where the Homeowner is in trouble and that set you up with a personal reverse mortage and you live there, the rest of your life, without paying anything.

Sounds like a real sweet deal.
0 votes Thank Flag Link Sun Nov 4, 2012
Please explain your question in more detail. What do you wish to accomplish?

In this case the Lender would continue to pay the proceeds or interest until the death of the owner. A short sale does not apply. Upon the owner's death, the bank would end up with the house and they would sell it for what they can get. A short sale does not apply.

Is the owner forced by court order or circumstance to vacate the house? This could be a different situation, requiring legal representation and lender advice. Let me know if you need a recommendation.

0 votes Thank Flag Link Sat Nov 3, 2012
Thanks for your quick reply Loren. The homeowner wishes to move to another state. We wish to purchase his property.
Flag Sat Nov 3, 2012
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