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Permalink Reply by Smitty on August 9, 2012 at 1:56am

Call the servicer and have them connect you with the reverse mortgage short sale department if their is one.  It likley is NOT processed on Equator if it's one of the bigger departments.  They should be able to connect you with the reverse mtg department. 

Here is the overview:

http://massachusettsshortsales.net/2012/05/the-reverse-mortgage-sho...

There are some key things to remember when negotiating a reverse mortgage short sale.

1)      Good news – The HECM is a “non-recourse loan”. This means that the HECM borrower (or his or her estate) will never owe more than the loan balance or value of the property, whichever is less; and no assets other than the home must be used to repay the debt.

2)      The property (as with most short sales) MUST BE SOLD AS IS – This is a HUD requirement

3)      An FHA appraisal MUST be submitted with the offer (paid by the seller – not buyer)

4)      The servicer of the note is NOT the seller – Payoff must go on line 504 of HUD-1

5)      If the appraisal expires it is the SELLER’S responsibility to procure another one.

6)      HUD is VERY specific in what are allowable costs on the sellers side of the HUD-1.  We know what is and isn’t allowed, so if you have questions the servicer for their guidelines. If you put non-allowable costs on the HUD-1, you will prolong the sale

7)      When title is pulled you will see two liens.  One will be the servicer and one is the HELOC.  The servicer will acknowledge in the approval the lien has a zero balance and the HUD-1 for release and then the HELOC is getting paid off

Keep in mind the above information and your reverse short sale SHOULD go smoothly. 

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Permalink Reply by Alex Krumm on August 9, 2012 at 7:43am

I did a reverse mortgage short sale once in which the owners got divorced, the wife got to remain in the property, and the husband retained any profit once the house was sold per their agreement; she moved out and he was already living somewhere else when the bottom fell out of the market. 

It was one of the easier short sales I've done although I don't remember who the bank was.  I think we got the whole thing approved in about a month.

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Permalink Reply by Art Hughes on August 13, 2012 at 6:20pm

I have the same question Brian. What's the incentive for heirs or an estate to SS?

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Permalink Reply by Patrick Smith on August 20, 2012 at 1:37am

Technically, once the borrower under a HECM dies the loan matures and comes due.  HECM lenders use all sorts of tools to monitor life/occupancy, so eventually they'll catch it and give you the maturity notice.  Then the heirs have to pay it off in full or short sell if there is not sufficient proceeds to pay off.

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