Being that there is hardly any in-depth detailed information on Reverse Mortgage Short Sales, any and all that are experienced with these should feel free to help us all out so that we can have a one stop post that is basically a "rough guide".
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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.