For adult children, executors and heirs
When your parent has, or wants, a reverse mortgage.
For twenty five years I photographed Oregon families, and I learned that the big decisions go better when everyone is in the room. Here is what I want adult children to know, before a parent signs, while they live there, and after.
Questions to ask together
- Who lives in the home now, and who is named on the loan?
- Is there a spouse or partner under 62 or not on the title?
- How long does your parent expect to stay in this house?
- Have other options been compared, like Oregon's tax deferral, a home equity line, or moving?
- Can taxes, coverage and upkeep be kept up for the long run?
Family members are welcome at the independent counseling session, and I encourage it.
What keeps the loan in good standing
- Living in the home as the principal residence
- Paying property taxes and homeowners coverage on time
- Keeping the home in good repair
- Returning the yearly occupancy certificate the servicer mails
Missing any of these can make the loan due. A second set of eyes from a family member helps.
When the loan comes due
- Contact the servicer early and keep notes of every call.
- Generally 30 days to respond and about six months to sell or pay off.
- Keep the home by paying the balance, or 95 percent of appraised value if that is less.
- Sell and keep any remaining equity.
- If the home is worth less than the balance, the estate does not owe the difference.
Keeping the family home
Buying the house from the estate.
When a son or daughter wants to keep a parent's home, it usually takes a regular mortgage to pay off the reverse mortgage, and timing matters because the servicer's clock is running. I help heirs with that loan too, and I coordinate with the estate's attorney, the title company and the servicer so the family is not chasing paperwork during a hard season.
Common questions
Am I responsible for my parent's reverse mortgage?
Not personally, unless you signed the loan yourself. A HECM is non recourse. The debt is repaid from the home, and neither the estate nor the heirs owe more than the home is worth when it is sold.
What happens to a reverse mortgage when my parent dies?
The loan becomes due. The servicer contacts the estate, and the family generally has 30 days to say what it plans to do and about six months to sell or pay off the loan. Up to two 90 day extensions may be granted when the family is actively working on a sale or payoff.
Can we keep the house?
Yes. Heirs can keep the home by paying the loan balance, or 95 percent of the home's current appraised value if that is less. Many families do this with a regular mortgage, and that is a loan I can help with.
What if my parent moves into assisted living or a nursing home?
The home must remain the principal residence. If the last borrower is away from the home for more than 12 consecutive months for medical reasons, the loan generally becomes due.
What happens to a spouse who is not on the loan?
An eligible spouse who was married to the borrower at closing, is named in the loan documents and lives in the home may be able to stay after the borrower dies, as long as the loan obligations keep being met. This is one of the most important questions to settle before signing.
Plain language guides
Keep reading.
Oregon reverse mortgage summary. At the end of the loan, some or all of the equity in the home may no longer belong to the borrower, and the home may need to be sold or the loan repaid from other assets. The lender charges an origination fee, a mortgage insurance premium, closing costs or servicing fees, which may be added to the loan balance. The loan balance grows over time and interest is charged on the outstanding balance. The borrower keeps title and is responsible for property taxes, insurance, maintenance and related taxes, and failing to pay them may make the loan due immediately and may subject the property to a tax lien or foreclosure. Interest is not deductible on an income tax return until all or part of the loan is repaid. A home with a reverse mortgage taken out on or after January 1, 2017 is not eligible for Oregon's Senior and Disabled Property Tax Deferral Program.
Not a commitment to lend. All loans subject to credit approval.
Talk with Becky
A family call, at a time that works across time zones.
Evening and weekend video calls are fine, so siblings in other states can join. Everyone hears the same explanation, and nobody is rushed.