Death of the Reverse Mortgaged Home Owner: What Happens Next?

Death of the Reverse Mortgaged Home Owner: What Happens Next?

Estate planning attorneys typically find out that their clients have entered into a reverse mortgage twenty seconds after the indebted client or clients have died. The typical situation involves a telephone call to ask the lawyer why Dad’s home is going into foreclosure “so soon after he died.”

The conversation typically then continues: “I don’t think Dad knew that the bank would go into this attack mode so soon after his passing. It hasn’t given us time to react.” Or, another common response: “ Things didn’t happen this quickly when my husband’s parents passed.”

There is a different reason for each of these reactions. First, Dad had to have known about the immediate need to react when he died with a reverse mortgage. According to Howard Platte, the Branch Manager of the North Orange County Gem Mortgage office, “The process of obtaining a reverse mortgage involves a counseling session that explains, in great detail, the requirements following the death of the borrower. Basically, every borrower is told in intentional detail that a house which is collateralized with a reverse mortgage, no matter who the lender is, has a basic requirement at death: either the loan is paid off, or the house must be sold to pay off the debt.”

Platte believes that the second reaction to a foreclosure on a Reverse Mortgage – that the fast foreclosure didn’t happen when another person died– is probably accurate. He explains “Most likely the other family member who had an easier time at death owned the home in trust. When that occurs, the lender is more likely to be able to talk to the heirs of the deceased home owner. That trust can make all the difference, because if the lender is not able to talk to anyone, the foreclosure will follow.”

One of the principal problems with slowing down the process of foreclosure at the death of an owner of a home outside of a trust with a reverse mortgage stems from the fact that too many lenders are unwilling to deal with the heirs of the deceased home owners unless the heirs of the deceased owner have been issued paperwork from the probate court to indicate that they are authorized to talk for the deceased family member’s estate.

“Since lots of family members wait a few weeks to contact the mortgage company, and because it then takes some more time to get the letters from the Court,” explains Platte, “the lenders will often start the foreclosure before the probate has given the authority to the family members to talk to the mortgage company.”

The frustrated heirs are frequently left in the lurch once the foreclosure process on the homes outside of the trust begins.

“We have seen the advantage of trusts owning homes first hand,” Platte continues, “and it just doesn’t make sense to add problems to the ability of family members to administer their parents’ estates. A trust owning a home that has a reverse mortgage will normally allow the family to save time and money on the passing of the title to the next generation, and in some cases it simply saves the house from foreclosure.”

When a family considers the ability to avoid the foreclosure which may follow the death of a parent whose home has a reverse mortgage, and then adds in the increased cost of probate fees for the home, as well as the increased time of probate administration which may accompany the home passing by will instead of by trust, along with the fact that probate administration can take up to three to four times as long as trust administration, the decision appears almost self apparent.

“I don’t know why home owners with reverse mortgages, or even just traditional home loans, would consider not having a trust to hold their homes,” admits Platte. “Everything in our experience points to the logic of trust ownership.”

Donald A. Hunsberger

Hunsberger Law is a full-service estate and busi- ness planning legal firm, with estate planning attorneys and a licensed, professional fiduciary on staff. Connect with Don Hunsberger by calling (714) 663-8000 or visiting www. hunsbergerlaw.com

Latest News

Sorbet Magazine Celebrates Its September Issue!

Business Showcase Sorbet Mag

Sorbet Magazine Celebrates  Its September Issue!

It’s impossible to say what we love most about our issue release parties, especially the most recent one at V...

The Escher String Quartet Opens Segerstrom Center’s 2018-2019 Chamber Music Series

Entertainment Sorbet Mag

The Escher  String Quartet  Opens  Segerstrom Center’s 2018-2019  Chamber Music Series

Thursday, November 1, 2018 in Samueli Theater Segerstrom Center for the Arts launches its 2018-2019 Chamber Se...

Segerstrom Center Kicks Off Its 2018-2019 Jazz Season With Jazz Master Ahmad Jamal

Entertainment Sorbet Mag

Segerstrom Center Kicks Off Its  2018-2019  Jazz Season  With Jazz Master Ahmad Jamal

Segerstrom Center for the Arts presents Grammy® Award Lifetime Achievement Award Winner Ahmad Jamal for one pe...

Beyond the Books Nadia Milner delivers "Top Notch Services"

Entertainment Jody Robinson

Beyond the Books  Nadia Milner delivers "Top Notch Services"

I remember when one of my college friends was appointed Payroll Specialist for a large company in Pasadena. Whe...

Ready for Open Enrollment?

Health & Wellness Sorbet Mag

Ready for  Open Enrollment?

In a few weeks, you’ll be making important choices about next year’s health plan. As you consider your opti...

Making Educated Choices for Your Loved One’s Care

Education Jody Robinson

Making Educated Choices for Your Loved One’s Care

A Q & A with Derek Mannion, founder of Alliance Eldercare You think it might be time to consider options f...

Lea Michele and Darren Criss Continue LM/DC Tour With North American West Coast Dates

Entertainment Sorbet Mag

Lea Michele  and  Darren Criss  Continue LM/DC Tour With North American West Coast Dates

November 2, 2018  in Segerstrom Hall Following the demand of fans and rave reviews, actors and musicians ...

Drug Free, Surgery Free & Needle Free: A New, Proven Treatment to Reverse Erectile Dysfunction

Health & Wellness Jody Robinson

Drug Free, Surgery Free & Needle Free:  A New, Proven Treatment to Reverse Erectile Dysfunction

A Q & A with Dr. Michael DeYoung, M.D., LaSara Medical Group Men with erectile dysfunction (ED) often suff...

Pilates and Yoga for the Neck

Health & Wellness Align Pilates Team

Pilates and Yoga for the Neck

There is no shortage of reasons why people suffer from neck pain, but primarily, the root cause is due to impro...

How Can I Tell If I Have Skin Cancer?

Health & Wellness Kristy Fleming, MD

How Can I  Tell If I Have  Skin Cancer?

People of all ages get skin cancer. Checking your skin can help you find skin cancer early when it’s highly t...

Broadway’s Smash Hit Beautiful The Carole King Musical returns to Segerstrom Center for the A…

Entertainment Sorbet Mag

Broadway’s Smash Hit Beautiful   The Carole King Musical   returns to  Segerstrom Center for the Arts

October 9 - 14, 2018 Back by popular demand, Beautiful – The Carole King Musical returns to Segerstrom Cente...

The Art of Craft @ The Brewhouse in San Juan Capistrano

Business Showcase Jody Robinson

The Art of Craft @ The Brewhouse in San Juan Capistrano

Let’s play a quick game: I’ll say a word and you write down the first thing that comes to mind. Ready? Beer...

Thinking Inside the MedBox. The New Standard in Medication Management Offers a Better Way to Dispens…

Health & Wellness Jody Robinson

Thinking Inside the MedBox. The New Standard in Medication Management Offers a Better Way to Dispense Prescriptions

In a recent conversation with my mother, I discovered something. Something that was a cause for pause as I pond...

Upcoming Events at Segerstrom Center for the Arts

Entertainment Sorbet Mag

Upcoming Events  at Segerstrom Center for the Arts

The Australian Pink Floyd Show September 6, 2018 Segerstrom Hall The 2018 Australian Pink Floyd Show Tour is ...

Segerstrom Center for the Arts Announces 2018 – 2019 Jazz Series

Entertainment Sorbet Mag

Segerstrom Center for the Arts Announces  2018 – 2019  Jazz Series

Ahmad Jamal Quartet and Shahin Novrasli Kenny Barron Quintet • Kurt Elling Christmas Branford Marsalis Quarte...

Compassionate Caregiving: Your Home Care, Inc.

Health & Wellness Jody Robinson

Compassionate Caregiving:  Your Home Care, Inc.

In-Home Care and the New! Senior Social Club & Stay Care Center in Laguna Woods Village Over the past deca...

RODAN + FIELDS: Changing Skin. Changing Lives.

Health & Wellness Jody Robinson

RODAN + FIELDS:  Changing Skin.  Changing Lives.

Friends are good for a great many things. Laughing with you, getting out of tight spots every once in a while, ...

Get Your Game Together with No Bogeys Golf

Entertainment Ann Laurence

Get Your Game Together with No Bogeys Golf

Everyone knows that you’re not supposed to pick favorites when it comes to family. But let’s be honest, we ...

Medicare: A + B = ? Where does D come in?

Insurance Denice Merrill

Medicare: A + B = ?   Where does D come in?

I’m getting so much information in the mail! What do I need to keep? I am the presenter at the Mission Hospi...

Johnny Mathis “The Voice of Christmas” Returns to Segerstrom Center for the Arts With a Speci…

Entertainment Sorbet Mag

Johnny Mathis  “The Voice of Christmas” Returns to  Segerstrom Center for the Arts  With a Special Holiday Concert

The legendary and undisputed “Voice of Christmas,” Johnny Mathis will brighten the holiday season when he r...