Reverse Mortgage Short Sale

I am currently involved in a reverse mortgage on a home that was left to me by my uncle. I live in Philadelphia and helped my uncle get home hospice set up for his house in Maryland, and traveled between Maryland and Philadelphia for the last six months of his life. When he passed in December, I started to prepare the house for sale. This also involves many trips between Philadelphia and DC, time spent away from my family, expenses and the frustration of having to sell a house in this market. Financial Freedom just notified me that they will foreclose on the property and I will end up with nothing in return for the time, effort and money I put into the house to try and salvage a legacy for my family. All the advertisements I see for reverse mortgage tout how beneficial they will be to the heirs. I see no benefit at all in this deal and thought I might be able to salvage it with a short sale. I know I cannot benefit directly from the short sale, but it is very frustrating to see all of my efforts and my personal money and time that I put into this project go down the drain. There doesn't seem to be any help out there for the situation.

Erika, can you please point me in the right direction regarding your post of June 24th? "Unfortunately, the bank will not allow an arms length transaction. So, immediate family members cannot buy it."

I am researching this exact situation. I have an heir to a client who has a HECM and wants to buy the property back once his father passes. I want to know if the Arms length rules are lender specific or if HUD will allow it.  If the house sells for market value and the deficiiency balance will be collected via an MIP claim, who cares if a family member buys it or if a total stranger buys it. The bank will become whole after the MIP claim anyway.

 

I spoke to someone at the reverse mortgage company for 45 minutes. He said a family member cannot purchase it. It cannot be an arms length transaction. I agree with you 100%, who cares! Unfortunately, after my reading and talking to him, reverse mortgages are to benefit the homeowner and the investor. And once the homeowner has passed, the investor wants his money back period. That's why HUD guarentees 95% of it and there's no short sale transaction. They don't need us. It's set up like a prenuptial agreement! And sucks for family members! If you can find anything different, I'm all ears!!!

have reverse mtg property value is way down here in fla so would like to sell it to my son what is the process for me on a short sale can i get it appraised then noify the lender and do theyhav to accept the value by appraizer as long as they are locensed by the state thnks im in fla

Regarding Erika's comment:

#38: "If you tell them you want to sell the property; they will order an appraisal..."

My parents are currently living in Florida with a reverse mortgage balance of $145,000 their house is currently worth about $90,000, lost half the value already. They want to sell it for medical reasons, is is possible to short sell it.

Thanks, Fernando

I am a Washington State Realtor and I am attempting to close a short sale on a HUD insured reverse mortgage.  We have an otherwise qualified FHA buyer but Bank of America says their interpretation of HUD guidelines prevent them from paying typical, ordinary and customary seller and buyer loan costs.  For instance, despite the fact that nearly all closing in Washington State are handled through an independent 3^rd party, an escrow or an attorney, Bank of America says HUD guidelines forbid them from paying a closing settlement or escrow fee.  They justify their decision by claiming that since Washington Law doesn't specifically dictate that closings have to occur through an escrow company or an attorney, they cannot be considered typical, ordinary or customary.  Except for the closing of a FHA repo, in my own 38 years of experience in real estate, I have not had a circumstance where a closing or settlement fee was not paid in some fashion.  In the case of the FHA repo, HUD has a specific closer located in Snohomish, Washington, who is under contract with FHA to handle those closings.      

The bottom line though, our FHA buyer will likely be unable to complete the purchase because, like a majority of FHA buyers in our jurisdiction, the buyer lacks the additional funds, beyond the down payment, to complete the FHA purchase.   Bank of America's contention is, the data we've provided concerning what is typical, ordinary and customary in our jurisdiction has been deemed unsatisfactory.  Yet, Bank of America has been unable to identify for us what exactly would be deemed satisfactory. 

My questions are;

1).  Is there any recourse against Bank of America?   

2).  Is it really the intent of HUD to essentially make it impossible for a FHA buyer to purchase a home where it involves the short sale of a HUD insured reverse mortgage?  In the case mentioned above, due to Bank of America's rigid unrealistic interpretation of the HUD guidelines, that is exactly what is happening.    Is that really what we want?

I would be extremely interesting in a response to our situation and my questions.

I have read all of the responses and have not seen reference to what happens to a reverse mortgage principle who is still surviving, but the property value has decreased to below the value of the reverse mortgage value (payments made). Does the investor (Bank, etc) stop payments if the reverse mortgage is a periodic payment and forclose on the property or does the investor continue payment to the full extent of the contract, knowing the property will never recover the investment?

Just sold deceased parents house in short sale that had HECM with Financial Freedom. 3 months waiting for deed in lieu with no response and many phone calls,  put house on market and acceptable offer in 3 weeks, received DIL acceptance and short sale acceptance on same day. Had to complete sale due to liability of breech of contract. We closed on house about 3 weeks later. HUD has specific guidelines about closing costs. Sold house for 95% and most closing costs were paid by lender or HUD and realtor commission and property tax. We'll see how IRS plays out with this.   

We are trying to buy the house next door I missed the public sell which was not posted on or near the house it was posted in a small newspaper. I found out that no one place a bit on it and the Wells Fargo N.A. as trustee for Riverview was highest bitter in the amount of 45,000 Well, now I know that Riverview HECM 2007-3 is the reverse mortgage. They condition of the house is bad i don't think they came out to look at it.. How can I get in touch with these people to see if they will sale it?

Thank you