You Inherited A House With A Reverse Mortgage?

You inherited a house with a reverse mortgage on it?  What happens if you can’t pay it?

When a person dies, the reverse mortgage on a house, including all unpaid amounts for insurance and taxes, becomes DUE IN FULL.  Now you have inherited this house subject to this mortgage and want to know your options.  One option is to see if you can qualify to buy the house.  You get a mortgage of your own and buy the house and the money goes into the decedent’s estate which uses it to pay off the reverse mortgage.  Another option is to try and takeover the mortgage and refinance it.  And another option is to sell the house and then use the proceeds to satisfy that reverse mortgage.

Another option is to inherit the house subject to the mortgage and then file a Chapter 13 to stretch out payments on the debt over five years.  But remember, now that the person has died, the entire debt has come due and your Chapter 13 plan will have to make payment on that entire amount (including insurance and taxes).  Unfortunately, most people find funding that kind of Chapter 13 plan very difficult to do.

In the end, while you may be attached to the house as the house where your parents lived and as the house you grew up in,  you might have to let it go.  Just remember a house does not make a home or a family.

If you find yourself dealing with a reverse mortgage that you inherited, please consult one of the attorneys in our office to look at your situation with you and see if there is some creative way to save your home — sale, refi, or sometimes a well-planned Chapter 13 can make a difference.