How to Handle a Reverse Mortgage in Probate

While it’s never easy to deal with the death of a family member, you may not have much time to grieve before handling their affairs, if they had a Reverse Mortgage on their house.

Reverse Mortgages are regulated by the US Department of Housing and Urban Development (HUD). A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. In the event of a death, the servicer of the loan has a right to initiate the foreclosure process in as little as 30 days, unless the beneficiaries or heirs of the estate can provide the servicer with the required information.

Upon learning of the homeowner’s death, the loan servicer will send out a letter letting the heirs know that they have to repay the loan within 30 days
or the servicer will initiate the foreclosure process. Typically, the beneficiaries will be inclined to sell the property to repay the loan. However, if the house has to pass through probate, it can take as long as 60-90 days from the date of death to have the necessary documents (Letters Testamentary or Letters of Administration) and authority to sell the house.

The servicer of the Reverse Mortgage has the option to extend the 30-day
deadline to initiate the foreclosure process, but will only do so if the property is being actively marketed. The property can only be marketed if a representative of the estate has been appointed by the court, which can only be done by initiating a Probate of the estate.

It is imperative that the beneficiaries of an estate with a reverse mortgage on the home contact a Probate Attorney in San Diego familiar with Reverse Mortgages to save a property from a foreclosure due to a Reverse Mortgage on a home.

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