"octogenarian" <jim.m.gong[at]gmail.com> wrote in message
news:1118434932.585736.228960[at]o13g2000cwo.googlegroups.com...
- quote -

One of the problems with "snipping" the previous posts is that sometimes the
original context is lost and the thread goes off into neverland.

I posted the original question and I was referring to the heirs. Actually
it would apply to the person who took out the RM in the first place it the
RM was a term loan.

JW

Thanks,

I did say the estate, not heirs, right?

In the event the estate were broke, then, it would be moot for the heir.

"Cal Lester" <cal-lester[at]comcast.net> wrote in message
news:VNSdnRidDtYTYjXfRVn-gA[at]comcast.com...


octogenarian wrote:
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The statement above is 100% WRONG....................
One of the basic tenets of the GOVERNMENT sponsored concept
is that in the event that the sale of the home does NOT cover the
current TOTAL Mortgage, that the heirs owe NOTHING...........

Cal - it wasn't said that the heirs should pay the difference between the
mortgage and the sale price, but the estate. I think it should be recognized
that the estate is a legal entity in itself, separate from the heirs.
Anyway, I believe the poster was voicing an opinion, not the law.

Elizabeth Richardson

octogenarian wrote:
- quote -



The statement above is 100% WRONG....................
One of the basic tenets of the GOVERNMENT sponsored concept
is that in the event that the sale of the home does NOT cover the
current TOTAL Mortgage, that the heirs owe NOTHING...........

In the closing there is an amount set aside to cover that contingency.
Cal Lester CLU

If the house sells below the loan value, the estate owes the difference
in mho. There is no free lunch even after one's death.

jw wrote:
- quote -

Probably not. Here's a link that may be helpful:

ReverseMortgage.org
http://www.reversemortgage.org/

The information on the site is provided by the National Reverse Mortgage
Lenders Association (NRMLA).

Rick Wheat
www.wheatworks.com

Hypothetical:

The owners of a home pass away and the following apply to the RM they had on
there residence.
The accumulated debt on the loan is $450,000.00.
The appraised value of the property is $425,000.00

The way I read the rules:

1. when if the house is sold for $450,000.00 -- it's a wash. The estate
owes nothing, or
2. if the house sells for $475,000.00 the estate gains $25,000.00, or
3. if the house sells for $425,000.00 the estate owes nothing.

This leave me with the nagging question.
If you know the property is not going to sell for an amount over $450,000.00
what is to stop the heirs from selling the prepay at any price -- say for
the sake of discussion $100,000.00.

The reasoning would be the heirs are not going to gain anything from the
sale of the property and according to the rules the heirs are not
responsible for any debt over the selling price of the home.

I know there is probably something in place to assure the lenders are
covered. I believe the government insures these loans. It would be in
someone's interest that the property sells for the maximum amount, but in
this case, not necessarily the heirs.

I'm sure I'm missing some salient point here. Could someone enlighten me?

If I'm not missing something -- do I smell an opportunity?

JW

jw wrote:
- quote -

The sale of the must be approved by the lender.If the sale price is
for an amount that is LESS than the present debt, then the lender
would take over the house, release the Heirs from any obligation,
and they would then offer the house for sale.

This is really no different than the sale of any home. The buyer
looks to the current mortgage holder for a release or satisfaction.
This is accomplished by paying off the existing note.

The same would apply.

Cal