Can the owner of a fully owned house that is in an irrevocable trust get a reverse mortgage on it ?
Sunday, January 31st, 2010 at
5:18 am
The owner died and now the reverse mortgage company is trying to foreclose on the property.
Filed under: Retirement Planning
Like this post? Subscribe to my RSS feed and get loads more!
Yes, they can and it’s not a foreclosure, that’s part of the reverse mortgage agreement…how did you think they were going to get paid back? Do you think they gave that money to the owner for free?
Whatever is left on the property, however, goes to the person that has the irrevocable trust, but the mortgage company is under no obligation to go to extraordinary efforts to get the highest possible price, as their goal is only to recover what has been paid out plus interest.
I wouldn’t fight that one, because you will lose. The bank has the right to be paid back, after all, the owner received an income from them and the owner has FULL CONTROL of the property regarding all financial decisions, and an irrevocable trust doesn’t change that.
"Someone else living in the house" does NOT apply unless it’s a spouse or a child that is a legal dependent and their guardian.
If the owner (applicant) on a reverse mortgage passes away and no other applicant is living in THAT home – then the reverse mortgage needs to be satisfied now or the property goes to the bank.
Usually in a trust, the applicant (owner) makes arrangements for the property to be satisfied OR the beneficiary doe snot get the home.
Hope this helps