My father had a reverse mortgage and he recently passed away. I am not on any paperwork, am I responsible to pay?

Oh, goodness. I personally think reverse mortgages should be illegal. People don't know what they're getting into until they are over their heads. You didn't sign any of the paper work. Were you the person listed on the will and the executor/trix? It sounds to me that you need legal advice to help to sort it out. This may just be harassment to see if they can collect money from you. Companies that still do reverse mortgages are kind of shady. The banks and other reputable companies won't do them anymore. The companies that do them now are the ones that made sub-prime loans that caused such problems ten years ago. That tells people a lot.

Definitely see a lawyer.

DLO, earlier today I was reading about responsibility for mortgages after the mortgagor/borrower dies. The article, on a legal website, stated that Personal Representatives (f/k/a executors or executrixes) are responsible for maintaining the mortgage in good standing, making payments and keeping HO insurance up, e.g.

However, although not stated, I believe that article assumes the mortgages are standard, not reverse mortgages.

A mortgagee (lender) of a standard, conventional mortgage has the option if it desires to accelerate the indebtedness and call the loan, but it also has the option of working with the PR to avoid acceleration and foreclosure if the PR and/or other heirs want to assume the mortgage.

I faced this situation after my sister died. I notified the mortgagee of her death and advised that payments would continue until disposition of the house was made. Countrywide, the mortgagee, pressured me to assume the mortgage and become personally responsible for it. Obviously I refused. Eventually they gave up and just accepted the payments - no more issue of foreclosure or assumption of the mortgagor's responsibilities. As long as they got their money, they were happy.

But reverse mortgages are different because, as I understand, they're automatically accelerated at death (meaning the entire indebtedness becomes due and payable), and it's usually well beyond the capability of any heir to pay.

Since you've already worked out a deed in lieu arrangement, just make sure that a real estate or better yet a transactional attorney with mortgage work out experience drafts it, to ensure that there's nothing snuck in under the table by the mortgagee, especially something relating to deficiencies.

Getting an experienced attorney in a law firm which handles major transactional work is worth every cent. I would not trust any reverse lender not to sneak something into the deed or agreement (if there is one) to terminate the mortgage.

Since the mortgagee has agreed to the deed in lieu, I wouldn't be too concerned about their harassment. But I also wouldn't ignore it. My guess is one department doesn't know what the other is doing.

What I would do is have the attorney who prepared the deed in lieu notify the mortgagee that mortgage payments will not be made, based on the terms of the deed in lieu.

If the reverse lender prepared the deed in lieu, I DEFINITELY would have an attorney review it. You want to make sure that you and your father's estate and heirs have no residual obligation of any kind for the mortgage.

However, I would keep up the homeowners insurance until the deed in lieu is recorded, just to be on the safe side, especially if the home is now vacant, which raises another issue as insurance carriers don't like to insure vacant homes. I would advise them of the situation to ensure that the HO policy isn't cancelled until the deed in lieu is recorded.

It's actually to the reverse lender's advantage to take the deed in lieu b/c it avoids the time and cost of foreclosure.

So, long story made short, assuming you're not a joint mortgagor (borrower), you don't have obligations under the mortgage. If you're a PR, in that capacity you do have an obligation to resolve the issue of the accelerated indebtedness, which it appears you've already done.

Another thought as to the deed in lieu - there should be a collateral agreement addressing the fact that ALL the indebtedness under the RM is being resolved, that the deed satisfies ANY and ALL indebtedness, that there are not and will be no outstanding, remaining issues of indebtedness of your father's estate and/or heirs, and that the full indebtedness of $xxx is extinguished through the granting by whoever is the PR of the deed in lieu.

Ideally, there should also be ab unconditional release by the RM of your father's estate - the PR and the heirs.

In other words, wrap it all up; don't leave anything outstanding for the RM lender to use to

BTW, under normal conditions heirs are not responsible for the bills of their parents. Creditors have first access to the estate. In this case it would be the house if your father is the only name on the deed.

More information and answers will come.
A lot of knowledgeable and caring people on this site.
Best regards,
M88

Oh how I wish it were true that your dad got away with $200,000 from the sleezy reverse mortgage people. I'm trying to remember the details about the one time I knew someone who got caught up with a reverse mortgage. I know that if your dad didn't pay the taxes and insurance the mortgage company had to. If you put the house on the market and sell it for more than the mortgage plus the taxes and insurance that the mortgage company paid, then the estate gets the balance. If you can't sell it for enough to cover the mortgage then the mortgage company is out of luck. They made a hefty fee at the beginning of the loan you can bet. The one I know about sold for enough to pay off all the fees and past due taxes and insurance ( barely). I think if it were me I would have a good attorney look over the Deed in Lieu and all the recent bills and make them go away. Either way you aren't responsible but I'm not sure about your dads estate for the property taxes and insurance. You should negotiate that all away before signing. They don't loan the entire appraised amount so there should have been equity held back that would have covered what your dad didn't pay. In the case I know about the husband took out the loan in his name only. His wife wasn't at the age required at that time ( 62). So when he had a heart attack and died at 68, his loan was due. She had to sell and move. He could have added her name when she turned 62 but he would have had to pay loan origination fees all over again if I remember the details correctly. There were no realtor fees included in her sale (friends helped) or she wouldn't have cleared anything. It was that close. Sorry for the loss of your father.

dlo9000, quickly call the reverse mortgage company and get something in writing, if not already, to the fact that you are handing over the key to the bank. Until everything is sign, sealed and delivered "the estate" is still responsible for property taxes and homeowners insurance.

My boss ran into harassment issues with a reverse mortgage that was under his late wife's name, it was taken out many years ago.... since his name wasn't on the reverse mortgage, he had 30 days after her passing to refinance or sell the house. Since he wasn't able to refinance, as the house value had jumped big time, but his income didn't, he put the house on the market For Sale. Quickly downsized and had to find a new place to live all while dealing with the sad loss of his wife.

During the couple of months the house was on the market, my boss was getting calls and letters asking for the money back on the reverse mortgage. Eventually the house sold for a nice price... the reverse mortgage got back their loan paid in full, along with interest and fees... and there was equity left over for my boss.

Months after the sale, my boss was still be harassed by the mortgage company.... apparently the right hand didn't know what the left hand was doing.

errata....second paragraph should read "... also be an unconditional release..."

And third paragraph should end "...lender to use in an attempt to get any further funds or obligations from the estate, PR and/or heirs."