Reverse mortgage, owner died, house abandoned, how to buy? (RE agent, appraised, foreclosed) - Foreclosures, Short Sales, and REOs - - City-Data Forum

hotzcatz · 01-05-2014, 04:12 PM

About four years ago, the owner of the house next door died. She had just gotten a reverse mortgage on it about a year before. Her heirs didn't want to buy the house back from the mortgage company and the house has been sitting empty for four years now. We have finally tracked down the financial institution who currently holds the mortgage, but we haven't contacted them yet.

We want to buy the house, what's the best way to go about it?

There must be some benefit the financial institution gets from holding onto the house, although they have to pay property taxes on it and it isn't making them any money from rents or anything else we can see. The yard is terribly overgrown, there's beginning to be rats over there and the house is starting to deteriorate. We'd like to buy it while it's still easily salvageable.

The financial institution doesn't seem to be putting it up on the market. I think they foreclosed on the heirs? What does the financial institution do in the case of a reverse mortgage when the owner dies? Why would a financial institution keep holding onto the property for this long?

AZJoeD · 01-06-2014, 03:38 PM

Because this is an estate, it may be more complicated that you think. But, I would first contact the owners to find out where they are at with this debt. If you find it is in foreclosure you will need to find out the status of such things as probate status, back property taxes, IRS Liens, etc. The only way I know is to do a title search.

The bad thing is that even if you find the bank and asset manager they are unlikely to deal directly with you. They will sell it through a RE Agent when they are ready.

jackmichigan · 01-06-2014, 04:29 PM

Do you know if the taxes are paid up to date? That would be the first thing I would check. If they're not, that's an angle to begin discussions with the financial institution. As has been pointed out, however, they usually won't deal directly with potential purchasers...but you won't know unless you ask.

hotzcatz · 01-06-2014, 10:20 PM

The taxes are paid, the heirs were offered the property at some sort of percentage of appraised value and declined. I'd heard the property was being "foreclosed" on, but how can the financial institution foreclose if it already owns it?

The property - according to the papers were were able to get on it - was reverse mortgaged for $570K but that number has nothing to do with any sort of real world value at all. If the place were appraised, I'd be astonished if it went over $175K.

We've found out who the financial institution is that is holding it, but we haven't contacted them directly yet since we aren't sure what the best method is. Should we get a Realtor to ask for us?

The place was taken care up up until several years ago, since then nothing has been done, not even the folks with clipboards have come past to checkup on it. I'm thinking of mowing the lawn and doing the yard work and charging them it. We might be able to post a lien on it for the yardwork so if /when they get around to selling, we'd hopefully find out about it.

399083453 · 01-06-2014, 10:26 PM

Quote:

Originally Posted by hotzcatz

Why would a financial institution keep holding onto the property for this long?

The short version? The mortgage is guaranteed by the government. If they sold it 4 years ago for full value at $100k or if they sell it falling apart for $25k and the gov guarantee kicks in $75k, they still get $100k. They get the same amount no matter what, so why hurry.

ocngypz · 01-07-2014, 07:08 AM

There was a similar situation in my town - although there were no heirs and no foreclosure.

The original owner spent 3 years in a nursing home before passing away. It was another 2 years of pushing paper before the court appointed adminstrator was given bank approval to try a short sale. It took nearly a year for the property to sell. The house was basically a hazmat zone. Lead paint, asbestos, etc.

The property sold for 1/2 the assessed value of the 1.62 acres near the water.. the most upscale neighborhood in town.

hotzcatz · 01-08-2014, 07:21 PM

The yard is a mess, but salvagable. The house is okay, although there may be a bit of water damage below the bathroom sink, not too terrible. We'd love to buy it for 1/2 the assessed value but we'd even buy it at the assessed value. It's directly next door so it would make a great mother-in-laws "room". Much better than in the house.

It's been going on four years now and no short sale in sight. How does one find out the current state of the paperwork on a house? I had to go into the tax office and ask them who was paying taxes on it. If the taxes hadn't been paid, then I may have paid them and tried a "hostile" takeover, although I think that would have to be done for ten years before it would become legal.

The ownership of properties by financial institutions is crippling our neighborhoods. Wouldn't they make more money by keeping the properties in good shape and having a property management company rent them out?

Okey Dokie · 01-08-2014, 09:31 PM

The owner's name and all mortgage-type paperwork is public record. You can go to the courthouse and see them (at the Recorder of Deeds or similarly named office). They may very well be online as well.

hotzcatz · 01-10-2014, 02:56 AM

The "Bureau of Conveyances" would be our Recorder of Deeds, unfortunately, it's on another island and airfare is $150 round trip. Plus car rental, etc. etc. The owner's name is still listed as the person who died four years ago. The person listed on the last mortgage document filed with the Bureau of Conveyances (for a fee, they'll send documents) lists someone else as the holder of the mortgage but when we contacted the last listed mortgage holder, they said they'd sold it years ago. We tried following the chain of who all it had been sold to but after several layers nobody knew anymore. We finally found what we think is the actual owner but aren't sure how to go about making an offer on the house.

Do we call them on the phone and say "Hi, we want to buy a property you hold a reverse mortgage on". Or hire a Realtor to go ask them the same thing?

How does the amount of the reverse mortgage ( $570K ) relate to the actual value of the house (somewhere around $175K)? Will the reverse mortgage holders expect the amount we offer them to be the $570K? Will they expect us to offer that amount or will they accept an offer closer to the actual value of the house? Will they talk to us at all?

Can they sell the property without it being officially foreclosed on? The person who they gave the reverse mortgage to died and her heirs declined buying the property back. Do they have years of paperwork to go through before it can be sold?

If we find the heirs, can they offer to buy it for us? Or since they declined to buy it several years ago are they now completely out of the picture?

It is all very confusing, I'm not even sure who the people to ask would be. Realtors? Lawyers? Asking lawyers things can get really expensive really quickly.

jackmichigan · 01-10-2014, 05:49 AM

Quote:

Originally Posted by hotzcatz

Do we call them on the phone and say "Hi, we want to buy a property you hold a reverse mortgage on". Or hire a Realtor to go ask them the same thing?

I'd still just call them directly. They may not want to deal with you, but maybe you can get some answers as to their process for dealing with the house.