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My Mom is 85 and in failing health. She needs some help getting around, but not on a daily basis. We'd like to move her into an assisted living setup soon, but the home has a FHA insured reverse mortgage.
The home value is sitting at about $61k and the reverse mortgage note is sitting at $78k as of end of July and increasing every month. My Dad had taken out a lump sum payment 9 years ago and it's all gone.
We have considered going to the servicer of the loan and seeing what it would take to do a Deed in Lieu of Foreclosure process.
The house is paid up on taxes and house insurance. And, the home is in ok condition with everything in working order. One of the concerns we had was the wording of "the owner should maintain the property in a condition equal to when the load was closed". What exactly would the servicer of the loan mean by that statement? If there is some slight damage to the interior walls would they need to be repaired before vacating?
Does anyone have any thoughts or information on whether the Deed in Lieu of Foreclosure is a good or bad process to go through?
If your mother leaves for more than a year, the lender can call the mortgage. If she can't pay it they will begin foreclosure proceedings. They also require payment of taxes, insurance and maintainence, but that's true of any mortgage. Will it make any impact on your mother if the house is foreclosed? If not, don't worry about it, and don't forget, she has a lifetime home as long as she lives there. Reverse mortgages require nothing but payment of taxes, insurance, and maintainence. The last does not incllude minor problems; they just don't want collapsed roofs and other major damage.
Assisted living is very expensive. Home health care would likely be less expensive and far more pleasant. Finally, do not give the house away. There is no advantage whatsoever in doing that. Besides, as long as she lives there the bank can't foreclose.
If you have more questions address them to an attorney, not the bank, and certainly not an internet message board.
The home value is sitting at about $61k and the reverse mortgage note is sitting at $78k as of end of July and increasing every month. My Dad had taken out a lump sum payment 9 years ago and it's all gone.
Most reverse mortgage loans are HECM (Home Equity Conversion Mortgage) or “non-recourse loans". Is your Dad's? If so, neither he nor you will ever owe more than the amount of the note.
Having a non-recourse loan means that neither you nor your heirs will ever owe more than the loan balance or the value of the property, whichever is less; and no assets other than the home must be used to repay the debt.
My Mom is 85 and in failing health. She needs some help getting around, but not on a daily basis. We'd like to move her into an assisted living setup soon, but the home has a FHA insured reverse mortgage.
The home value is sitting at about $61k and the reverse mortgage note is sitting at $78k as of end of July and increasing every month. My Dad had taken out a lump sum payment 9 years ago and it's all gone.
We have considered going to the servicer of the loan and seeing what it would take to do a Deed in Lieu of Foreclosure process.
The house is paid up on taxes and house insurance. And, the home is in ok condition with everything in working order. One of the concerns we had was the wording of "the owner should maintain the property in a condition equal to when the load was closed". What exactly would the servicer of the loan mean by that statement? If there is some slight damage to the interior walls would they need to be repaired before vacating?
Does anyone have any thoughts or information on whether the Deed in Lieu of Foreclosure is a good or bad process to go through?
Thanks
AlphaBravo
The present home aside, how do you expect to pay for an assisted living setup?
It is my understanding that the bank simply takes the home. They agreed to pay xx dollars per month to your mom at some point. If those payments add up to much more than the value of the home it's their loss, not yours. I once originated mortgages and the only experience I have is originating one Reverse Mortgage. That product did not stop if the homeowner were to outlive the value of the home (receive more monthly payments than the value of the house). It did not mean that the homeowner had to surrender the home and pay back the back the "over payment".
When the RM is originated the bank will only lend a certain percentage of the current home value. The OP's father took that percentage of the home value 9 years ago. The bank did not figure the home would decrease in value. I believe it's the banks' loss, not the OP's.
The loan is an HECM non-recourse loan and biscuitmom is correct. Once the paperwork is completed, my mom should not owe more than the value of the home. The home value has dropped from 2009 and has been on a continual decline since then. Of course, the loan amount keeps rising.
The plan right now is to move out of the home, move her to a senior living apartment setting for 2-3 years(?) and then finally into an assisted living arrangement. I understand the costs of assisted living are very high. My Mom has a fixed income pension from USAF (not much) and SS. We'll also be looking at VA Aid and Attendance type help for assisted living.
VA aid and attendance is approximately $1100 monthly. Think about how much her pension, SS, and VA A&A will be. Assisted living can be between $2500 for a small group home up to $5500 or more for a nice studio apartment style place with 3 meals, etc. Maybe others here can fill in details about what Medi-care can cover, if anything. Then that has to be compared with the costs (utilities, taxes, insurance, food, payments to caregivers) to the costs of her staying in the home to come up with a plan to meet her needs.
Medicare won't help and will help only for a few months for skilled nursing home care after several days in the hospital (most commonly for women a broken hip).
Thanks "TheShadow" on VA info. I've looked at the VA site, but it's a bit confusing on the amount a person could potentially receive from VA. From what I remember reading, the amount one could receive is based on what the person applying had in the way of 'countable' money. What constitutes countable money? My Mom has Social Security and Military pension and that's it. Do both of those apply against what one could receive from VA?
And, Neil is right about Medicare. No help on any type of assisted living, nursing home care and Medicare is only for a short period of time.
No Masonic background either. Still doing research on what a state might be able to provide and I found a good website for helping get some answers on what might be available at: Payment Options for Elder Care and Assisted Living
If your mother leaves for more than a year, the lender can call the mortgage. If she can't pay it they will begin foreclosure proceedings. They also require payment of taxes, insurance and maintainence, but that's true of any mortgage. Will it make any impact on your mother if the house is foreclosed? If not, don't worry about it, and don't forget, she has a lifetime home as long as she lives there. Reverse mortgages require nothing but payment of taxes, insurance, and maintainence. The last does not incllude minor problems; they just don't want collapsed roofs and other major damage.
Assisted living is very expensive. Home health care would likely be less expensive and far more pleasant. Finally, do not give the house away. There is no advantage whatsoever in doing that. Besides, as long as she lives there the bank can't foreclose.
If you have more questions address them to an attorney, not the bank, and certainly not an internet message board.
I am not sure people realize how expensive assistant living is and none of it is covered by medicade if the situation gets that bad. I was surprised to learn the cost truthfully.
Yes, op you really need to talk to an attorney and see what can be done for her. If she just needs help getting around check into home health care, maybe just a few hours a day or a few days a week.
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