Is a reverse mortgage more foreclosure-prone? Last month, I closed escrow on a San Fernando Valley foreclosure. The former owner obtained a reverse mortgage. When there is a reverse mortgage and the owner passes, the estate has six months to pay off the loan or lose the home in foreclosure. The heirs can try to get as many as two additional ninety-day extensions. The heirs did not list the home for sale in order to pay off the loan; the home was lost in foreclosure.
After the foreclosure, the loan servicer hired my brother-in-law, Joe Harb, to list the home. After the former owner’s children and associates failed to vacate the property, the servicer initiated eviction proceedings. Several months later, Joe met the sheriff at the home, and the sheriff locked the adult children out. Joe later returned to allow them to retrieve their belongings. We then listed the home for sale and opened escrow.
However, the children moved back into the property. Joe called the sheriff again, and we had the home secured. They returned once more. We repeated this process five times, as they continued to re-enter the home. Eventually, the investor buyer grew frustrated with the delays. After the final eviction, the investor agreed to close. The property had been in escrow since before Christmas, and we closed in April.
And you don’t need to feel too sorry for the kids. They were lawless hellions; I don’t believe any of them held jobs. A tough lesson for parents: this is where spoiled kids end up.
