Ask Phyllis: a blog series of frequently asked real estate questions.
Reverse mortgage sale after death
Dear Phyllis,
My father passed away last month, and he had a reverse mortgage. My brother is the trustee, and he lives in Nevada. So far, my brother has done nothing. He has not come out to look at the home or meet real estate agents. From the research I have been doing, we only have five more months to pay off the reverse mortgage, and I am concerned about his lackadaisical attitude. I have offered to meet with realtors experienced with reverse mortgage sales, and he has refused. What do you suggest I do?
Concerned
Dear Concerned,
You are right to be concerned. A reverse mortgage timeline is serious. Although some lenders grant extensions, many do not. In most cases, the loan must be paid off or the home sold within a limited period after the borrower passes away.
For example, years ago, I met beneficiaries who waited more than four months before contacting me. Unfortunately, the family had failed to notify the reverse mortgage lender of their parent’s passing within the required thirty-day timeframe. Eventually, the lender discovered the death on its own. As a result, it filed a Notice of Default. Consequently, we had less than six weeks to prepare the home, market it, sell it, and close escrow. Fortunately, they avoided foreclosure, but they came dangerously close to losing the property. Moreover, because of the tight timeline, they were limited to cash buyers. As a result, they likely sold the home for less than they could have if they had more time to properly prepare and market the property.
First, immediately contact the trust attorney and explain your concerns. The trustee has a fiduciary duty to protect the estate and act in the best interests of all beneficiaries. Delays can create serious financial consequences for everyone involved. Additionally, if your brother continues to ignore the situation, you may want to consult your own attorney. If necessary, your attorney can formally remind your brother that he could be held personally liable if the property is lost due to negligence or inaction.
Most importantly, do not wait. Reverse mortgage sales require experienced guidance, careful timing, and constant communication with the lender. Every week matters.
I wish you success!
