October 18th, 2012 8:37 AM by Juan Luis Rodriguez-Kohly
As most of you already know, you must be 62 years of age or older to be able to do a Reverse Mortgage on your home.
There are a few reasons why you could consider removing a Spouse or owner from Title in order to do a Reverse Mortgage. As an ethical, responsible, caring human being and Loan originator, I DO NOT recommend doing it in, ANY CASE, without consulting competent legal counsel an obtaining a Legal Opinion in writing:
SOME OF THE REASONS:
1) One Spouse or Owner is younger than 62 and you "need it now". You may want to consider how long you would have to wait until he or she turns 62 and then do the Reverse Mortgage.
2) The proceeds from the Reverse Mortgage with the younger Owner on Title would not suffice to pay off your present Mortgage balance and you are facing LOOSING THE HOME TO FORECLOSURE.
While it is possible to remove an owner from Title, TODAY LENDERS ARE NOT ALLOWING IT TO BE DONE IN ORDER TO DO A REVERSE MORTGAGE.
The reason for the “gravity” of this action is that IF the Borrower Pre-deceases the removed Spouse or owner, the Estate would have UP TO 1 year ( 6 months of due diligence and 2 extensions of 3 months each) to pay off the loan or face foreclosure.
The property can be sold, refinanced or simply pay off the balance and keep the home. If the Balance due is higher than the Value of the Home a “short Sale” or “Deed-in-Lieu-of –Foreclosure” might be negotiated with the lender or the Estate might pay off a 95% of the current appraised value to the Lender and keep the home.
There have been unethical or uninformed Loan Originators who have told Clients of mine that you can put the spouse on the Title and on the Mortgage once they turn 62. It is NOT correct. Yes you can, easily, put the spouse on Title, but NOT on the Mortgage and the Lender would “call-in” the Reverse Mortgage and it will become “due and payable” immediately. You must do a HECM to HECM Refinance and pay Closing costs again.
If the Balance due on the old Reverse Mortgage is higher than the proceeds of the new Reverse Mortgage due to the younger age of the new Borrower or because of decreases in value, then you might not be able to do this refinance.
Whatever you decide to do, call me, before you do it, and I will be happy to talk it over with you without any cost or obligation.
Your comments will be appreciated. Post here or send them to RodKohly@Gmail.com * For most answers call me at 786-262-6486 or visit http://HappySeniorHomeOwners.com (English-Español). Follow me in Facebook: http://Facebook.com/RodKohlyLO To tell a friend visit http://www.happyseniorhomeowners.com/tellfriend.aspx