Mother Died, No Will, Reverse Mortgage Way Under Water, Barely Any Assets

[spike51]

What is the name of your state (only U.S. law)? Maryland (but I live in PA)


Sorry if this question was already asked - I did a search but didn't find a situation that matched ours.

My mother passed away last week without a surviving spouse and without a will (we believe - although we have not accessed her safe deposit box - there is not a will filed with her county registrar).

Her only assets (again - we believe) are her car, worth maybe $1000 at most, a tiny bit of money in her checking account (<$1500), and her condo - which we believe to be way under water with a tapped out reverse mortgage ($150k balance vs. a value of $80-$100k). We do not believe that she has any other creditors, as she went through a bankruptcy proceeding last year.

With the situation as it is, we (me, brother, sister - her heirs) are not sure if opening her estate is the correct thing for us to do as obviously her debt to the mortgage company is well in excess of her assets. Part of me thinks the best thing is to just walk away as the estate is very likely to be insolvent.

I have covered her funeral expenses, but am not sure if my best course of action is to hire an estate/probate lawyer if I'll be personally responsible for the expenses. The mortgage company have already sent a letter demanding I fax them a bunch of things, and have had an appraiser call me seeking entrance to the condo. I am ignoring them for now (my mother passed less than a week ago - we haven't even had her services yet!!).

Also - is it OK for us to remove personal items from her condo? Where does the line between personal things and "assets" occur. Laptop computer? TV?, Etc? What should I do with her car? Since her only creditor is the mortgage company, would they have any legal grounds (or balls) to demand from the family members any things like this?

Thanks in advance for your kind help - we are really scratching our heads and none of us want to write a lawyer a check to tell us to just walk away if that's our best course of action.

 

[TheGeekess]

What is the name of your state (only U.S. law)? Maryland (but I live in PA)


Sorry if this question was already asked - I did a search but didn't find a situation that matched ours.

My mother passed away last week without a surviving spouse and without a will (we believe - although we have not accessed her safe deposit box - there is not a will filed with her county registrar).

Her only assets (again - we believe) are her car, worth maybe $1000 at most, a tiny bit of money in her checking account (<$1500), and her condo - which we believe to be way under water with a tapped out reverse mortgage ($150k balance vs. a value of $80-$100k). We do not believe that she has any other creditors, as she went through a bankruptcy proceeding last year.

With the situation as it is, we (me, brother, sister - her heirs) are not sure if opening her estate is the correct thing for us to do as obviously her debt to the mortgage company is well in excess of her assets. Part of me thinks the best thing is to just walk away as the estate is very likely to be insolvent.

I have covered her funeral expenses, but am not sure if my best course of action is to hire an estate/probate lawyer if I'll be personally responsible for the expenses. The mortgage company have already sent a letter demanding I fax them a bunch of things, and have had an appraiser call me seeking entrance to the condo. I am ignoring them for now (my mother passed less than a week ago - we haven't even had her services yet!!).

Also - is it OK for us to remove personal items from her condo? Where does the line between personal things and "assets" occur. Laptop computer? TV?, Etc? What should I do with her car? Since her only creditor is the mortgage company, would they have any legal grounds (or balls) to demand from the family members any things like this?

Thanks in advance for your kind help - we are really scratching our heads and none of us want to write a lawyer a check to tell us to just walk away if that's our best course of action.

9. Settling the Loan Account

The homeowner doesn’t make any monthly mortgage payments during the life of the loan. The loan is repaid when the homeowner or last surviving spouse on title ceases to occupy the home as a principal residence.

The reverse mortgage is a non-recourse loan, which means no debt will be left to the heirs and if the loan balance is less than the market value of the home, the additional equity is retained by the homeowner/heirs (if the home is sold).

If a name is removed from the title, that person is no longer an owner of the home. When the person whose name is on the deed passes, the surviving spouse or the heirs are responsible for informing the loan servicer. Servicers also audit deaths of borrowers using a variety of tools. Future payments stop at death, but interest, mortgage insurance premiums and homeowner's insurance continue to accrue until the loan is settled. The Servicer will mail a notice to the surviving spouse or heirs informing them the loan is now due and payable. The surviving spouse or heirs are responsible for paying back the reverse mortgage. The loan can be paid back out of other resources or by selling the home. If there is a balance from the sale of the home after the reverse mortgage is paid, it belongs to the heirs.

When the borrower sells or conveys title of the property, passes away or does not maintain the property as principal residence for a period exceeding twelve months due to physical or mental illness, you have reached what is called a “maturity event.” This means the loan is due and payable. You or your estate will work closely with the Servicer to ensure your loan is paid in full in a timely manner.

The estate will have six months to satisfy the debt. In the fifth month, you will receive a letter from the Servicer advising you have 30 days to settle the loan, but can request a 90-day extension, which must be approved by HUD. You may also request a second 90-day extension. If the 30-day demand letter is not responded to, or after the 90-day approved extensions expire, or if the borrower has no heirs to help pay off the loan, then the Servicer may initiate foreclosure.

If, however, you or your estate are actively working to either refinance your property or sell your property so as to satisfy your reverse mortgage, then foreclosure may be forestalled.

The key to a proper and clean end to a loan is to work closely with your Servicer from the time the loan is called due and payable.

http://www.reversemortgage.org/YourRoadmap/9SettlingtheLoanAccount.aspx

See also:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm

 

[LdiJ]

What is the name of your state (only U.S. law)? Maryland (but I live in PA)


Sorry if this question was already asked - I did a search but didn't find a situation that matched ours.

My mother passed away last week without a surviving spouse and without a will (we believe - although we have not accessed her safe deposit box - there is not a will filed with her county registrar).

Her only assets (again - we believe) are her car, worth maybe $1000 at most, a tiny bit of money in her checking account (<$1500), and her condo - which we believe to be way under water with a tapped out reverse mortgage ($150k balance vs. a value of $80-$100k). We do not believe that she has any other creditors, as she went through a bankruptcy proceeding last year.

With the situation as it is, we (me, brother, sister - her heirs) are not sure if opening her estate is the correct thing for us to do as obviously her debt to the mortgage company is well in excess of her assets. Part of me thinks the best thing is to just walk away as the estate is very likely to be insolvent.

I have covered her funeral expenses, but am not sure if my best course of action is to hire an estate/probate lawyer if I'll be personally responsible for the expenses. The mortgage company have already sent a letter demanding I fax them a bunch of things, and have had an appraiser call me seeking entrance to the condo. I am ignoring them for now (my mother passed less than a week ago - we haven't even had her services yet!!).

Also - is it OK for us to remove personal items from her condo? Where does the line between personal things and "assets" occur. Laptop computer? TV?, Etc? What should I do with her car? Since her only creditor is the mortgage company, would they have any legal grounds (or balls) to demand from the family members any things like this?

Thanks in advance for your kind help - we are really scratching our heads and none of us want to write a lawyer a check to tell us to just walk away if that's our best course of action.

Generally, her creditors are not going to have any interest in her personal property unless she has things of significant value. Mostly, it costs them more to clean out a property than they might ever gain from its contents. If she has significant antiques, artwork, jewelry...that sort of thing they would have some interest, but odds are that they would have little interest in any used electronics.

I also doubt that they would have any interest in her car.

Most states have some sort of small estate procedure where you don't actually have to open full probate in order to access things life a safe deposit box etc...so a consult with a probate attorney, just to ask general questions would likely be a good idea. However, there does appear to be some good information here:

http://registers.maryland.gov/main/forms.html