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. As the former owner’s kids and entourage did not move after the home was lost, the servicer initiated eviction. After several months, Joe met the sheriff at the home and the adult kids were locked out of the home. He then met them again so they could get their belongings out of the house. We listed the home for sale and opened escrow.
But the kids moved back. Joe called the sheriff, we got the home boarded up again and they came back. We did this drill five times, they kept coming back. Well fortunately for the servicer, the investor buyer became tired of waiting and after the last go round with the sheriff kicking the kids out yet again, the investor decided to close. This home had been in escrow since before Christmas and we just 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 to parents: this is where spoiled kids end up.