Reverse Mortgage lender stalling process after father passed away

[draco]

What is the name of your state (only U.S. law)? Minnesota

My father took out a reverse mortgage on his house. After he passed away, I contacted the reverse mortgage company to ask about resolving the reverse mortgage. They said I could just sign the house over to them. I said no, I wanted to get an appraisal and see about paying off the mortgage or selling the house. They told me to send in documentation, which I did. For weeks they said they were behind in processing and didn't even know if they got it. Then they requested more information, even though I sent what they asked for. Then they complained that I used a script font instead of my signature. All the while, still suggesting I just sign it over. Now it's been almost 4 months, and they still haven't requested an appraisal.

It's an FHA backed reverse mortgage. Are there any laws or regulations on how long they have to do things? I know I have 6 months, plus two extensions of 3 months each to settle the mortgage. But because of their inaction, 4 months are almost gone. It seems they're just stalling to earn more interest on the loan, and to maybe get me to just sign it over to them.

Thank you in advance for any help.

 

[HUD-1]

Sounds like incompetence on their part. If you are the executor and the home has equity, go ahead and list it for sale. You can pay off the loan at any time. If it is underwater, you will have to proceed with a short sale, with the lender's approval required. After six months, they will start a foreclosure action if there has been little or no action to resolve the situation.

 

[OK-LL]

Why would you be expecting the lender already in place to produce an appraisal for you? If you are trying to determine your position with regard to equity in the property vs. reverse mortgage balance, it would be up to you to obtain your own appraisal to inform yourself of the property's FMV. As previously said, the executor/administrator of the estate needs to request a payoff statement from the lender, obtain an appraisal of the property and determine whether it is in the best interest of the estate/beneficiaries to payoff the mortgage, liquidate the property or let it go to the lender.

 

[draco]

Because the lender is REQUIRED to provide an appraisal from an FHA approved inspector. If the appraisal comes in under the mortgage balance, I can buy it for 95% of the appraised value. The mortgage balance is substantially under the amount my father could have borrowed, which is why I think they're stalling and encouraging me to just sign the home over to them. They think they can make a lot of money on the deal. But I think their value is high, as the house isn't in good condition. So I want the appraisal so I can decide what to do.

Why would you be expecting the lender already in place to produce an appraisal for you? If you are trying to determine your position with regard to equity in the property vs. reverse mortgage balance, it would be up to you to obtain your own appraisal to inform yourself of the property's FMV. As previously said, the executor/administrator of the estate needs to request a payoff statement from the lender, obtain an appraisal of the property and determine whether it is in the best interest of the estate/beneficiaries to payoff the mortgage, liquidate the property or let it go to the lender.

 

[STEPHAN]

Don't expect mortgage companies to be logical.

(I have to deal a lot with them in similar situations.)

 

[OK-LL]

Because the lender is REQUIRED to provide an appraisal from an FHA approved inspector. If the appraisal comes in under the mortgage balance, I can buy it for 95% of the appraised value. The mortgage balance is substantially under the amount my father could have borrowed, which is why I think they're stalling and encouraging me to just sign the home over to them. They think they can make a lot of money on the deal. But I think their value is high, as the house isn't in good condition. So I want the appraisal so I can decide what to do.

Is what you have described a part of the reverse mortgage documents? I've only seen one set of reverse mortgage documents and I don't recall any requirement that the lender provide a current appraisal at any point after the mortgage closing, nor a requirement that they sell the mortgage obligation (to you or your father?) for 95% of a post-closing appraisal.