Capital Gains and Losses
Questions and comments about tax rules for buying and selling stocks, mutual funds, real estate and other assets.
reverse mortgage?
Posted by: gejo48, February 1, 2017 08:34PM
Almost-70--yr.-old sibling lives alone (no other family) in FL, collects disability social security. Condo is fully paid, no other debts. Sibling is not well and upon passing (whenever that may come) wants to leave me the condo, but I don't really want it, and inheriting it would be difficult due to great distance, etc. Sibling wants to live out days in condo but still would like to leave me something. Sibling also has only a DIY will, naming our now-deceased parent as beneficiary and me as contingent beneficiary, is not very interested in dealing with own expenses past day-to-day stuff, and has asked me for ideas that would solve this situation without leaving me a burden.

I have heard that reverse mortgages are not generally regarded as a good idea, but Iím wondering if that might be siblingís best bet. If sibling gets a reverse mortgage, my understanding is that the reverse mortgage changes the ownership of the condo to the financial institution granting the mortgage, but the sibling will still be allowed to live in it until death as long as taxes and upkeep are paid all along. What would be ideal for sibling is to take the reverse mortgage, get the money for the condo as a single payment, put it in the bank, and use that money to live on, until death, at which point the reverse mortgage holder will simply take possession of the condo and there will be no money owed. So that would also eliminate my having to go through probate, sell the condo, etc.

I only know a limited amount about reverse mortgages, but maybe someone reading this can explain how they work. Is this correct?

Re: reverse mortgage?
Posted by: Sven, February 3, 2017 12:12AM
A good place to start might be asking the condo association (there probably is one) if they get
involved in the reverse mortgage process. If they say no, you at least know you won't have to deal with then. If they say yes, however, you may get useful information from them.

Re: reverse mortgage?
Posted by: triad, February 6, 2017 02:51AM
A reverse mortgage does not change the title to the property. There may be a lien.

When the owner dies, their estate comes into existence with both the condo and the loan amount owed to the bank. The bank typically gives the executor one year to sell the house. I do not know if the executor can trigger a foreclosure before then.

Re: reverse mortgage?
Posted by: Drewremedy, February 7, 2017 09:46PM
The reverse mortgage solves nothing and adds costs if nothing else....there is no free lunch. The sibling can leave you the unit by will or by title ..but ultimately you need to step up and get it sold when that time comes.....if you don't want to get involved, I'm sure for a mere $250 per hour some attorney will do all the leg work....

Re: reverse mortgage?
Posted by: caesark, February 8, 2017 04:11PM

How can you say that? The reverse mortgage definitely entails costs, but in the described situation it would provide funds for living expenses for the remainder of the owners lifetime.

Re: reverse mortgage?
Posted by: Drewremedy, February 9, 2017 01:59AM
that's not what OP said...owner is debt free and collecting a stable SSD .....providing cash to somebody who is not interested in dealing with expenses does not appear to solve a thing and invites dissipation of funds....look, owner is free to convert his assets to cash and blow same on balance of his life ...but that wasn't the question posed . COnversely owner has nomsiry to preserve assets for the future enjoyment of OP. IF OP is ducking the practical issues of selling inherited property that's fine, somebody will do the legwork for a fee or lower price ...

I'd be real nervous about an old DIY will holding up....

And to suggest that one borrow a lump sum at say 5% and some fees and deposit it in a bank at say 0.2 % is missing something in math 101 .

Re: reverse mortgage?
Posted by: 47Percent, February 11, 2017 03:30AM

"Sibling is not well and (Sibling) not very interested in dealing with own expenses past day-to-day stuff."

"I don't really want it, and inheriting it would be difficult due to great distance, etc. "

IMO, from your description of your sibling and yourself, going for a reverse mortgage would be like inviting the vultures to feast on you when you are alive.

One missed or delayed property tax payment, and someone is going to be thinking really hard as to why the condo should not be reprocessed and the resident thrown out. If you think that won't happen, think again..


There are more of them where this guy came from.

Just assume that everyone is out to get you and rip you off, because that is much closer to the truth than anything else. This is absolutely true in the financial industry. Nobody gets into it for altruistic purposes.

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