Q: My mother has a reverse mortgage on her house and there will be a negative equity of $50,000 owed when she passes.
I do not wantany responsibilty for the house , how does my mother keep that from happening? I don't want to be responsible for the balance on the house or the death or estate taxes.
A: Assuming that your mother's reverse mortgage is federally insured, upon her death the outstanding balance of the mortgage becomes due, however, neither her estate nor any anyone inheriting from her estate will become liable for that debt. In your mother's case where there is no equity in property, the mortgage is greater than the value of the property, the mortgage company will either take back the property or sell it, but in either event any losses are covered by the federal insurance. When this event occurs the estate nor the heirs of the estate have any right to the house or any of the subsequent sale proceeds. Your mother does not have to do anything at all the protect her estate or family members since these terms are incorporated in the reverse mortgage instrument. I hope this addresses your concerns,
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