Q: My parents have a reverse mortgage. They are in their mid 90s. Is it possible to have my name added to the deed?
Champion mortgage is the holder of loan. Document indicates I have 1 year to remain in the home after last owner is deceased. Should I add my name on the lein to be included as “Tenants in Entierty”? They have no saving/retirement/ safety-net to leave me. I can’t afford purchase the house when they pass. Would bankruptcy help ME??
A: No, none of this would work. First, you cannot be added onto the reverse mortgage, as that was calculated based on your parents’ ages and life expectancy at the time of the mortgage. The mortgage typically must be paid off within 6 months of death, or the property be listed for sale and marketed by then in order to avoid foreclosure. Adding your name to the deed not only would not help, but would not be permitted under the reverse mortgage terms. Further, you would cause adverse tax consequences to you as heir of your parents’ estate if you did that. If there is no way to pay off or refinance the mortgage after your parents are deceased, then the property will need to be sold and the proceeds used to pay off the mortgage balance. Any net proceeds would go to the heirs of their estate, and if you are their sole heir,then it would go to you. If your parents are mentally competent then they should seek out advice from a lawyer to review their estate plan (will, health care and general powers of attorney, etc.) to make sure they have everything in order. There may be planning strategies they can use to better control what happens after they die and to better help you as their heir.
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