Q: are the heirs responsible for a reversed mortgage after parents die ? If there was no money in the estate.
Directly, no, unless one or more of the heirs has signed a guarantee with the provider(s) of health care for the deceased.
An argument may be made by the creditor, however, for heir-liability, in the absence of a guaranty, if any of the heirs claimed the decedent as a dependent during life. And there are cases out there that impose liability of a de facto (non-tax) dependent where the creditor provides "necessities".
Keep in mind that a creditor of the deceased my push its claim against the decedent's estate, and the heirs my suffer a loss if estate assets are liquidated to pay claims against the estate.
The heirs aren't personally responsible, but the property is.
Typically after the passing of a borrower with a reverse mortgage, there are 3 options:
- Heirs purchase the property and/or refinance the loan to pay off the mortgage
- The estate sells the property if there's equity
- The reverse mortgage lender forecloses and the estate has no more liability
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