Paying Off Reverse Mortgage - Do This First - YouTube

Welcome to our freebie Friday video. We've taken a little break to revamp and

redo the videos, the topics, so that we continue to bring you quality and

relevant information as well as videos that are short and sweet . So thank you

for hanging in there with us and for watching.

Today I'd like to talk a little

bit about the situation when there is a mortgage that's a reverse mortgage - it's a

special type of mortgage. We have some other videos out there about reverse

mortgages if you're not familiar. They are the ones that are taken out by

people that are over 62 years old and they have equity in their homes.

It's something special that's done to help them with getting money out from

property that has quite a bit of value in it. And the reverse mortgages tend to be

backed by the government, which is USDA, also known as HUD. And when somebody dies,

the family members have a period of time in which they have to express what

they want to do with the property. The thing though with these types of mortgages

is that sometimes the lender doesn't necessarily reach out to the

family members (when they drop the ball). The lenders would drop the ball and not

reach out to family members to notify them of their options and they also

don't reach out to them to tell them the balance due on the loan.

Typically the mortgages would have one Deed of Trust for the actual lender

let's say Bank of America for instance, and then the second Deed of Trust will

be held by HUD (USDA). And the company that currently collects on these mortgages for

HUD is Novad Consulting. So Novad Consulting never steps in until somebody

defaults on the loan. And then, since the government backs those loans, the lender

in this instance if we pretend like it's Bank of America, Bank of America has the

option to do a foreclosure or has the option to approach HUD and get HUD to

pay them off and then HUD can follow through with the foreclosure since HUD

is in second place you know. So that's how it typically works.

Sometimes the lenders would do the foreclosure. I've seen that.

And sometimes they would just assign their right in first place to HUD so HUD

would then be the party to foreclose. Sometimes HUD would send out notices,

sometimes they don't. So Novad Consulting will drop the ball

sometimes too and not send out notices to the heirs. A lot of the times the

heirs need more time because if somebody has a Will for instance, it does take a

little bit of a process to get the Will sorted out after the family

grieves of course, put the Will in Probate, and then get the authorization

from the court. We call it over here in Texas, Letters Testamentary -

that would tell the whole world that this is the person selected to take care of the estate.

So, usually the executor is that person. So it takes a few months after

somebody has died for anybody to even get to that point after

grieving the death of that person. And so the mortgage companies do give you a

little bit of time and then after that time period expires, they try to move

forward with a foreclosure.

So then if they give the right to USDA (HUD), then HUD

will be the one to try to do the foreclosure.

So the question that came up

in this context was that HUD was trying to do a foreclosure, the family

members had been trying to reach out to HUD to get a payoff amount so that they

could refinance the loan or come up with the money - you know, things like that and

they got no response at all and then HUD sent out a notice saying they needed

to pay it off within 30 days or there will be a foreclosure. So my suggestion

is don't panic, don't freak out, and don't make any payment until you have proof of

the release from the actual lender.

So let's say that Bank of America was the lender,

then you need a release that's recorded in the property records showing that

Bank America has already let go of that loan. So it would be a Release or an

Assignment and once you have that recorded, then you know that you are

paying the right party. In this case it will be USDA and Novad Consulting would

be the one to collect for them, and then you could go ahead and pay it at that point.

Typically they cannot do a foreclosure unless they take it

through the court system and get an order from the court permitting

the foreclosure to go forward. So don't freak out.

Get legal consultation before you pay anything.

And we'll talk to you next time!