Is it Possible to wholesale a property with a Reverse Mortgage? (NEWBIE)

Hey REIClub,

Hope I can get some assistance on this one. I’m still new so please bare with me. I recently had a call come in from an owner that wants to sell his fathers property fast which is great but he has a reverse mortgage on the property.

I’m not familiar this type of situation and want to know if wholesaling the property is an option? And if so, What information do I need to know from the owner to make this work out? So for I’ve just ran numbers as if it were a traditional wholesale deal.

Thanks and hope to hear some helpful tips soon!

You can’t buy a home from a beneficiary of a reverse mortgage, without the cooperation of the lender.

The first right of refusal, for a lack of a better way to put it, belongs to the reverse mortgage lender. Once the beneficiary vacates the property for whatever reason, possession ‘reverts’ to the lender, not the occupant, or his heirs.

Meantime, if the beneficiary/occupant wants to sell, he must coordinate that through the reverse mortgage lender. However, it’s REALLY unlkely that any equity from the house will go to the beneficiary of the reverse mortgage (occupant).

It’s somewhat similar to purchasing an REO from a bank, or perhaps a short sale, since the lender has to approve any sale, and will net ALL the proceeds from the transaction.

For that matter, there will be a lien recorded by the lender, against the property, outlining the lender’s interest in the property, that must be satisfied/released, in order for the buyer to secure an insurable title.

The title of the house may still be in the seller’s name. However, again, the reverse mortgage lender must approve the sale. It’s doubtful that you’ll get a deal on this property, as the lender will likely require the house be listed and marketed by either their in-house agent, or a 3rd party of their choosing. And it won’t be in the lender’s best interest to take a hit on their investment.

After all, the lender’s been tapping his fingers on the desk, waiting for the beneficiary to die, so he could capture the equity profits that justified giving the seller a reverse mortgage in the first place. Just saying.
Good luck.

A reverse mortgage is only a mortgage. You can buy it. Unlike a regular mortgage when the longer theu have it the more they will get on selling it with a reverse mortgage the seller has taken some payments which come out of their equity so what they recieve will be less than they think.

Go on with the deal there would be no issue with the selling of the property and verify all the original registration, document related with the property. I would suggest you clear the doubts regarding reverse mortgage with any solicitor so as to be in a safe position to do the deal.

Holy first post! LOL…here’s my 2 cents. For the past 5 years I’ve solely transacted reverse mortgages. Based on experience, here’s how it works. The homeowner still has ownership of the home, and the mortgage holder is just the mortgage holder. There is no issue with purchasing the home; obviously the RM lien has to be satisfied for the sale to go through(DUH). Pursuant to licensing guidelines, the mortgage holder must honor a payoff request in a timely fashion. Furthermore, there are never any pre-payment penalties associated with reverse mortgages. Hope this helps and I look forward to interacting with the board!