Question on reverse mortgage foreclosure

Foreclosures, Short Sales, Tax Foreclosures
1

Hello everyone,
My dad passed away last month. He owned a condo that realistically will probably sell in the area of $45,000 and $50,000. A few years ago he took out a reverse mortgage on it and the payoff today for that mortgage is about $52,000. Hence we are probably upside down on the condo. Only my dad’s name is on the deed. Dad had no other assets, only this condo.

I am in touch with a realtor to get the unit sold and will have to call the bank to let them know of my dad’s passing. With the little knowledge I know, I believe that the bank will not want to take deed to the property and that it is looking like a short sale will be happening? Is this what usually happens in these cases?

Also, if it does become a short sale does the proceeds toward the short sale come AFTER the closing costs (ie realtor commission and other fees)?

Any other information would be helpful. My brother seems to be under the impression that we as children of my dad are obligated to ensure that the mortgage company gets paid the loan amount in full. None of us held title to the property and none of us co-signed or were trusts to the estate. I am not sure why we would be obligated to ensure that the bank gets their full $52,000.

2

You’re not obligated on this one and don’t let the bank try to sway you in that direction. Now if the place was worth 100K then maybe. Herbster

3

Check the loan docs. There is probably language that requires the bank to take the home without recourse. In any event, the heirs are not required to pay estate debts and creditors eat the loss if there is insufficient assets to pay the debts.