Q: My mother is 75 (widowed) and in reasonably good health with the attendant financial issues of living on a fixed income. She lives in Michigan and I am in North Carolina.
My sister (age 54) lives with her and is disabled due to multiple sclerosis. She is still functional — able to drive a car, etc. — but unable to handle any sort of home upkeep more than housekeeping. She is divorced and her only income is Social Security disability.
I would love for my mother to take advantage of a reverse mortgage, but what are the options when she passes? What options would I have for my sister? Is there is any way for her to stay in the home?
A: Typically, reverse mortgages are restricted to people who are 62 years of age and older. Additionally, most reverse mortgages become due and payable on the death of the borrower or when the borrower moves out and sells the house.
Your sister is 54; if your mother lives for another eight years, then I suspect that your sister will be able to get her own reverse mortgage.
But, will your sister be the sole inheritor of the house? Or will your mother leave it to both of you?
Furthermore, when your mother passes, will it be wise for your sister to live in the house by herself even if she can afford to do so?
There are many questions that you should start asking and getting answers to as soon as possible. Your mother should consult with an estate planning attorney in Michigan. She should have a last will and testament, a durable power of attorney and a living will — and some people also want to have a durable power of attorney for health.
Q: My mother has a reverse mortgage on her home, taken out after my father died, with her name alone on the title. The usual terms of the reverse mortgage apply, including the acceleration clause upon death or removal from the home. If anyone else is added to the title via a quitclaim deed in a tenancy in common, what impact does that have on the loan terms?
A: The reverse mortgage was recorded on land records in the jurisdiction of the property. If anyone else is added to title, they are second in line. Thus, when the reverse mortgage becomes due and payable, that lender can foreclose on the property and the new parties are out of luck. They were on notice — based on the recorded information — that they were behind the reverse mortgage.
Q: In May 2008, I signed a land contract on my home, thinking I had done a short sale and was no longer on the mortgage or on the deed or title to the home. However, a few months after signing the contract, I discovered that my name was still on the mortgage and on the title to the home. When I found out, I tried to find an attorney that would be able to help me, but I was unable to afford a lawyer. Help!
A: Years ago, when the farmhands who worked for ranchers out West wanted to buy an acre or two, they made a deal with the landowner/rancher. "I will buy the land for $100, and pay you $5 a month. You will put the deed to the property in escrow with a third party (a bank, an attorney, a title company). When I am able to pay the full $100, you will instruct that third party to release the deed and record it in my name."
This is called a "land installment sales contract," or a "land contract" or "contract for deed." So, where is the party who is on that contract with you? I assume the mortgage is being paid by someone, as there has been no foreclosure over the past four years.
Do you have a copy of that contract? Read it carefully; you may not be in trouble at all.
But you really should get an attorney to review your documentation. If you cannot afford legal counsel, most cities have a bar association that can provide "pro bono" (free) legal services.
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