Selling a Home That Has a Reverse Mortgage


hi I'm John Belton with na our public

affairs welcome to our webcast on

reverse mortgages let me give you a

little background on what a reverse

mortgage is and also talk about some of

the questions you may have if you're

selling a home with one of these

mortgages a reverse mortgage is a way

for older homeowners who buy they're

paid off or largely paid off their

mortgage to access the equity in their


borrowers do not need to repay a reverse

mortgage also known as a Home Equity

Conversion mortgage until they leave the

home about a million reverse mortgages

have been made since the federal

government authorized the FHA to insure

them beginning in 1988 for that reason

there's a good chance you'll be asked to

sell a house under these conditions at

some point in the future the issue for

you as a real estate professional is

that a unique set of requirements

applies when the owner or perhaps the

owners adult children or a state puts a

home with a reverse mortgage up for sale

these requirements are related to the

fact the loan must be paid off within a

limited amount of time after the owner

vacates the home whether to move

someplace else or because they've passed

away another consideration is that you

may need to work with the family members

who have had to step in because the

owner is no longer able to handle his or

her own affairs we're joined by two

experts who are going to answer some

questions and take us through the

process of working on a listing that has

a reverse mortgage there Leslie Flynn

who is the chief operating an operating

officer with reverse mortgage solutions

and Steve Irwin who is the executive

vice president of the National reverse

mortgage lenders Association welcome to

both of you thanks for being here well

thank you for having us before we jump

in I should note that if you have

questions throughout the the webcast

that you would like answered you can go

ahead and email them to realtor mag web

cast at and that email address

should be popping up on the screen right

now but before we get too deep into the

the nitty-gritty of how this is how all

of these these processes work why don't


Leslee take us through some of the top

things that you think an agent who is

working on a list

with a reverse mortgage should know or

should do from the beginning sure so

there are many things but from my

perspective that maybe the top four the

first would be to understand who

actually has authority over the property

oftentimes Realtors will be facing a

situation where someone passed away and

the estate may not be totally resolved

yet but understanding who is the

authority is is a very important factor

it's particularly important because as a

participant in this transaction a

realtor typically likes to take the lead

and be informed and oftentimes they may

choose to talk directly to the servicer

of a hecka mortgage but to be able to do

that they're going to have to have

authorization from whoever is appointed

to administer that estate so it's not

only important that the head of the

estate become an authorized member to

talk to the servicer but that the real

estate agent can have that same ability

and that's all done through writing with

and communication to the servicer so

that sort of sets in motion the ability

to talk and one of the critical things

that everyone wants to talk about is

what is the amount of the debt what is

the amount that needs to be retired and

they're only going to be able to get

that either through direct communication

through the servicer as I just described

or perhaps the estate has received a

demand letter from the servicer and in

that demand letter the amount of the

debt is generally stated very

prominently in that letter so that's

another thing they need to do then is

find out what communication that their

client has actually gotten about them

that's true and there's various

communications throughout the course of

the liquidation of this asset so it

could be very early on where only

communication might be a demand letter

or it could be much further along where

maybe there's been a notice of

foreclosure so it's important to know

because they're very interesting

timelines associated with this mortgage

I think we'll probably get into that but

the other thing that realtor is

typically want to

always what is the total debt and has

there been an appraisal of the property

and there generally is going to be an

appraised value if in fact there's been

a demand letter and that appraisal is an

appraisal that's conducted by an FHA

rostered appraiser and if it's an

internal then it may be the appraised

value that the mortgage company of the

servicer is actually going to depend

upon now when is that appraisal actually

going to happen well it generally

happens 30 days after that demand letter

is sent it could happen you know two

days after the demand letter but it must

be ordered 30 days after the demand

letter within 30 days so it's very early

on in the process and as I said the four

things perhaps a fifth thing that they

need to know is where is that loan in

this process is it early on or is it

very close to foreclosure because all

real estate agents may not be introduced

right at the beginning of a default

situation so that could gets us into how

the timing comes in there may be a sense

of urgency for the real estate agent and

they should understand what that timing

is as soon as they possibly can Steve

maybe you can speak to this a little bit

but when when do agents typically get in

come into this process wherein they're

in a time frame were they entering these


well the loan is to be satisfied within

six months of the being called dudn't

payable and we encourage heirs and

estates and borrowers if they're looking

to sell to get an agent involved just as

soon as possible so there's no

prescribed timeline where an agent has

to get involved but we will encourage as

soon as possible and we did we used a

term earlier heckum what was why don't

you do for anybody who doesn't already

know why don't you break down what a

heck I'm actually has I had come to use

a Home Equity Conversion mortgage more

commonly known as a reverse mortgage

it's insured by FHA and as a result

that's why there some very specific

rules that

principally two-timing and how the

property can be liquidated okay so let's

talk about timing what are the I guess

if you want to call them the tentpole

marker is in this in this process that

an agent should be aware of

well they event the default event which

could either be death or it could be

where the borrower's moved into a

nursing home or moved in with the family

or it could be when taxes and insurance

are not paid promptly so that's sort of

the event of default and as Steve

indicated the mortgage needs to be

satisfied within six months of a date if

the date of death or when the demand

letter goes to the estate in the case of

an occupancy or tax insurance default

and when we say six months if it isn't

satisfied in six months then foreclosure

proceedings begin and that can take a

very short period of time or it may take

a little longer or a very lengthy period

of time depending upon the state in

which the property is located on so you

use the word default I mean Steve are

these is this a traditional defaults

like with a with a normal loan or we're

using that term a little differently


I think it's defined a little bit

differently as Lesley has indicated we

are referring to situations where the

borrower is no longer occupying the

property as their primary residence and

once that happens that's considered a

default scenario there are also certain

terms of the loan certain loan

obligations that have to be met and once

those aren't met that's considered

defaults as well so an agent will enter

this process somewhere most likely

somewhere in that six month window to

begin with correct yes we hope so

generally yes they'll know coming in

that the six months are ticking let's

say you know the family is interested in

purchasing purchasing the property or

they were still working and putting

financing together can we extend that

six month window at all sure and if the

family chooses to purchase the property

they don't have to list it they can

merely call for a payoff and then

submit those funds they may need to

spend some time getting the funds either

through life insurance or perhaps

they're actually applying for a loan so

they can request their servicer to ask

for an extension from HUD and they can

get a 90-day extension HUD likes to have

some evidence that there's actually

activities in place that warrant getting

that extension and if you give some

examples of what those sure so if you

wanted to market the property perhaps

the MLS agreement if you were obtaining

financing perhaps a loan commitment or

information from a mortgage company that

an application is being processed if

time runs out there is a possibility of

getting another 90-day extension but

again the requirements oftentimes get a

little bit harder or a little need to

demonstrate that more action has taken

perhaps a sales contract on the property

HUD does not want to foreclose servicers

don't want to foreclose but the timing

is such that the dates and the

requirements keep moving to an ultimate

retire and extinguishment of the loan

either through repayment through selling

the property and repaying the funds or

through foreclosure so there absolutely

is a six-month window and then there's a

possibility of two 90-day extension so

this theoretically could go and go for a

full year right and that is before the

foreclosure actions are undertaken right

it's a till initiation of foreclosure

which is not as often as you might think

and these do get resolved pretty quickly

but it could take up to six months to

get the property listed etc so we all

understand that there is a need for

these extensions well and so leslie

mentioned the mortgage servicer quite a

few times

obviously the agent wants to be helpful

in this process they're going to be

working you know with their client

pretty closely should they also be

reaching out to the mortgage service


absolutely however given the privacy

laws that exist the servicer is limited

in the amount of information they can

share unless the agent has authorization

to discuss the case is that pretty

common Leslie

it is common particularly with people

and heirs who may be unfamiliar with the

fact that this is a heck of loan and

thinks that perhaps there's something

peculiar about it or just wants to seek

the advice of a professional and have

that professional advise them throughout

the process so as I mentioned in the

beginning to be able for us a mortgage

servicer to be able to speak to that

real estate agent they need

authorization in writing so whoever is

in charge of the estate or the borrower

if they're still alive needs to provide

written evidence request that the

servicer deal with this individual the

real estate agent so that particulars

about the transaction can be discussed

freely and they could be dealing with

any number of people it could be the

homeowner it could be an heir or it

could be an attorney who's in charge of

the estate right it can be all of those

people and of course we as servicers

enjoy the benefits of having a real

estate agent involved because they

always tend to work to make the

transaction happen on time and bring it

to a successful conclusion I guess we

were gonna say one thing about timing

though it sounds like timing really is a

key factor in when you're dealing with a

listing that's got a reverse mortgage on

it if that case is in a due and payable

status then yes there all parties need

to be conscious of the timelines were

involved which is to say one of the

events that you laid out earlier yes and

there are occasions in fact there are

more occasions as people are planning

for their end-of-life situation where

they may choose to leave the property

before they become incapacitated so

sometimes real estate agents become

involved with a heck of loan because the

borrower's choosing to sell the home to

perhaps move someplace else or to

downsize and there is this heckum

mortgage in that situation because the

loan isn't in default there is as

such time as anyone needs there's no

need to gain extensions because this is

just like a regular loan it it just

needs to be paid off when it comes to

and it the borrower can decide when it

can become due because they choose to

leave the home or it may be because

they've had to leave the home or because

they've passed away and then it becomes

immediately too as we said with the six

months window all information that

hopefully the the agents getting from

their client when they enter the process

hopefully hopefully but you know it's

always good to get it firsthand so I

guess let's let's dive a little bit

deeper right at the top of the webcast

you mentioned the appraisal process you

said within 30 days there's going to be

an appraisal so an agent may be walking

into a situation where the appraisal is

underway or has already happened talk a

little bit about the importance of that

and some of the timelines that might be

associated with it well the the most

important thing I think is that because

these loans operate just slightly

different than a traditional loan the

appraised value is particularly

important because the debt can be

satisfied by the lesser of paying off

the total debt or 95% of the current

appraisal so that oftentimes can afford

people to points-of-view

the appraisal which sort of demonstrates

what the property can generally be sold

for but the fact that it could be

satisfied this debt could be satisfied

in what most Realtors are going to call

a short sale and in this case that short

sale is limited by regulation to 95% of

the appraised value now there may be

occasions where it could be lower than

that but it's it's not common and so

it's good to know what that appraised

value is because if it's not a internal

appraisal if it was just an external

appraisal another appraisal can be done

and the other factor which I'm sure all

your agents are familiar with is that

because this is an FHA appraisal

only good for a hundred and twenty days

so if the real-estate agent wasn't

introduced to the transaction early on

it could be that that appraisal may only

have two or three more months life on it

and then it will have to have another

appraisal so you mentioned the

difference between an external internal

appraisal Steve I mean is one more

comment than another and is there some

way that an agent can involve themselves

in the situation to make sure it goes

right the answer to that question really

depends on the circumstances that the

property is being sold if it happens to

be an unfortunate circumstance where the

borrower has passed away the servicer is

required to order that appraisal within

those 30 days and oftentimes may not

have access to the property right at

that time so that will be an exterior

appraisal but naturally to avail the

selves for the estate to avail

themselves of this 95% payoff a full

interior appraisal is required so maybe

an exterior appraisal is not the

preferred method if you can avoid it no

it's not and it's not what we can

conduct a sale on so when the real

estate agent has the listing then they

can provide that access for the

appraiser so that at full interior

appraisal can be performed and you

mentioned this earlier but just a sort

of hammer at home that those appraisals

are good for a set period of time 120

days from the date that they're done so

even if you're partway through the


you mean that six months may be ticking

and then when the appraisal happens

there's 120 day period so you might have

more than one appraisal in this process

that's correct I mean how would you say

that the common occurrence yes okay

that's it yes sure well yes I'm very

certain because of just the fact that we

always do an appraisal 30 days after the

default event but there can be

extensions as we talked about so you're

very likely to get a second

and that's where the real estate agent

being familiar with the property is

going to have a pretty good idea of what

that appraised value should be right we

we talked a lot about what happens when

the appraisal is lower is it the low end

what about when the appraisal is is much

higher maybe the the property values

have gone up considerably I mean can you

it's it's a scenario that's gonna happen

and can you talk for a bit

absolutely and as homes continue to

appreciate it's going to happen more and

more frequently but the servicer and the

lender and the investor to the loan are

only concerned with having the unpaid

principal balance satisfied and so if

that property is listed for and sells

for more than the balance then those

funds will go to the estate it is not

something that the servicer is

interested in they just want to have the

balance satisfied and if it to the

estate maybe to the area's I mean it's

it it's a probably a preferable

situation and a lot of circumstances yes

and just like with a normal mortgage the

title company they are screw agent the

closing agent is going to call for a

payoff and it will be the amount of the

unpaid principal balance and any cost

that may have accrued to the loan since

the default the appraisal taxes or

insurance because the estate is

responsible for those taxes and

insurance up to the foreclosure date so

the payoff will excuse me

include all the mounts and the amounts

that will satisfy that one so some good

things that can come out of the the

value coming up a little bit and part of

what it you know agents are familiar

with doing and do regularly is you know

offer their services to help bring the

value of a property up they may offer

advice on curb appeal or doing some

remodeling or even just cleaning the

place up

is that something an agent should be

doing in a in a property with a reverse

mortgage steep wonder you take a girl

here okay so cleaning it up of course

anything that can add curb appeal which

i think is a realtor's term is obviously

advantageous but i think people should

be very careful

about making improvements if the amount

of the debt and the value of the

property the appraisal are very very

close to one another you may not want to

make any improvements to the property

because that's only going to drive the

appraised value higher and it is going

to cause perhaps that 95% to just rise

but if clearly if there is a small

amount of debt or even you know

three-quarters of the amount of debt

versus the value then realtor should

exercise the same good judgment they do

on all of their listings and when a

property looks good it has a higher

tendency to sell I believe so not just a

point of clarification if I may the

scenarios Leslie just described and

described well pertain to those

instances where the loan balance is

equal to or greater than the appraised

value naturally as we discussed a minute

ago if the property is appraising at a

value higher than the loan balance then

these improvements and modifications and

sprucing up if you will could only


okay well to know I will say one more

time for the people who are out there

watching that if you have questions you

want to ask either to our panelists you

can email them to realtor mag webcast at

I think the email should be popping up

on the screen so send your questions and

we'll get to as many of them as we can

it sounds like you know we've been

through we've been through a little bit

about the timing the appraisals some of

the top things that agents need to know

when they're walking into these it's a

lot of different scenarios that can

happen a lot of different ways that

these transactions can can end up

Leslee way once you take us through some

of the different options or the way that

these can close or the way a transaction

can certainly and so as I had indicated

earlier the family can just where the

borrower can always just pay off the

loan like with any mortgage you can

always retire the mortgage and the

properties is whoever paid it off

you also can do a deed in lieu of



certain requirements are necessary the

property has to be in broom swept

condition which means it does need to be

cleaned out and the title does need to

be free of any liens but the family

could do a deed-in-lieu and in that case

obviously there wouldn't be a real

estate commission involved right so and

then the sale transaction that we've

been discussing so that's why another

aspect of advising clients in the

situation if you're a realtor is to

really understand what is their intent

is their intent to keep the property is

their intent to sell the property or is

their intent to just walk away from the

property and let the property be

foreclosed upon it okay and there could

be some pretty dramatic differences in

the way that it turns out for the agent

as well as the people involved in them


well it makes sense we do have one

question that I wanted to get out there

from someone in our audience they want

to know you know you mentioned the

possibility of these defaults triggering

when somebody has left the home how is

that information going to be transferred

to the mortgage servicer how will

someone know that someone has left the


well the servicer monitors the occupancy

status of the property there is a

requirement that the borrower complete a

certificate of occupancy on an annual

basis and has to return those and if

that is not returned

then the servicer will take action to go

out and inspect the property to see if

it's still occupied and try to determine

that it's occupied by the borrower

there are also actions undertaken by the

servicer to determine if any of the

borrower's within their portfolio may

have passed away

over the past month or quarter or year

so there's a continual monitoring of

that process make sense and Leslie you

mentioned mentioned some of the costs

that get passed along to to the estate

you know that go through the process of

the sale the viewer had the same

question about utilities that sort of

thing ongoing utility costs electricity

water same deal yes yes because clearly

this is no different

than any other mortgage the person who

took that loan is responsible for that

property until the title is transfer

transferred either through a sale or

through a foreclosure okay all right

that makes sense one of the things that

I think a lot of people are probably

going to notice about these is we

mentioned earlier there's a lot of

different people you could be

interacting with assuming you have the

right approval you could be working with

the mortgage servicer but the property

could be being watched over by an estate

attorney it could be watched over by

heirs the homeowner could still be in

the home when you're going through this

so how did the timelines change or how

did the processes change when you're

working with you know say an estate

attorney versus a homeowner or what

should an agent be thinking about when

it working with you know different

people and the timelines don't really

change they're the same whether an

attorney is involved an heir or the

borrower the the concept I think that

everyone should know is that there are a

lot of people to this transaction

there's the investor who actually owns

the loan and ultimately may have a lot

of say over what can be done there's HUD

who has insured the property so they

have a lot of rules that serve that

people must follow and then there's the

servicer who generally is going to be

who the borrower or the estate attorney

is going to speak to they're the people

who act on behalf of the investor and

who adhere to the rules from HUD as well

as hopefully help the estate help the

borrower and help the real estate agent

in making sure that everyone gets what

they want out of this transaction which

hopefully is what everybody believes is

in the best interest either a sale or

deed-in-lieu or a foreclosure and very

few people and certainly we are not

anxious to do a foreclosure so we we

welcome all of the opportunities to sell

the property before that situation has

to occur well I guess you know one of

the questions someone you know an agent

coming into the into the transaction

might wonder is you know at some point

we're going to sign a representation

agreement and I is the agent I'm going

to be representing someone is there is

it more common for it to be one person

or another me

what's the most common scenario where

people most likely to work with the

heirs yes it's not common that is the

most common and and they oftentimes have

many many many questions they they've

heard lots of things about these

mortgages many of which are not true and

so they do need counsel and they don't

often call the servicing company the

servicing agent soon enough and so they

worry needlessly I'd in my mind about

the peculiarities and the particulars of

this transaction where a real estate

agent where it's their business

oftentimes can can distance themselves

from the emotion and the grief that may

be accompanying this situation and help

convey the facts and Shepherd the

transaction in the direction that

everyone would like it to go in well

we've nibbled around this you know when

some of the other questions that I asked

but let's talk about the errors first

second say you're working with a family

they want to purchase the home you know

does it necessarily have to be listed if

they want to if they want to purchase

the home absolutely not there if they

have the right and authority to conduct

the transaction then that's perfectly

acceptable and so they would need to

satisfy the balance of the loan that's

right okay correct

and then they could either conduct the

sail through the estate or they could do

it as a normal listing either way right

now I nodded my head but let me correct

myself right if that loan is in default

and they wish to satisfy the loan they

to get the benefit if they are in the

air to 95 percent of the appraised value

so what's what is more common there do

you see heirs who are most likely trying

to purchase the home or or not today and

with you know the wide far-flung nature

of all families we don't see as many

family members purchasing the home

perhaps as you might think that makes

the transaction a little bit more

difficult sometimes the heirs don't live

close to the property so the real estate


was even more valuable to the

transaction oftentimes the property is

still full of someone's life and needs

to be cleaned out whether it's going to

be go through a deed-in-lieu or whether

it's going to be sold on the marketplace

so real estate agents have delightful

array of talents and one is to arrange

for that clean-out and making it more

appealing to the public and so there may

be come a time when family members do

wish to purchase it and that's the more

prevalent transaction but today the most

prevalent transaction is a sale or a

foreclosure wait go ahead today I was

just going to say that Leslie is

describing situations and circumstances

that aren't necessarily unique to a

reverse mortgage product and these are

scenarios that realtor's should probably

be familiar with in instances where the

homeowner has passed away whether it is

a what we call forward mortgage or

regular mortgage or it happens to be a

reverse mortgage itself you know we're

talking about some of the some of what

goes into it when you've got an error

who's involved we got a question from

someone in the audience they say does

the estate pay upfront for any of the

appraisal or is it just added to the

loan balance it's added to the loan

balance which is going to make a

difference yes yes but it's also very

good in that they don't have to come up

with those funds oftentimes that is a

problem for heirs is I'd like to

participate in a sale but I don't have

the funds to be able to do certain

things and so the appraisal is covered

by the servicer it's it's added to the

loan balance the estate is welcome to

make a partial prepayment to pay down

that part of the debt which is

attributable to the appraisal but it's

not very common and it's not necessary

nor required well we're talking about

costs and

some that we mentioned earlier that an

agent may not necessarily want to help

bring up the value of the property

because it might not always be

beneficial to to the client or to the

person who will be receiving the home

but what about in this situation where

they do want to purchase the home I mean

it sounds at that point even if they're

living far away maybe you do want to do

some maintenance on the home and you may

encourage your client to do that right

because we're a passive person to this

transaction an entity to this

transaction we certainly do not control

what people choose to do I just caution

real estate agents to consider what is

the real intent what's the likelihood of

sale and then what is the comparison of

the debt to the current value because as

Steve indicated if the property is worth

more than the debt of course it behooves

the family to sell that because there

can be equity and they certainly are

entitled to it and may in fact want to

do improvements to the home and that

would be totally appropriate so here's

another question now we're in I'm gonna

start firing these away and sure we'll

just take them as they come in but if a

son or a daughter is named in a will can

that person automatically negotiate with

the servicer well the general practice

is to do this is to call the servicer

provide a copy of the will provide

indication that they are the person

that's named in the will and that

generally we'll start the ball rolling

in many states as your agents are going

to know having a will is not enough it

needs to be probated and so we

understand that probating takes a period

of time but providing an indicated

providing copy of the will is a terrific

way terrific way that their parents

provided for this situation and they're

now in a position to begin the ball

rolling that ball well and you actually

brought up an interesting point that it

some of this is based on on state law

and and Steve you may want to speak to

this I'm not going to ask you to speak

for all 50 states mm-hmm but it sounds

like that it may behoove agents to

become familiar with their state and

local regulations on estates and and

these issues as well

yeah well yes because it will impact

that estates ability to enter into the

transaction so that wouldn't be a bad

bit of research at all

it's tough thing to do but not a bad

idea to get familiar with it

mm-hmm they probably already are in many

ways you're probably right again we went

through this a little bit earlier but I

think some of it you know it's easy it's

easy to lose track of this there's three

big ways that these can end up there can

be there can be a sale there can be a

deed-in-lieu or there can be a

foreclosure why don't we just run

through each of those and you tell me

what the the Commission result would be

for the agent involved so uh certainly

that's one out of three so in a


there is no commission all the more

important to understand when they're

introduced to the transaction are people

seriously committed to a sale

transaction and deed-in-lieu is the

situation where to settle the settle the

balance and they simply walk away from

the property at what they do

no that's that's oftentimes a

misperception what helped me out okay so

here's what they have to do when the

property has to be cleaned up it has to

be in HUDs terms broom swept condition

which means that all the personal

property has to be taken away and the

property look very vacant you know you

can still leave curtains on the walls

but there can't be any furniture and in

addition the title has to be free of any

liens so a deed-in-lieu may be something

that an individual might say yes that's

what I want to do but it's it has to be

looked at before we can agree to

consummate a deed in there so frankly

it's like a waterfall here's what


first of all heirs think let's sell the

property maybe there's probably equity

so that's the first determination is to

determine can we sell it is it is it

going to be a property that's going to

sell in that period of time or might it

take three or four years I'm sure your

real estate agents know if your property

is located in a town of 500 it's likely

to take much longer to sell than if it

were located in a town of 50,000

so if I assume that there's no the

timeline isn't affected by that it is no

it's not it's just a fact of life that's

right so if the property can't sell then

heirs typically say well let's do a

deed-in-lieu and just not have to do the

foreclosure and again the deed in lieu

has to be looked at if in fact none of

those options transpired they don't pay

it off they can't sell it and it can't

have a deed-in-lieu then foreclosure

occurs and there is no commission in the

foreclosure transaction so it's only in

that first scenario that an agent's

going to see a commission on that's


question that just came in I Steve this

may be one for you or you can you know

take it as you as you like going back to

the appraisal question someone wants to

know how the appraiser is chosen

specifically are they an unbiased third

party or is there you know how were

these appraisers coming from the server

so we'll pick an appraiser

but that appraiser has to be from the

HUD approved roster of approved

appraisers okay no rebuttal no he's

absolutely right this time as always so

what I could what I'm hearing then is

agents coming into the deals they need

to be thinking about the timelines that

are involved that six months and they

need to find out as soon as they

possibly can where they are in that six

month process but then also talking to

your your potential client and finding

out what it is they really want to do

with the property yes yes oftentimes

people are undecided and think that they

should wait and make a decision when

things have settled down and in almost

every instance I believe that that is

sound advice in this instance maybe one

should counsel the potential client on

these are the things that can happen and

these are the things that you can take

control of and have more control of and

have less deadlines facing you because

deadlines when they're not expected are

very difficult for people in times of

grief or when people

moving out of the home there are a

thousand other things that they choose

to think about and these bits of details

oftentimes the lewd them time goes by

and then they have very limited options

six months goes quickly it does

particularly in the case where grief is

involved yeah you know I think I guess

people will be thinking about those that

extension process you know say you come

into a transaction and you're in the

fourth month is it tough to get an

extension when when you need it and if

your client says you know I heard I can

go for another six months we can get to

90-day extensions we're good to go I

mean is that really the case typically

but as Lesley explained earlier there is

certain documentation that would be

required there needs to be an

understanding that there is a real

listening happening that there could be

possible refinance and all of that has

to be supported with proper

documentation so question that just came

in you know we've talked today a lot

about HUD insured mortgage products are

there non HUD insured reverse mortgages

that people should be aware of there are

they're considered a proprietary reverse

mortgage and I don't mean to speak out

of turn here but we happen to serve as a

portfolio server portfolios of

proprietary products and most investors

have hired a servicer to service those

loans most investors don't service their

own loans and the typical process is

that they follow HUD rules now the

difference is that they can make

different decisions they may be able to

provide more concessions they may be

able to deviate from some of those

limitations as to 95 percent of

appraised value but they're typically

going to have a practice that says

follow the HUD timelines as far as

liquidating this property I would say

that while the sleaze absolutely correct

I'd like to remind the audience that the

majority of reverse mortgages in the


today and most of the existing reverse

mortgages that have been originated are

the FHA insured Home Equity Conversion

mortgage so it would probably be Hooven

agent then to find out for sure what

kind of product they're working with but

whether it's an FHA insured or not

chances are it's going to look

substantially similar to great well once

again it's not the fact that the agent

needs to do a lot of research on this

and go scour the library of what this

means but what we do want to reiterate

is that there be consistent and clear

communication with the servicer who will

help step through all of these and if

there are different nuances between

products the servicer will step them

through that and let me just add one

other thing and it's not always going to

be the situation where their family

members are going to authorize the real

estate agent to talk directly to the

servicer so if that is not the case and

then this real estate agent needs to

make the family member whoever is

talking to the service are aware and the

kinds of questions they should ask

because most individuals don't know the

real estate transaction as well as the

agents do and so they ask one question

and forget to ask something else and

then it occurs to them later and then

they're frustrated because they're not

always going to get that same person

that they talked to the first time on

the phone the second time so whether

they're directly in contact with the

servicing agent or they're working

through the heirs or whoever is handling

the estate they need to maybe provide an

outline of these questions so that their

client gets the answers to them so that

they can help them understand just

exactly the best way to deal with this

particular loan and property one to

reiterate and I think you both have

mentioned this the the agent should

really be thinking about getting

approval from their client to talk

directly with the service area if if

they can't and if the client is

comfortable with that correct well I

will say as we're sort of coming into

the last little bit of this webcast if

you do have questions get them in we're


pretty quickly the email addresses

realtor mag webcasts at send

them our way and we will we'll get to as

many as we can in this last little bit

here just talking about the servicer and

some of the things we were talking about

earlier occasionally I understand it

probably won't be too frequently but

sometimes they may not be responsive it

may be it may be tough a tough line of

communication any any advice for the

agent in making sure that you know there

is a good line of communication there

well generally we find that servicers

are indeed responsive it's just a matter

of having the authority to conduct the

conversation and that's where you'll

find some of the hesitation the

servicers are keenly aware just with as

with any other mortgage products of the

nation's privacy laws so we just want to

make sure that the servicer has the

ability to carry on the conversation

with the proper people parties well

here's a question that I'm gonna guess

you get fairly frequently we have a

question from someone who wants to know

if the timelines that we talked about

earlier are in effect if there is a

surviving spouse in a situation where

you have someone who's passed away can

you talk a little bit about I can I can

in the reverse world a surviving spouse

is consisten times called an on

borrowing spouse if let me just be clear

if both the husband and the wife were

parties to the original transaction the

loan doesn't become due and payable

until the last borrower passes away so

when there's a surviving spouse it's

generally because that spouse was not on

the mortgage when the loan was taken and

HUD has provided some very very gracious

aspects to non-boring spouses in the

last year and a half it has been

promulgated that if an on borrowing

spouse is contacts the servicer and now

and identifies themselves

and they meet certain requirements which

are pretty basic which is provided that

they were married at the time the loan

was taken they can provide evidence of

that and they provide excuse me a

acknowledgement which is actually an

agreement that they will continue to pay

the taxes and the insurance they can

sign an agreement to that effect

as well as a couple of other documents

they get to remain in the home there was

a time when that was not the case but

that is the situation today this speaks

to what we were talking about earlier

about really having clear communication

with your client and not only knowing

what their intentions are but also what

their what their situation is visa faith

alone and their borrowing status yeah

absolutely but at which point a realtor

is stepping in if there is an on

borrowing spouse well then that non

borrowing spouse can certainly initiate

a sales transaction and just carry on as

we discussed before you know taking a

look at some of the questions that we're

getting in I think it it speaks to how

complicated some of these issues are and

how much you kind of have to remember so

we're gonna read a couple of reiterate a

couple of things here but it's worth

going over a few is sure we just had got

the question they said they picked up

that we said the appraisal was good for

a hundred and twenty days but the

deadline is actually within a six month

window so obviously those are two

different periods so you have an

appraisal that may not live as long as

the the term of to default right so we

call that that the appraisal expired

okay because it's good for a hundred and

twenty so let's make an example here

let's let's use death the borrower died

and within a very short period of time

the family members call the mortgage

company we need to do an appraisal 30

days and within 30 days of being

notified of that borrower's death and we

do one and then 30 days later the heirs

decide we'd like to undertake real

estate transaction we'd like to bring

the real estate agent on board and

in our example here indicate that

they've authorized the servicing the

servicer to speak to that real estate

age so now that the were two months in

and the appraisal is a month old that's

right that's right

so you can see that that appraisal is

going to expire if that appraisal we're

in external we're going to get a new one

and that one starts a new hundred and

twenty days and if we haven't got an an

internal then we're gonna do as I said

we're gonna get a new one if we have an

external the fact that they want to sell

it's going to cause us to get an

internal if we have an internal you're

absolutely right some days have expired

off of it and the only thing that a real

estate agent has to worry about is that

they're listing the property they get a

contract for sale and then the appraisal

expires because they can't close that

transaction before that appraisal

expires another extension is available I

can get an extension on the life of that

appraisal does the appraisal itself

constitute sufficient evidence or need

for it for an extension

the appraisal plus a sales contract

there it is okay with that appraisal can

get me another 30 days so I have a

question would it make sense then to get

a current appraisal soon before listing

so that the listing duration may more

accurately coincide with the age of that

appraised that's an excellent idea

because that makes that transaction a

little less risky the last thing and the

thing that is most confusing and unhappy

situation is when that appraisal starts

in the listing and it expires and a new

appraisal is received and the appraisal

is significantly higher than the prior

appraisal as we see where property

values are rising this can happen and so

that's an extraordinarily good idea now

you may get some pushback from servicers

but for the price of an appraisal it's

great insurance

well you know trends are something that

gets talked a lot about in the real

estate industry and you just mentioned

that property values are coming up and

that's we're seeing that in most markets

but property values are coming up yeah

is that changing the way people handle

reverse more listings with a reverse

mortgage of them absolutely I mean there

was a time when it was rare that the

property would appraise at the debt

value but today more and more of that is

occurring where properties have actually

met the debt and are exceeding the debt

alright here's something to go over one

more time we we've talked a lot about

that six month window that that people

have to deal with but the question I

just got is again what triggers that

six-month period what's the what's the

firing guard gun that we should be

that's me and so let's do one more thing

to underscore the six months is where

the loan needs to be resolved before

foreclosure is going to be initiated it

doesn't mean that if you can't

consummate that transaction in that

first six months all is lost

it just means that the heirs then are

going to start getting documentation and

instances where they get information

that makes them feel uncomfortable

because a foreclosure is looming but to

know that they may be getting some of

that in the mail though that's beautiful

but up until foreclosure sale

transactions can't still close because

the last thing that a servicer wants and

a very less thing that HUD wants is

another REO property so everyone is

interested in making this transaction

work so the event that starts this

six-month window and the event that

actually starts the whole foreclosure

process is either the death of the

borrower the day that the property is

deemed vacant or when the borrower fails

to pay their taxes and insurance and so

when its occupancy and when its taxes

and insurance a demand letter will be

sent and that accelerates the loan calls

it doing payable and the timeline starts

at that

point so you get a demand letter that is

the result of one of those three

occurrences and that's when the six

months begins with the exception of

death death while you will get a demand

letter and that time meter that that

clock starts on the date of death that's

a good distinction and I would also like

to point out that we kind of focused on

this six month time frame but it is more

typical that these extensions are

granted as long as there's an effort to

market the property and resolve the loan

there are these two 90-day extensions

which takes that six months out to a

year before foreclosure is initiated and

another thing that real estate agents

when I've talked to them are a little

frustrated about is they know that if

they're introduced into the transaction

at month four that they're going to need

that extension so they say okay go ahead

and get that extension right away well

had it has a role that says you can't

ask for an extension until you're 30

days away from some expiration points so

I can't ask for my first extension until

month five I can't get my second

extension until the to a month before

that one is going to expire but we

tickle them just like real estate agents

put a little tickler in their diary to

make sure that everybody asks for that

on the day in which it can be asked for

so it's something the agent and their

client might be thinking about but

there's no pre-planning that can be done

you've got to be within 30 days to

request that well you know lots of

servicers make provisions for that we

like I said put a tickler you've asked

for an extension we know that you want

an extension and we will set it up to

ask for an extension but it's never a

bad thing to check to make sure that

your servicer did that reminders are

good how long does it typically take an

extension request to go through very

prompt right okay so this is so you're

within 30 days but you're gonna hear

fairly clear maybe like a week because

that's oh yes most definitely within a

week question we just got the answer I'm

not sure what the answer is if the

deceased owner is a veteran does it make

it does it change anything is there any

a veteran preference in this process

there's not okay so they can take that

off the off their list of things to no

foreclosure process

you know let's say you've asked for two

extensions they've been granted you get

to that one-year mark now what happens

you keep trying to sell the property so

it's not one year in the agent is is out

of the process no you keep trying to

sell the property right up to the

foreclosure sale and I will tell you in

our particular situation if a real

estate agent comes in and has a contract

for sale and high probability that that

transaction is going to close near-term

we can and servicers can postpone that

foreclosure they can put it on hold

that's how committed this industry is in

insuring that properties don't become

REO so they're a very transient and the

best way to stay on top of it is to stay

in close contact with your servicer be

patient and most of all remember all of

these things so that if you can

construct the right sequence of events

you will be on time asking for things

that you're quite likely to be able to

receive in the interest of reiterating

just a little bit as we get ready to

close here let's talk about Commission's

one more time you know we are dealing

with with a HUD insured product are

there limits on the Commission that the

realtor needs to be aware of yes

industry standard there's HUD will pay

six percent commission on a transaction

okay I know I know every listing okay

yes we're and we actually just got this

question and they wanted to know where

who's paying that Commission where's the

money coming from so it's just like any

other transaction the HUD one which

demonstrates all of the parties to the

transaction all the cost to the

transactions the contract price that had


shows and reflects that most of the

costs are paid at closing very few is

paid outside of closing so the

commission is deducted from the proceeds

and the seller will pay their portion

just like the buyer pays their portion

of costs and the net proceeds then are

wired to the servicer okay well we are

coming into the last couple of minutes

and before we before we turn in I mean

Steve do you have any final thoughts you

want to make sure to share with everyone

I don't think so I think we've pretty

much covered everything that I wanted to

make sure we communicate it out I think

most importantly it's important to

understand that the reverse mortgage is

a mortgage and there may seem to be a

lot of differences in nuance but

ultimately it's a mortgage and it gets

satisfied just as any other mortgage I

would like to also mention that members

of the audience may be interested in a

product that's out there which is the

FHA insured heckum for home purchase

which enables the reverse mortgage to be

used for the purchase of a principal

residence we Leslie we talked about

timelines we talked about communication

with client I mean anything else you

want to add or hammer home before we

close up no I think I too share Steve's

thoughts that heckum sounds scary maybe

they're not and we as servicers really

really appreciate a real estate agent

being involved and being informed

because it makes this transaction so

much easier to wind down so and it

sounds like if the agent does have

questions assuming they've gotten a


you know agreement that they can talk to

the servicer servicers more than happy

to answer some of those questions and

stay in close contact yes in fact most

servicers will talk to real estate

agents in general about the practices it

just can't talk specifics and realtor's

like specifics so they have to be

authorized in that regard but general


about how this process works or how

about how the transaction works are

perfectly open for questions and they

should feel free to be able to call any

servicer whose service is a heck of

mortgage great well I want to thank you

both for joining us this was fantastic

helpful certainly you know if people

continue to have questions you can get

more information on and for

anybody who may have joined late this

webcast will be available later on video

we'll make it available on

thank you all so much for being here