Selling Home With Reverse Mortgage in Louisiana

By Andrew Rodriguez & Tony Bertucci

A reverse mortgage lets an older owner borrow against the house without monthly mortgage payments, but the loan comes due eventually, and that is usually when a family has decisions to make. This guide is for heirs who inherited a house with a reverse mortgage, for owners moving out to live with family or into care, and for borrowers who have fallen behind on taxes or insurance. It explains when the loan comes due, your options, how the payoff works when the house sells and how selling as-is to a local cash buyer fits in. Bertucci Investment Group buys houses across Jefferson, Orleans and St. Tammany Parish. This is general information, not legal or tax advice. Your loan papers and your loan servicer have the final word on your loan.

Key Highlights

• A reverse mortgage usually comes due when the last borrower dies, sells the house or moves out for good.
• It can also come due if property taxes, homeowners insurance or upkeep fall behind.
• When it comes due, the house can usually be sold and the loan paid off at closing.
• Most reverse mortgages are federally insured loans that generally don’t require heirs to pay more than the house is worth. Confirm with the servicer.
• The servicer sets deadlines, so contact them early and get everything in writing.

When Does a Reverse Mortgage Come Due?

Most reverse mortgages in the U.S. are Home Equity Conversion Mortgages, insured by the federal government. In general, the loan becomes due when:

• The last borrower dies.
• The borrower sells the house or transfers the title.
• The borrower moves out permanently, including a long stay in a nursing home or assisted living.
• The borrower falls behind on property taxes or homeowners insurance, or lets the house fall into serious disrepair.

When that happens, the servicer sends a notice. The balance usually includes the money borrowed plus interest and fees that built up over the years, so it can be larger than families expect. Ask for a written payoff statement.

If You Inherited a House With a Reverse Mortgage

Heirs generally have a few choices: pay off the loan and keep the house, sell the house and use the proceeds to pay off the loan, or let the lender take the house back if it is worth less than the balance. What you can do, and how long you have, depends on the loan, so the first step is always the same:

• Contact the loan servicer as soon as you can. Tell them the borrower has died and ask what they need from you.
• Ask for the payoff amount, the deadlines and how to request more time if you are selling.
• Keep the house insured and secured while it is vacant. See selling a vacant house.
• Start the succession. A house usually can’t be sold until the heirs have authority to sell it. See selling an inherited house through a Louisiana succession and the documents you need to sell an inherited house.

Many houses with a reverse mortgage were owned for decades and need repairs that were put off. That can make a regular listing slow. For Jefferson Parish families, see selling an inherited house in Jefferson Parish.

If the House Is Worth Less Than the Loan

With the federally insured loans, heirs generally aren’t personally responsible for more than the house is worth, and the rules allow a sale for less than the full balance in some cases. Those rules have conditions, and the servicer has to approve the numbers. Ask the servicer in writing what they will accept, and talk with an attorney or a HUD-approved housing counselor before you agree to anything.

If the Borrower Is Moving Out or Behind on Taxes

If an owner is moving in with family or into care, the loan usually comes due once the move is permanent. Selling while the owner can still sign, or while someone holds a valid power of attorney, is often simpler than waiting. If the loan is in default because property taxes or insurance fell behind, the servicer may start foreclosure. The earlier you act, the more options you have. See your options when facing foreclosure in Louisiana, selling a house in foreclosure and selling a house with back taxes.

How the Payoff Works When the House Sells

Selling a house with a reverse mortgage works much like selling any house with a loan. The title company requests a payoff from the servicer, the loan is paid from the proceeds at closing, and anything left after the payoff and closing costs goes to the owner or the heirs. If the house needs work, a buyer using a loan may not be able to close until it is fixed. An as-is sale to a cash buyer avoids that problem.

Watch Out for These Red Flags

• Anyone who asks for money up front to stop a reverse mortgage foreclosure.
• Pressure to sign the deed or a contract on the spot.
• An offer that isn’t in writing or doesn’t name a title company.
• Someone who tells you not to talk to the servicer, an attorney or a housing counselor.

How Selling to Bertucci Investment Group Works

• Tell us about the house. Fill out the short form with the address and a good number to reach you, and tell us about the reverse mortgage and where the succession stands.
• We talk and see the property. A local team member calls to learn about the house and your situation, then sets a time to walk through it.
• You get a written cash offer. The offer is based on the house’s condition, the repairs it needs, recent sales of similar homes nearby and our costs to fix it up. We walk you through the numbers. There is no obligation to accept.
• Title work, then closing. A title company checks that the property can transfer, handles any payoffs and you sign at closing.

You don’t make repairs, clean out the house or pay agent commissions, and you can leave behind anything you don’t want to take.

In Summary

A reverse mortgage usually comes due when the last borrower dies, sells or moves out, or when taxes and insurance fall behind. Heirs can generally keep the house by paying the loan, sell it, or let it go, and the servicer sets the deadlines. Contact the servicer early, start the succession and get a written payoff. If the house needs work or the deadlines are close, an as-is sale to a local cash buyer is one option. We buy houses across Jefferson Parish, Orleans Parish and St. Tammany Parish. Request your written cash offer or contact us with your questions.

FAQs

Can I sell a house that has a reverse mortgage?

Yes. The loan is paid off from the sale proceeds at closing, like any other mortgage.

What happens to a reverse mortgage when the owner dies?

The loan usually becomes due. The heirs can generally pay it off and keep the house, sell the house, or let the lender take it back. Contact the servicer right away to learn your deadlines.

Do heirs have to pay more than the house is worth?

For the federally insured reverse mortgages, heirs generally don’t. Confirm the details with the servicer and an attorney.

Do I need a succession to sell an inherited house with a reverse mortgage?

Usually, yes. The heirs need legal authority to sell. A succession attorney can tell you what is needed.

Will you buy a house with a reverse mortgage that needs repairs?

Yes. We buy houses as-is. The offer reflects the repairs the house needs, and the reverse mortgage is paid off at closing.