Before I discuss the facts you raise in your question, let us review reverse mortgage basics.
Reverse Mortgage Basics
A reverse mortgage is a unique mortgage because they are no payments required from the borrower. Instead the homeowner receives cash from the lender and in turn, the lender receives a portion of the homeowner's equity. A reverse mortgage loan is designed to give older homeowners the ability to receive tax-free income without having to make payments, sell their home or affect their hold on their title. For older homeowners (must be 62 years or older to qualify) a reverse mortgage can be the right way to receive either extra income or security in retirement.
The loan is repaid when the borrower ceases to live in the home. This can be a result of the homeowner selling the home, moving out (and it is no longer their primary residence), or dying. In any of these cases, the lender receives the proceeds of the sale of the home to pay off the balance of the reverse mortgage loan. If the proceeds of the sale exceed the outstanding loan balance, the difference is paid to the borrower or to their estate. On the other hand, if the proceeds of the sale are less than the loan balance, then the lender (and not the homeowner or the homeowner's estate) has liability for the deficiency.
Your Question
You state that one homeowner has passed away, and the other has moved to an assisted living center. If the owner in the assisted living center intends to reside there permanently, then the reverse mortgage lender has the right to foreclose on the property. Alternatively, the owner in the assisted living center has the right to sell the property or gift it subject to the reverse mortgage.
More on Reverse Mortgages
Bills.com has written extensively about reverse mortgages. See the following Bills.com resources to learn more: Reverse Mortgage & Inheritance, Reverse Mortgage and Medicaid, Is a Reverse Mortgage a Good Choice?, Reverse Mortgage Living Trust, Reverse Mortgage Benefits, Reverse Mortgage Refinance,and the Bills.com reverse mortgage information page.
I hope this information helps you Find. Learn & Save.
Best,
Bill
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