Reverse Mortgage and MIP

[David Fair]

We have a seller who has POA for his mother. They have a home with a reverse mortgage and the home is currently upside down. The home has damage from a hail storm in 2012 and they have been involved with a law suit with their insurance company that was recently settled. The home needs a lot of repairs and they are short from the settlement and the attorney's fees to get the home back to where it needs to be. The son says they have MIP and he as been doing some research that has led him to believe that he can sell the house at a loss and that MIP will kick in and make the lender whole. He is under the impression that they have control and sole discretion as to what price they can accept for the home and then MIP will pay the difference. I don't think it's that simple or perhaps this would be some sort of short sale with the lender more involved with the decision of the sales price? Has anyone had experience with something like this? Your feedback will greatly be appreciated. Thank you!