Bank owned reverse mortgage?

Question

Greg H. · Answer

Why is it funny ?  Here is an excerpt from the guidelines:

• The most important, at least for buyers, is that the property CANNOT  sell for less than the appraised value, which is the list price
• We accept offers from both Owner Occupants and Investors
• Earnest Money for investors and cash offers is a minimum 10% or $1,000, whichever is greater
• Earnest Money will be held by Sellers attorney
• 90% of the time the Seller is Fannie Mae; the other 10% it as another GSE (Government Subsidized Entity)
• Property is NOT Homepath eligible
• Property is NOT a HUD home
• There are deed restrictions for investors
• Seller WILL NOT pay closing costs
• Seller WILL NOT do any repairs
• Seller WILL NOT connect utilities
• There is a cap on what the Seller will spend on these properties;  this can result in the property not being trashed out, cleaned, etc.
• Property is SOLD AS-IS, WHERE IS

After 120 days, the property will be reappraised and a price adjustment might occur.  The amount owed on the property has xero bearing on the price.  Pricing is based on the appraisal and is listed at 100% of that value

Christopher Phillips · Answer

@Jason Staine

Rules are rules...

A reverse mortgage foreclosure is different from other foreclosures. The HUD Guidelines 24 CFR 206.125 states it must list and sale for the appraised value. Not for a penny less.

Reverse mortgages convince people they can pull their equity out to live their final years in comfort. But when they pass, their heirs must pay off the mortgage in full within 1 year. If not, they lose the asset to foreclosure. Since all the equity was already pull out, they basically inherited nothing. So, most heirs tend to lose the home to foreclosure if they can't come up with the cash or finance the homes.

Irina Belkofer · Answer

How it's prove  that they WILL sell for the asking price?

Every bank now has their own ridiculous terms: buyer pays all agent's fees, seller doesn't do disclosures, even back taxes are on the buyer!

The price has to be really dirt cheap to make an offer on something like that, not what's market value is.

There are always uneducated buyers who will buy on any terms. I never make an offer on something like that and don't advice to my clients.

At least, I count all the costs to buy before they will make an offer. Market is high but not that high to comply with any stupid guideline

Irina Belkofer · Answer

That's plain funny ;)

I've seen a condo with reverse mortgage @$92K for the property with market value $15-20K went to foreclosure and sold for $5K.

There is no such thing as appraised value when it comes to sale - the property I'll be sold for whatever the highest and best offer will be received. HUD is not going to hold up the property forever. Every 30 days the price will go down unless there are enough showings to assure that the price is correct.

If your selling agent is not comfortable to present your offer for what you want - go to the listing agent or get another agent.

There is no set prices on anything - there is market to dictate the price, not HUD. Off course, if they get a buyer for the asking price, yours will be dismissed. But if they don't have any offers - they will counter yours.

Rich Hupper · Answer

This rule amazes me. It is as if the person who made it up doesnt understand supply demand and the fact most of the homes that have these mortgages attached to them are cash deals.

The appraisals always seem too high

Bank owned reverse mortgage?

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