Reverse Mortgage Purchase

[Dustin Senor]

I have a friend who just got super lucky and is supposedly buying a home for considerably less than what the home is worth. Based on what he tells me, the house has appraised for $245, but is buying it for about 25k from a family who has a reverse mortgage on the house. They have a $1M MI policy on the house which apparently allows them to walk away with selling the house for cheap and the bank gets made whole at time of sale. 

So my question is this; do sales of homes with reverse mortgages on them typically go like this, or is my buddy getting extremely lucky by finding this deal? It should be noted that the seller is a family friend.