Curious about a Reverse Mortage in Foreclosure. Any tips?

[Jenny D.]

Hi BP Community,

I'm a REI newbie looking at/for opportunities. I ran across a house in foreclosure with a Reverse Mortgage.

What questions should I be asking? What research should I be doing? It looks like the owner is deceased. The reverse mortgage was for $625k. Market value is around $781k. It is going up for auction in two months. It looks to be in great shape.

Thanks for any pointers, suggestions.

[Chris Mason]

Originally posted by @Brett Goldsmith:

you'll need to get in contact with the owner or the heirs in this situation if you want to have any chance at purchasing it prior to a foreclosure auction. 

 & keep in mind that $625k might have been the original balance, but reverse mortgages go up every month. Very probable that it's underwater and the heirs aren't in a position to do anything but let it go to auction.

Another FYI is that "has a reverse mortgage" is strongly correlated with "has heirs that are not financially doing so well and/or aren't financially savvy." You will have a hard time finding someone with a middle class (or better) income and/or with an average (or better) understanding of basic personal finance that lets their parents take out a reverse mortgage... better to write mom/grandma a $2k check every month than to let a reverse mortgage "pay" her $2k/mo!