Doing Deals Involving a Reverse Mortgage

[Raphaela Todd]

Hello Biggerpockets Family!

Today a friend of mine "Sweetie" asked if I might be interested in a possible deal.   Her elderly next-door neighbor of many years (they're great friends) ("Seller") has a Reverse Mortgage ("RM") on her home.   I don't have the firm numbers yet, but for my friend's recollection of conversations she had her elderly neighbor.   She got the RM for $300K right before the recession hit about 2006.   Sweetie thinks the house would probably go for about $189K today, but not sure.   House is in great condition, with taxes fully paid and no additional liens.

The Seller has already vacated the premises about a year ago as she needs to reside in a nursing home.  Because it's an RM, and she didn't know how long she would need to stay in a nursing home.  It turns out, she needs to remain there, so she will be contacting the bank soon about her leaving the home.    Aside from physical ailments, she is of sound mind.

Sweetie wanted to give me a "heads-up" on this property before the Seller told the bank that she moved out of the premises. 

I happen to know that a RM loan becomes due upon the homeowner dying or moving out of the premises.   

I asked Sweetie to first talk with the Seller to see if she's interested, and if so, to provide me with: the address; how much she borrowed; the current pay-off amount; any other liens; and any needed repairs.      She said she will do this by the week-end.

My question is this:  If the numbers work for a good deal, (using the BP Calculator of course!) as this is a RM, would I still contract with the Seller to make the purchase ... or contact the bank directly?  

Would really appreciate input from anyone who has done a deal involving a RM ... or knows more about it.  Thanks very much for your expertise!!