Is a Subject To possible on a Reverse Mortgage

[Warren Williams]

I found a house that is in preforeclosure that I am interesting in obtaining.  I would like to do a sub2 on the property that is now vacant.  In talking with the owners daughter, she said that her mother had taken out a reverse mortgage on the property.

According to the daughter the Payoff is $82,000.   Other comp properties (sq. ft. and condition) are in the $150,000 range.  This house probably has $30,000 in rehab work.  Rehab $ will need further investigation once I can access the house.

I would like to do a Subject To on the property, but am confused by the reverse mortgage aspect of this deal.   I know that on a reverse mortgage the owner is suppose to remain in the house (primary residence), but regular mortgages have a the Due On Sale clause.

Is there a way to do this deal? 

[Ramon Cuevas]

Hello Warren,

If the owner is no longer occupying the home as a primary residence, the lender can accelerate the loan making the reverse mortgage due and payable which is similar to the Due on sale clause. They keep tabs on occupancy by mailing borrower an annual occupancy certification and can also have a field inspector check on the occupancy. A change of title can also cause a maturity event.

Hope this helps and good luck with whatever you ultimately decide to do.