All Forum Posts by: Michael Morrongiello

Dan
If you ALREADY have TITLE to the home Sub 2 their existing loan and
If the payments continue to be sent in to the lender, taxes are paid, and insurance is maintained the lender will in all likelihood continue to accept those payments.

HOWEVER if you are Trying to ACQUIRE the property and the borrower on the Note is now deceased - the ONE Big question (among others) is How do you get marketable and insurable TITLE Transferred over to you SUBJECT 2 that existing debt?

Melvin
Perhaps you can BUY their property from them on WRAP Around financing basis
You pay them on a WRAP AROUND Note (eg. perhaps $1.00 over their existing loan balance)
of where they can LEASE the home you and also give you an option to buy SUBJECT TO their loan if or when you exercise the option.

Now they can SHOW their LO- loan office that they have either SOLD the home and have financed it via a WRAP AROUND loan or have LEASED IT to you under the Lease with an OPTION and that shows INCOME still coming in to offset the debt.

Michael Morrongiello

Sort of what  I had thought - Thank you for affirming that. Yes if she has MAXED out
the Reverse Mortgage Loan Advances and the property value is < LESS than what she owes
(primarily due to poor upkeep and ongoing maintenance) - she gets NO More MOOLA $$ from the lender but then they may have trouble getting their loaned MOOLA E$$ back
in the future IF or WHEN that time comes for her to go to that great BIG escrow in the sky.

She continues to live there with no more income but as long as she pays the taxes and keeps it insured -the MAXED out lender cannot force her out....

What Happens when a REVERSE Mortgage is MAXED OUT to the owners occupancy?
Situation: Years ago the owner of a property worth $1M and an elderly property owner placed a REVERSE MORTGAGE on their property which when funded allowed her to stay in her home and receive distributions from the lender up to a MAXIMUM sum of $700K. 

The owner now has "cannibalized" with this REVERSE MORTGAGE LOAN all of those sums and is NOW maxed out with the $700K being pulled out. The value of the home is worth a little more than that as given its poor upkeep over the years its value receded somewhat. The Owner STILL lives in the home and is alive and thriving.  The property taxes are current and insurance is current.

Q- Can the REVERSE Mortgage lender - call their loan due and accelerate their loan now that its MAXED OUT?

Not sure what their rights are as a lender but the owner is fearful that now that she has REACHED the Maximum funding amount the Reverse Mortgage loan would go to - that she may be forced to sell?

Michael - I agree "semantics", labels, can often create more confusion... Thanks for pointin that out...

The PURE Option is not finalized yet. So we have not closed but expect to soon. This option will run for 27 YEARS as this property owner selling us the exclusive OPTION to buy their Home will still LIVE there. As I may have stated the OPTION to Buy - IF or WHEN we buy will be SUBJECT TO their VERY low interest rate loan (*under 3.0% Fixed and fully amortizing.

So In SIMPLE terms; you are stating that REGARDLESS of whether the FULL $60K in funds paid to the Seller for the OPTION to buy the home at $300K is APPLIED towards that $300K "Strike Price" reducing the remaining amount due to them to $240K OR if only $30K of the $60K in funds paid to the Seller is APPLIED reducing the the remaining amount due to them to $270K - the Tax Treatment for THEM (the seller) is the SAME on the $60K paid for the OPTION ? That is; They will have the use of those funds with NO TAXABLE event involved UNTIL sometime in the future,  when either the OPTION is exercised, cancelled or perhaps renegotiated ?

So No 1099 is required to be issued to them?
Q- How do THEY report the $60K we are paying them for this OPTION  when they file?

Michael M. 

Can Only a PART of paid OPTION Consideration Funds be NON Taxable ?
In the process of BUYING a PURE Option to buy a SFH subject to an existing loan (at a lower fixed long term interest rate)
Let say the OPTION "Strike price" to BUY the property IF or WHEN the OPTION is EXERCISED is $300K

The seller wants $60K to sell us the OPTION.
Our understanding is that if we designate the $60K as "OPTION CONSIDERATION" - these funds and the USE of these funds are NOT Taxable to the property seller UNTIL one of two things happen; # 1 the OPTION gets exercised, or # 2 the OPTION gets cancelled.

Now we negotiated ALL of the $60K Option Consideration funds paid to be APPLIED towards the $300K Property Purchase STRIKE PRICE. The Seller did not understand or misunderstood and thought that NONE Of these $60K in funds would be credited or APPLIED towards the $300K property purchase STRIKE PRICE. To "soften" or reach a compromised we agreed to ONLY have $30K of the $60K in funds be considered "OPTION CONSIDERATION" funds (giving us the EXCLUSIVE RIGHT to buy the property at the $300K Purchase price) and the OTHER $30K of funds would be STILL be given to them but we informed them that it likely will be consider TAXABLE INCOME to them.

QUESTIONS:
1- We assume we can structure the Pure Option this way ?
2- IF only $30K is labeled & considered OPTION CONSIDERATION funds paid for the OPTION (thus Not immediately taxable)
What do you call or or would be a proper way to DESIGNATE the other $30K in funds given to the Property Seller?
And is it as we thought TAXABLE to them?
3- If its Taxable to them; Must we issue them a 1099 next year for the $30K also paid to them or HOW would you handle that?

Appreciate the input ....

Michael M.

Can Only a PART of paid OPTION Consideration Funds be NON Taxable ?
In the process of BUYING a PURE Option to buy a SFH subject to an existing loan (at a lower fixed long term interest rate)
Let say the OPTION "Strike price" to BUY the property IF or WHEN the OPTION is EXERCISED is $300K

The seller wants $60K to sell us the OPTION. 
Our understanding is that if we designate the $60K as "OPTION CONSIDERATION" - these funds and the USE of these funds are NOT Taxable to the property seller UNTIL one of two things happen; # 1 the OPTION gets exercised, or # 2 the OPTION gets cancelled.

Now we negotiated ALL of the $60K Option Consideration funds paid to be APPLIED towards the $300K Property Purchase STRIKE PRICE. The Seller did not understand or misunderstood and thought that NONE Of these $60K in funds would be credited or APPLIED towards the $300K property purchase STRIKE PRICE.   To "soften" or reach a compromised we agreed to ONLY have $30K of the $60K in funds be considered "OPTION CONSIDERATION" funds (giving us the EXCLUSIVE RIGHT to buy the property at the $300K Purchase price) and the OTHER $30K of funds would be STILL be given to them but we informed them that it likely will be consider TAXABLE INCOME to them.  

QUESTIONS:
1- We assume we can structure the Pure Option this way ? 
2- IF only $30K is labeled & considered OPTION CONSIDERATION funds paid for the OPTION (thus Not immediately taxable) 
    What do you call or or would be a proper way to DESIGNATE the other $30K in funds given to the Property Seller?
   And is it as we thought TAXABLE to them?
3- If its Taxable to them; Must we issue them a 1099 next year for the $30K also paid to them or HOW would you handle that? 

Appreciate the input .... 

Michael M. 

Tom / Chris 
Thanks for affirming what we already knew.
This father passed away leaving his family either intentionally or unintentionally with them only having a DEATH Certificate and a 2 year old Lender Statement from Champion Mortgage the REVERSE MORTGAGE Serviecer at the time (Not its Nationstar)
Essentially he left his family with NOTHING and a BIG MESS....(no will, no Trust, no paperwork, no bank account info, etc.)

Yes we are familiar with getting the daughter of the deceased (her Father) to be declared a successor in interest or executor of his estate. However as you stated that TAKES TIME and that COST MONEY - she does not have and we believe that there may be NO equity left in this property as the last statement from several years ago show he owed $330K on a property that today is worth maybe $400K

We are reluctant to SPEND $$$ to only find out and affirm what we suspect; That there is NO EQUITY in this property and the Reverse Mortgage has "cannibalized" any equity that existed.

Another TRICK someone told me is to get a credit report run on him since we do have the decedents SS# and IF the account is still active with DEBT owed it likely might show up on the credit report of the decedent. Not sure IF Reverse mortgage DEBT (outstanding balances) show up on ones credit report as a trade reference or not? THOUGHTS ?

Its unbelievable that an immediate family member CANNOT simply obtain a written payoff request from the lender...Even a Title Company we engage with said they were rebuffed as well.

Situation: Owner who took out a RV- Reverse Mortgage back in 2007 originally thru Wells Fargo passed away recently in 2023. 
That RV loan was transferred to HUD, then serviced by Champion Mortgage and most recently by Nationstar

The daughter of the Decedent (the Father who passed away) has been left with a MESS.
She called Nationstar and informed them that her Father has passed away. They told her that they would give her 6 months to sell the property or pay off the loan. However she and the family cannot find any will that exists, and NO SPECIFIC Information about the Reverse Mortgage loan at all. When they attempted to call BOTH Champion Mortgage and also Nationstar they were told that they could NOT speak with her nor provide her with any information about the loan because she has no evidence to show she is the executor of her Fathers estate (and they have the same last name)

Before we spend a LOT of time and money ($$) going down this rabbit hole with this property we really NEED to know WHAT may be still due on the Reverse Mortgage Loan.

Any TRICKS to getting more information from the loan servicer or a loan payoff generated by them?

Frederick

You need to get a professional foundation contractor to come and inspect this property. If it is a serious issue, it could be very costly for you to remedy. I would not rely on a general contractor who has opinions on foundations as they are not experts in this arena, be sure to use, a be sure to use a company that specializes in foundation, investigations, repairs reports, etc. 

Michael Morrongiello