A California homeowner with a reverse mortgage (HECM) passes away. The heirs inherit the property. What options do the heirs have regarding the reverse mortgage balance?
Correct Answer
D) The heirs may sell the property or refinance to pay off the reverse mortgage balance, which cannot exceed the property's appraised value
HECM reverse mortgages are non-recourse loans. The heirs can sell the property or refinance to pay off the balance. If the property value has declined below the loan balance, the heirs owe no more than 95% of the appraised value — the FHA insurance covers any shortfall.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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