Lets say someone is a widow. Is in their own home with a highly leveraged reverse mortgage. Where the reverse mortgage company has paid all they are willing to pay. The owner has not been able to pay back any interest to the RMC. So they are assessing large monthly interest penalties against the property. Supposedly as long as the person lives they cannot be evicted. It would seem possible that the RMC could end up in the rears on something like this. Would a family memeber listed as a trustee be on the hook if the RMC cannot sell the propety to cover their payout on the reverse mortgage. Meaning could they come after trustee's of the trust once the owner passe's.

I don't understand your scenario.
Is the house owned by the person or the trust? If the person owns it, why wpuls a trust be involved? If the trust owns it the shouldn’t the trust be making payments instead of the person?

ORC, this is an interesting question. I researched it by using the search term "Can the trustee of an Estate Trust be held liable for debts owed by the Trust?" and found this.

IANAL, but I think the answer is no, they cannot unless they mishandle the funds of the Trust. I would also advise you to check with an estate attorney in the state in which the Trust is filed to be sure.

Edited to ask: Is the house owned by the trust?

My understanding is a house cannot be in a trust if not owned. In this case the house is owned in part by the reverse mortgage company, if I have that right?

As Judge Judy would say, you have to go to the contract of the reverse mortgage agreement. That contract would spell out all eventualities. It's not like the reverse mortgage company doesn't have lawyers and haven't thought through all the different possible scenarios.

quote:

Originally posted by old rugged cross:
the RMC could end up in the rears on

Holy shit, Forrest is that you?
I worked for someone who constantly used this phrase, and it's amazing I didn't get fired for turning blue each time. Tried everything short of giving him a dictionary to help redirect this, he just couldn't stop. Thought it might be just with me to aggravate me, but nope - he did it in public settings where he absolutely wanted to seem very well educated.

In the rears is, however, apprapopes of the actual situation.

No.

The trust is a legal entity, like a person. The trustee is akin to an employee or volunteer for the trust or the person. Thus the trustee does not own anything in the trust, nor anything owned by the person (the widow in this case).

Either the home is owned by the trust or by the widow. Any debts related to the home attach to the owner, which is apparently the trust in this case.

The trustee is legally obligated to manage the trust per the trust's instructions. If the trustee is not the widow herself, the trustee will not become responsible to pay out of their own pocket for any debts of the trust.

This might have changed, but when I was involved in the mortgage industry, all reverse mortgages were back by the FHA.

The rules were that the heirs could by the house by paying 95% of the appraised value. It did not matter what the mortgage holder claimed was due.

The mortgage holder would have to deal with the feds to get their money.

The trustee is just a fiduciary, he is not personally liable unless he does something illegal with the trust money.

I am not a lawyer this is nothing more than my opinion.

quote:

Originally posted by Georgeair:

quote:

Originally posted by old rugged cross:
the RMC could end up in the rears on

Holy shit, Forrest is that you?
I worked for someone who constantly used this phrase, and it's amazing I didn't get fired for turning blue each time. Tried everything short of giving him a dictionary to help redirect this, he just couldn't stop. Thought it might be just with me to aggravate me, but nope - he did it in public settings where he absolutely wanted to seem very well educated.

In the rears is, however, apprapopes of the actual situation.

Thanks for the laugh, that is some funny stuff.

As in all things mortgage, check the note. That governs all of this.

However, Having been in this world slightly, Generally the property is the collateral. When elderly person moves out of passes on then there is usually 6 months the house has to be sold or reverse mortgage paid off. IF the accrued interest and principal owed exceeds the sale value then the mortgage company loses. The estate is usually not liable.

I am not a lawyer, check the note and consult a lawyer if the mortgage company is being difficult.


All cases I’ve seen the reverse loan was used as agreed by the old person. They passed away and the estate paid it off upon sale.

Never have I seen a case where the amount owed exceeded value but it’s totally possible. An 80 year old takes a reverse 20+ years ago and never makes a single payment (except taxes and insurance) for 20+ years and then died at 104 in the home very east for the math to work against the Mortgage company.

I don't want to stomp on the well intentioned but please full stop on all responses from folks who are guessing.

I am a Floria attorney and have dealt with over 3000 reverse mortgages and helped FHA retune the HECUM program about 10 years ago.

No, the Successor Trustee will never be liable for this type of debt.

If you look at the monthly mortgage statement you should see a charge incurred for Monthly Mortgage Insurance. (If you do not see that then I suggest you call me.)

That mortgage insurance will pay the lender if there is ultimately a shortage.

If a family member wants the home after the trust beneficiary dies, then you need to work that out with the lender as to what the rights are for a successor family member are to buy back. I believe that percentage can fluctuate by state.