I’m Michigan Real Estate Attorney, David Soble. Each week I answer questions that people send in through email or by submitting the question through our website provenresource.com.
This question concerns inheriting a house and comes from John P. of Harper Woods, who writes:
”My mother passed away earlier this year and she left me her home. My sister and I have no need for it, as we have our own homes and so we want to sell it. The problem is that my mother had a reverse mortgage on the property. The mortgage company says that they need all the money paid back and they are putting the home in foreclosure if they do not receive full funds. They will not accept payments. We went to list the property, but because it is not in our names, the real estate agent won’t work with us until it is in our names. In fact, the mortgage company will no longer speak with us because we are not titled into the home. What do we need to do here? We are very confused.”
Personal Representative of Estate
First, in order to have any authority over the home, you will need to open a probate file to be appointed personal representative of the estate. If your mother’s will names you as the personal representative already, then the petition is rather simple. However, if you are not named and wish to be the personal representative, you will have to petition the court. In either case, becoming the estate’s personal representative will then allow you to list the home for sale. It will also give you the authority to speak with the reverse mortgage company.
Reverse Mortgage Program
As for the reverse mortgage, lenders in these programs do not set up payment plans after the death of a homeowner. The lenders want the entire balance paid back upon the borrower’s death. What I would suggest is that you let the lender know that you are going to sell the home with the intent of paying them off soon. Otherwise, if you let the home go to foreclosure, while you can still pay the loan off during the redemption period, prospective purchasers will not likely offer you the fair market value of the home, but try to purchase the home at the foreclosure bid price knowing that the home is in distress.
Time is of the Essence
As there are quite a few moving parts involved and time is of the essence, I suggest that you first get with a competent real estate and probate attorney as soon as possible. Most good real estate attorneys also work with real estate in probate.