Removing an Owner From Title

As most of you already know, you must be 62 years of age or older to be able to do a Reverse Mortgage on your home.
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SPOUSES YOUNGER THAN 62 YEARS OF AGE

Recently HUD modified the Rule so that if  a Non-Borrowing Spouse (N-BS) had to be removed from Title due to being younger than 62 years of age, he/she would not have to pay off the mortgage or leave the home if the Borrower passed.

This applies ONLY to loans closed after August 4, 2014.

The proceeds from the loan will be lower, since it will be calculated using the younger, Non-Borrowing Spouse’s date of birth.

The Borrower must be married to the  N-B Spouse at the time the loan is applied for, closed, and when the Borrower passes.

This is great news for those couples where one spouse does not qualify for the Reverse Mortgage because he/she is younger than 62 years of age. The surviving N-B Spouse would not have to leave the home, nor pay off the loan as long as certain conditions are met

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OTHER OWNERS (NON-SPOUSE)
There are a few reasons why you could consider removing a Spouse or owner from Title in order to do a Reverse Mortgage.  Some considerations:

1) One Owner is younger than 62. You may want to consider how long you would have to wait until they turn 62 and then do the Reverse Mortgage.

2) The proceeds from the Reverse Mortgage with the younger Owner on Title would not suffice to pay off your present Mortgage balance and you are facing LOSING THE HOME TO FORECLOSURE.

If the Borrower Pre-deceases the removed owner, the Estate would have UP TO 1 year ( 6 months of due diligence and 2 possible extensions of 3 months each (IF NECESARY) to pay off the loan or face foreclosure.

The property can be sold, refinanced, or simply pay off the balance and keep the home. If the Balance due is higher than the Value of the Home a “short Sale” or “Deed-in-Lieu-of–Foreclosure” might be negotiated with the lender or the Estate might pay off a 95% of the current appraised value to the Lender and keep the home.

There have been unethical or uninformed Loan Originators who have told Clients of mine that you can put the spouse on the Title and on the Mortgage once they turn 62. IT IS NOT CORRECT. Yes, you can, easily, put the spouse or another person on Title, but NOT on the Mortgage, and the Lender would “call-in” the Reverse Mortgage loan and it will become “due and payableimmediately.
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A HECM-to-HECM Refinance can be done and pay Closing costs again. (refinance a reverse mtge. with a new reverse mtg.)

If the Balance due on the old Reverse Mortgage is higher than the proceeds of the new Reverse Mortgage due to the younger age of the new Borrower or because of decreases in value, then you might not be able to do this refinance. there are strict HUD rules in order to be able to do this type of Refinance.

Whatever you decide to do, call me, before you do it, and I will be happy to talk it over with you without any cost or obligation.

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Great Florida Lending, Inc

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2828 Coral Way, Ste. 470
Miami, FL 33145