Hello my name is a0354jenny. Seeking answers about reverse mortgages.

[a0354jenny]

Hello:

Mother owns a house mortgage paid off. Mother puts her two daughters on deed with survivorship rights. Mother takes out reverse mortgage. Mother passes away. $450,000 is owed to bank from reverse mortgage. House goes up for sale at $325,000. Bank wants its money. Will the two daughters be responsible for any shortages in funds owed the bank? Can the bank sue for deficiency of funds? Please advise.

Thanks for your help.

a0354jenny

 

[That Lady in PA]

Read the reverse mortgage paperwork and seek legal help regarding the estate.

 

[hollydolly]

Welcome Jenny....

You may wish to put your question on the financial thread as well

Financial

 

[Aunt Bea]

Read the documents and talk to the lender.

Most reverse mortgages are non recourse loans that are limited to the value of the property.

There may be exceptions if the borrowers intentionally neglected maintenance or did something to decrease the value of the property.

 

[Tish]

 

[bobcat]

Seems strange that the lender would lend 450k on a home worth 350k. Usually they would only lend about 60% of the home's current value at the time of the loan. At any rate, here is what Copilot says, but I would still check it out to verify:

If daughters are added to a home title and a reverse mortgage is taken out after they are added, and the reverse mortgage ends up being 450k, but the home sells for 350k, are the daughters responsible for the balance?

No—they’re not responsible for the $100K shortfall, even if they’re on the deed with rights of survivorship. That’s because a reverse mortgage is a non-recourse loan, which means:

Heirs Are Protected​

• The lender can only recover the amount owed from the value of the home itself.
• If the home sells for less than the loan balance (e.g., $350K vs. $450K owed), the lender cannot pursue heirs—including daughters on the deed—for the remaining $100K.
• The difference is covered by FHA insurance, assuming it’s a federally insured HECM reverse mortgage.

Even With Survivorship Rights​

• Survivorship rights give the daughters legal ownership of the property after the mom's passing.
• But ownership doesn’t override the lender’s right to repayment.
• To keep the home, they’d need to repay the loan—but only up to 95% of the home’s appraised value, even if the loan balance is higher.

Summary​

Scenario	Amount Owed	Sale Price	Heirs' Responsibility
Reverse mortgage balance	$450,000	$350,000	$0 (lender absorbs loss)
Heirs want to keep the home	$450,000	Appraised at $350,000	Pay up to $332,500 (95%)