Reverse Mortage Appraisal for land contract transaction

[DebFuse]

I have received an order to do a reverse mortgage appraisal on a contract for deed transaction. Is it possible to do a reverse mortgage on this type of transaction? It is my understanding that to do a reverse mortgage the homeonwer has to have paid the home off and owe no monthly payments. The subject property is still recorded under the sellers name in public records. The lender insists that it is the same as a refinance. Looking for advise on how this should be handled.

 

[edward sekerak]

If you are doing the appraisal, why would this effect how you do your report? Note the owner, note the borrower, note the pending contract for deed, complete the report.

 

[Mr Rex]

FWIW, you are misinformed about reverse mortgages. The borrower doesn't have to own the property free and clear, they just have to have some equity built up against a certain LTV to get their equity back out.

 

[DebFuse]

Thank you Mr Rex...that clears things up for me. Greatly appreciate it

 

[RSW]

Rex is correct. You don't have to have the property free and clear. Most reverse mortgages have a LTV between 50-60% of the value of the property.

 

[sputnam]

I have received an order to do a reverse mortgage appraisal on a contract for deed transaction. Is it possible to do a reverse mortgage on this type of transaction? It is my understanding that to do a reverse mortgage the homeonwer has to have paid the home off and owe no monthly payments. The subject property is still recorded under the sellers name in public records. The lender insists that it is the same as a refinance. Looking for advise on how this should be handled.

You don't do reverse mortgages....you do appraisals. The particular loan program that the lender/client uses the appraisal for isn't your problem. Read the assignment conditions to see if there are any unusual requirements. Otherwise, do the appraisal the same way you would do any appraisal that's for a reverse mortgage.

 

[J Grant]

on a contract for deed transaction. Is it possible to do a reverse mortgage on this type of transaction? It is my understanding that to do a reverse mortgage the homeonwer has to have paid the home off and owe no monthly payments. The subject property is still recorded under the sellers name in public records. The lender insists that it is the same as a refinance.

The first part, how much equity etc, not your concern, the second part, maybe. I'm not sure what this is...a buyer with a different name has a contract for deed (purchase)? , yet the lender is saying it's the same as a refinance?

It is either a sale, or it's not a sale...is there a contract to review? OR does the applicant already own the property, but the deed has not recorded their names yet?

Disclose fully whichever way you mark it, as a refinance or a sale.

Either way, the valuation would be the same but it is unclear about whether the subject is being sold to another party or not...how can that be a refinance..unless it is a simultaneous closing?

 

[Mr Rex]

It sounds like there is a contract that was not recorded.

 

[Terrel L. Shields]

The contract for sale in my state remains in the name of the seller though recorded. I would certainly check what the TAX records say about the "ownership". I bet they have to pay off the seller in order to get this done.

An unrecorded contract for deed is about as worthless as it can be and only an idiot would buy a property like that. What happens if the seller goes and borrows against the place (the title search would show no contract) then reneges on paying?

I saw that happen a few years ago when someone bought an acre out of a 20 on contract to set a mobile home. Two more people did the same. But these contracts were meaningless. When the guy defaulted the bank took the 20 back. The bank allowed one of the three to buy the 20 and financed him on 18, and the other two paid out closing costs to get everyone the property they thought they owned. It could have been a really nasty situation otherwise.

 

[J Grant]

The title of your post said land contract transaction...

what does that mean? Only the land is contracted for?

contract for deed transaction What does this mean? And why is the lender telling you to treat it as a refinance?