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Reverse Mortgage Question

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Roy Courtney

Senior Member
Joined
Dec 8, 2006
Professional Status
Certified General Appraiser
State
Texas
A lender located in Troy, Michigan contacted our office (in Texas) about preparing an FHA appraisal for use in a reverse mortgage. The order was sent including the FHA Case Number. As per our requirements we collect appraisal fees at the time of inspection.

I contacted the borrower to set a time for inspection. Now for the problem. He tells me that his wife passed away several months ago. She did not have a will. This was the second marriage for each of them and she has two grown daughters by a previous marriage. Of course he and his deceased wife's daughters do not get along. The only thing that has been put of record in this situation is a copy of the death certificate. He was told by the lender that the death certificate was all that was needed and that he would get ALL of the proceeds with the daughters getting nothing.

I explained that the title search would show his wife's interest in the property and also the death certificate. Without a will to probate he would have to put on record an affidavit of heirship. He told me no that is not what the loan officer told him. I have tried to encourage him to seek legal advise but he will only believe what this out-of-state loan officer tells him. I do not see how the FHA could possible insure a loan on a property with such a title. I cannot help but think he will not get this loan under the terms he thinks. If he does not get the loan he will at least be out the $425.00 for the appraisal. I have decided to keep my opinions to myself and just do the job for which I was hired. This deal does seem pretty rotten when you know the poor guy is desperate for the money, he would believe whatever they say. What would you do?
 

Tom Woolford

Elite Member
Joined
Nov 20, 2005
Professional Status
Certified Residential Appraiser
State
Florida
You are an appraiser, not an Attorney, or a Title expert. You have been requested to perform an appraisal. The legal matters are not within the realm of your expertise, or experience. Do the appraisal, and leave the legal matters to those who have the expertise and insurance. Your appraisal assumes clear, marketable title.

Just my .25

I'm sure there will be other opinions.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
You are an appraiser, not a title attorney or title insurer.....do your job and leave the legal questions to others who are qualified to make such judgments. By the way, if the property was owned by a husband & wife as tenants by the entireties in Maryland, DC, or Virginia (which is the typical form of ownership for spouses here), then the full interest and title in the property automatically passes to the surviving spouse upon the death of the other spouse no matter what a will says or even if there is a will...probate is not required for the title in such a case. I such cases, I would think that the proper filing of a death certificate in the land records would by sufficient for a good title. In any case, let the title insurers and lender worry about title, you worry about appraising the property.
 

Roy Courtney

Senior Member
Joined
Dec 8, 2006
Professional Status
Certified General Appraiser
State
Texas
Thanks for the advise. As I had stated I plan to go ahead with the appraisal and earn the money. I am not an attorney but having a Texas real estate broker license for 33 years does give me a little knowledge of the conveyance of real estate in Texas. I have been involved in numerous similar transactions. I have just never had an FHA reverse mortgage involved. The loan officer is pushing to close this on Monday! So I should know next week when I get to listen to that poor guy cry on my shoulder.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Roy, I greatly respect your credentials and experience and I've only been in the biz about 7 years so take what I say in the respectful manner in which it is intended.

That conversation is a very, very good way to at least get you chewed out by your client and you would have to just suck it up and apologize profusely and at the other end of the scale you could lose that client and any other broker/loan officer he tells the story to.

I only offer this opinion based on personal experience.:)
 

Roy Courtney

Senior Member
Joined
Dec 8, 2006
Professional Status
Certified General Appraiser
State
Texas
Thanks Greg, I do agree totally with you. In most cases I would just butt out or would have never said a word. But I am willing to bet the loan officer my appraisal fee double or nothing that they will NEVER get a FHA reverse mortgage on that property without the title being cleared. When it is cleared the deceased lady's daughters will be entitled to their part. I expressed that concern to the loan officer as well as the borrower. Why, because this is an elderly gentleman and does not have $425.00 to throw away. He is almost desperate for the money and I think the loan officer is just rolling the dice at his expense. I guess I just feel sorry for him. If I do not accept the assignment they will just hire another appraiser to do it. I have a soft spot for kids and old folks!
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
How did they hold title? Joint tenancy? Wouldn't it then just go to the husband since there was no will? I think all you have to do is waive the death certificate around at the recorder's office and pay the two dollars.

A good FHA reverse mortgage LO will arrange for discussing the reverse mortgage with concerned family members.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
How did they hold title? Joint tenancy? Wouldn't it then just go to the husband since there was no will? I think all you have to do is waive the death certificate around at the recorder's office and pay the two dollars.

A good FHA reverse mortgage LO will arrange for discussing the reverse mortgage with concerned family members.

In Maryland, DC, and Virginia, where I work, the title in joint tenancy or tenancy by the entireties automtically transfer to the survivor upon the death of the other whether or not there is a wiill and no matter what the will says since all interests that the decedant had in the property are automatically terminated upon his or her death. A certified copy of the death ceritificate is all that is needed to clear the title....In any case it is not your problem nor is it any of your business.
 

Chris Colston

Elite Member
Joined
Jul 24, 2003
Professional Status
Certified Residential Appraiser
State
Florida
FHA reverse mortgage program REQUIRES the borrower to under go counciling prior to closing. I wonder if that was presented to this borrower? Sounds like the LO is pushing a bit hard and may not be performing under the best practices and in the borrower's favor.

It is my understanding, and perhaps someone else (Brad) will tell my I'm full of hot air, that the borrower on a reverse mortgage may not be "out of pocket" on the fees should the loan not be approved. In other words, the LO must see to it that the appraisal fee and any other pre-funding fees are returned to the borrower should the loan not close. I'm not saying the appraiser has to refund the fee, just that the borrower is not allowed to be upside down on the fees.

There is a place within the Reverse Mortgage sector where you can report predatory lending I just can't remember where right now. It might be a good idea to find out, though. This deal sounds less than ethical.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
Is Texas a community property state? Somewhere in the back of my mind flutters the thought that it is one of the few states that does not recognize the 100% community property theory. If held in Joint Tenancy, there should not be a problem. BUT, your advice should be given only to your client.
 
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