Well, I suppose that I had a bad feeling about the deal on the sale of my parents’ house yesterday when we hadn’t yet received the response to our contract revisions after 4 days. This morning my lawyer called me to let me know that the buyer was pulling out because the sale of their house fell through. They were scheduled to close on that deal on the 15th, so they are back to the drawing board, too. I am sure that they aren’t very happy with that turn of events when they were so, so close to Closing.
When I received the call my stress level went way up since the Reverse Mortgage is heading towards foreclosure. It is already in the hands of the lawyers for the bank. It is my understanding that the legal filing will happen by the end of September, since the process started on 7/29. The costs added to the loan balance are still low, but once the filing occurs, those fees will apparently begin racking up quickly, which stressed me out as I know that a new contract, even if agreed to quickly will probably not result in a Closing by that time and I don’t know if the filing will be delayed if we have a firm Closing date and a pending sale.
After making a few phone calls, stressing over the details for a while, and considering options, some of which were pretty complicated, I decided that I am not going to do anything differently. We will continue marketing the house and hope that the right buyer comes along soon. If the foreclosure filing occurs, so be it. It means that we may net next to nothing from the sale of the house, but we aren’t actually “losing” anything that hasn’t already been lost due to the insane falling of real estate values which have caused the current situation. The house is priced correctly, if not lower than market value. The cost to any option to pay off the reverse mortgage while still moving towards an eventual sale will likely be higher than the cost added to the loan balance as it stands today. The most reasonable and least complicated (relatively speaking) option would mean that I would borrow the money to pay off the Reverse Mortgage and loan that to the Estate. I would need to have legal paperwork that shows that the Estate is liable for the loan, of course, however, the actual liability would be mine. The rate on the current Reverse Mortgage is lower than any rate I could get for a personal loan or mortgage, even if I were buying the house from the Estate as an investment property. Since the Estate has no income, I would need a quick turnaround on a sale to cover expenses or I would need to rent the house, which opens up a whole other can of worms that I just don’t wish to deal with.
So, in summary, the best option is to hope for a sale at a reasonable price before the foreclosure filing. And the second best is to hope for a sale as soon as possible, even if the filing takes place as there will still be a balance after the loan and fees are paid off.
Keep your fingers crossed – mine are.