Reverse mortgage if upside down?

weed30February 19, 2010

My dad owes more than his home is worth, and is facing foreclosure fairly soon if he can't come up with some cash. Even if he pays this time, this situation will keep happening. Can he get a reverse mortgage even though he owes more than it's worth? I know he couldn't get any kind of additional money, just no more mortgage payment, right? He will be 82 in May. The house is in OK shape - needs some repairs but nothing horribly major.

Another question: What type of professional should I seek for advice on his overall financial situation? He owns two other pieces of real estate (commercial) that he's trying to sell, and has a contract on one of them. He owns a handful of collector cars and other items of value. I think I need to work with someone who can look at his entire financial picture and advise on the best way handle his affairs. I am also the executor of his will, when that eventuality occurs.

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Can he get a reverse mortgage even though he owes more than it's worth?

No. There is no equity in the property.

What type of professional should I seek for advice on his overall financial situation?

Assuming he has funds for any professional, a Certified Financial Planner might be of help. They charge a fee for planning and advice only; in contrast to many other "financial planners", they don't depend on commissions for selling financial products. An annuity, purchased for the liquidated value of the other assets he is disposing of, will be one route you should be considering.

    Bookmark   February 19, 2010 at 8:39PM
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dave_donhoff

Hi Weed,
I'd suggest an elder-law attorney to start.

A reverse mortgage approval requires a minimal amount of remaining equity. Granted, its less & less as the owner is older... but I'm not familiar with any approvals in an upside-down equity scenario.

An elder-law attorney will generally be well-connected with ancillary service providers who can help, but will know up front where your Dad's situation is protectable, and where he is vulnerable.

Luck!
Dave Donhoff
Leverage Planner

    Bookmark   February 19, 2010 at 8:39PM
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weed30

Thanks to both of you. I look at elder-law attorneys and CFPs. If the sale of his one property closes, he will be in much better shape financially. I hope to convince him to sell some of his other assets to keep him afloat. He's very stubborn though.

    Bookmark   February 19, 2010 at 9:59PM
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