Non-Recourse Explained

I would like to know if, a wife has signed off as a non-borrower, would she then convert to an heir rather than a suviving spouse? Under the non-recourse explanation, estates/heirs would become responsible for only the worth of the property. Please reply!

You have a asked a great question that really has two different answers. One relates to the ownership of the property and the other to the reverse mortgage loan and the non-recourse nature of the loan. First, if a spouse deeds off of a property in order to become a non-borrowing spouse, that individual's future ownership interests in the property are dependent upon the method by which the couple has set up the transfer in the instance of the passing of the spouse (for example, through a trust, etc). Since you have deeded off of the property, you may not have the same rights of survivorship and would need to be certain that you did establish the method by which the property would transfer to the remaining spouse in advance to avoid probate and a trust would probably be the best method. We would always recommend that a borrower consult competent legal advice in this area. State laws vary and Elder Care Attorneys would be the best counsel in this area. The next part of the question relates to the non-recourse nature of the reverse mortgage. The reverse mortgage is a non-recourse loan regardless of who the successor to the property will be. Whether you will be the one inheriting the property or whether your spouse outlives you and it goes to other family members, the estate or the heirs cannot owe more than the property is worth. This is one of the guarantees made to the reverse mortgage borrower and why they pay the HUD mortgage insurance. Now a quick word of advice. We always recommend that borrowers contemplating removing one spouse from title to do a reverse mortgage seek competent financial and legal advice for a couple of reasons. Firstly, for the reason stated above, to make sure that the transfer back to the surviving spouse is seamless. Secondly, and just as importantly, to make sure that adequate plans have been made for the surviving spouse in the event of the passing of the spouse on title. Usually the reason one spouse is removed from title is due to age (either the spouse to be removed is not old enough to qualify for a reverse mortgage or they are younger and do not qualify for enough to pay off an existing mortgage, etc). Since the loan accrues interest and the remaining spouse is not likely to be able to qualify for a reverse mortgage large enough to retire the existing reverse mortgage in the event of passing, the borrowers should have a plan for this eventuality. For example, some borrowers have adequate life insurance and know the remaining spouse would not be left without a place to live. Others have told us that they would not want to live in the house anyway and have made other provisions. Whatever the case may be, the time to discuss it and plan for it is before a mortgage becomes due and payable.

Someone told me that Hud has re-worded what a non-recourse loan is for reverse mortgages have your heard anything