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Title Insurance and The
Reverse Mortgage Title
Insurance and The Reverse Mortgage Before
we get into the title issues of a reverse mortgage we need to understand that
we generally are working with more seasoned adults from a different
generation that will have a lot of questions and we will need some
understanding and patience with the borrower. The mortgage company and the
mortgage servicer, along with the title company,
need to maintain a complete open line of communication and assume nothing. A
reverse mortgage allows seniors (over 62) to borrow against the equity in
their home without making monthly payments. Interest costs are added to the
principal, the total amount of the loan does not have to be repaid until the
borrower dies, sells, or moves out for longer than 12 months. The loan can be
disbursed in monthly payments for a set number of years to the borrower, or
taken in a lump sum. All
reverse mortgages are non-recourse, which means the value of the home will
satisfy the loan. Even if the value of the home falls below the loan balance,
the lender cannot come after the borrowers’ other assets. It also must be the
one and only mortgage against the property. Some title
issues that must either be addressed or at least be contemplated and
researched are, Probate
Law. If one of the parties has passed
away and the probate estate has not been satisfied or closed, the title
company needs to be aware of the circumstances and the title findings may
create an issue that needs to be addressed. In most cases if the property is
held in “Joint Tenancy, or Tenants by the Entirety” the probate issue likely
will not be a question. Family
Law. If there was a divorce in the past
for any of the parties in title, what does the divorce decree as to the
distribution of the property? A full copy of the divorce decree needs to be
reviewed by the title company examiners to determine what, if any, effect it
may have on this transaction. Criminal
Law. Has the title holder put up their
house as collateral in order to post bond for themselves or a relative?
This needs to be checked and resolved. Tax
Liens. In most cases, tax liens
will have priority over all other liens or mortgages filed against the
property, as they do in most all other situations. Some of them expire over a
certain period of time, others never expire until they are paid and released.
All of
the above issues, along with the normal search and examination process, must be
reviewed very carefully in order to be able to insure and close a “Reverse
Mortgage” transaction. As a title company Benchmark has closed some of these
loans and are fully aware that, in a lot of cases,
they will require more patience and understanding. Any
questions can be directed to Benchmark Title at 618-239-3750. Please feel
free to call or email:
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