Can I pay off my mother-in-law's reverse mortgage and have her quit claim it over to me?

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Mother-in-law and Father-in-law got a lump sum reverse mortgage about 10 years ago in Georgia thru countrywide. My father-in-law passed away about 2 years ago. My mother-in-law is willing to let me pay off the RM and deed it over to her daughter and I.

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Despite proofing several times, I found some errors that need to be addressed:

"I'm not referring to the RM interest rather to liens such as for assessments, taxes, worker's claims, insurance payments for casualties that affected the property, etc."

"Worker's claims" should have been "mechanics' liens", by workers in construction fields or others who have statutory rights to lien property if they're not paid.

"insurance payments for casualties..." is inappropriately worded. I was referring to contractors who performed emergency work, but who weren't paid through homeowner's insurance b/c it denied the claim. E.g., when someone broke into my house and destroyed the dining room window, the police recommended a company to do emergency board-up work.

After getting estimates, the cost of replacing the window was less than my deductible, so I ended up paying out of pocket to the board-up company. Had I not paid, that company could have liened my property.

Sorry for any confusion that might have been caused.
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I've been thinking about this situation and potential payoff of the RM, but couldn't really put my finger on what was bothering me. The issues of a QCD vs. Warranty Deed had been raised in this thread, but I just couldn't conceptualize what that issue was. It was like a dark menacing object looming over the possible transaction.

I think I realized it now, especially the choice of whether to use a QCD or Warranty Deed.

If done via a QCD, only your MIL's interest would be conveyed to you, w/o warranty or representation as to title. That's a big issue. It means there could be liens. There could be outstanding taxes. There could be other priority interests.

That's not to impugn her integrity; it's rather a safety check done routinely by attorneys when handling conveyances. One never knows what might show up as a lien.

It's been awhile since I've addressed priority of liens, so if anyone with legal background, including one of the experts here, finds error in my next statement, please feel free to offer corrections.

If there are any existing liens, and the property is quit claimed to you and your wife, I believe that you take title subject to those liens, i.e., they have a "priority" / "superior" interest, unless they're extinguished prior to conveyance. What I don't remember is how their liens interact with your fee interests.

I'm not referring to the RM interest rather to liens such as for assessments, taxes, worker's claims, insurance payments for casualties that affected the property, etc.

There used to be (and perhaps still is) an Owner Affidavit required attesting to no work, repairs, etc. done to the house in the last 90 days. That was the period during which contractors had to properly file liens in Michigan. I no longer recall what the filing time is for other states.


In addition, given the nature of RM lenders, you'll need to be very sure the RM lender hasn't filed any liens or anything else.

As Igloo states, BoA is not consumer friendly; it's an aggressive bank with tentacles like a giant squid. I dealt with them after my sister's death. To say that they're obnoxious and uncooperative as well as disingenuous is to be kind.

Generally the only thing to which title should be subject (in areas where mineral and water rights aren't an issue) are easements of record, and in favor of utilities,and these are beneficial, not detrimental.

It would be a good idea to have a real estate attorney handle the transaction, as he/she would order a title commitment (you'll need to have title insurance anyway insuring your fee interest), and determine if the title is in fact clear. Then payoff could occur, followed by a WD once a follow-up title commentment reflects recordation of a complete Discharge of Mortgage (or Deed of Trust as it's known in some states.)

When I worked for law firms that handled commercial foreclosures during real estate downturns, most of the foreclosed properties were strip or regional malls, or residential subdivisions - large projects with dozens of contractors and subs. We always waited 90 days before instituting foreclosure proceedings to "flush out" all the lienors. You need to give yourself the benefit of finding if there are any interests that need to be flushed out and addressed.

And make sure to get a title policy in your name after payoff of the RM, for at least the amount of discharge of the RM.
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we have not bought the house ...just been considering this option.
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The plan to move into your MIL's house, whoever it belongs to at that point, is another issue altogether.

How far down the road have you and your wife got with this plan?
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Her daughter is my wife....yes we would then live in the house....
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Excellent answers by the posters leave only one point I'd like to make.

You wrote that MIL is "willing" to let you pay off the RM, and that the property would be deeded "over to her daughter and I."

But YOU will be the one advancing funds for the payoff? How do you feel about sharing title and ownership with MIL's daughter? What are the plans for the home after that? Will the two of you live there together? Will she? Or will it be just you?

Not knowing your relationship with MIL, I can't help wondering about her proposal to allow you to advance funds. As to her daughter, I also don't know how this would play out, but it seems that you'll be advancing a significant sum and then sharing ownership 50/50 with the daughter, who apparently is advancing nothing for the pay-off?

Just something to think about.
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Btw CW meltdown 2008. Huge amount of subprime & RM leading up to this. So that RM done by your in-laws could have been put into paper that CW shipped out to IndyMac bank - which itself got seized by regulators in 2008/9 - & became OneWest. They may have it rather than BoA.

Steve Mnuchin - Trumps treasury Secretary - was CEO of 1west. Known as the "Foreclosure King". 39% of all foreclosures nationwide by 1West even though it serviced 17% of loans.
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CW won't care who pays off the RM. Mil, you, Santa... doesn't matter to CW as CW doesnt exist. BoA now.
I'd suggest mil/you look clearly & carefully at the existing RM as to what the payoff will be. Lump sum plus interest & fees.... it will add up. Lump sum RM is more costly than a line of credit RM. Also look to see if there is a early payoff penalty. May be more $$$ than anticipated.

If the property has risen in value tremendously, paying off the RM, getting the release of the Deed of Trust, and then mil doing a QcD to you, could make sense as your kinda getting a deal. But......

The BUT is IF mil ends up needing care in a facility and applies for Medicaid between now 2022. If so, the house she transferred to you via the QCD will be viewed as gifting by Medicaid. And gifting transfer penalty placed for the current FMV of the house. Not the payoff amount. Could be hundreds of thousands of $$ penalty.

The $ you paid to pay off the RM will more than likely be viewed as a gift from you to mil. You'd have to have a real estate atty draw up promissory note for the exact amount of payoff to loan MIL the $ to get around this. So mil uses the $ & she pays off the RM & repays you according to the PN terms. If she's really old, the actuarial table for repayment will set the payment pretty high to be considered actuarially sound. It won't be simple.

CW - like Wells Fargo - got out of the RM biz years ago. For even more fun, CW doesn't even exist anymore. It's Bank of America now, so good luck with them - they are notiously consumer unfriendly.  I don't know if they even still service the old CW loans. If not, it will have been sold to another service provider or even another after that. You need to keep very very detailed notes on any communication. And follow up in writing back to whomever what your understanding was of the conversation. Good luck & let us know what happens.
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If the RM is less than house value Medicaid will view the difference as gifting.
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Your mother can transfer the property to you. Is there a reason not to do a warranty deed, instead of a quit claim? I am a bit skeptical of quit claim deeds, since they can lead to problems.
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