My parents (87 year old dad has stage 5 parkinsons/ 84 year old mom who is mentally ill with extreme arthritis), who should have moved long before but stubbornly refused to, finally consented to 24/7 in home care, which would be great...if it didn't cost a fortune and the caregivers weren't calling me constantly. Still, I rested better knowing there was someone there. However, they only have two months of cash to pay for this care. My sister has arranged for a reverse mortgage. At this rate, that money will last them 2 years (assuming my mom doesn't need caregiving). I get why reverse mortgages exist, but they're a bad idea. Even the credit counselor said so during a meeting between my mom and her today. My mom can't do anything - she'd never be able to self-inititate to close the loan. She can barely get groceries (but refuses to have them delivered). If my sister just stopped replying to Omaha Mutual, my parents would be out of money in 2 months. No more caregivers. Falls and forced care would happen within 24 hours. I've been advised to let them fail many times on this board. I get why. If we just let the $ run out in two months, what happens when they end up in the hospital? Will they still end up losing all their $ and the house?
Their home is an asset to use on their behalf, but a better use may be to move them to assisted living or memory care, then sell the house to pay for the care.
"At the end of a reverse mortgage, the loan becomes due and must be repaid, but what that looks like depends on what’s happening with the homeowner and the property. Here’s a clear breakdown:
When a Reverse Mortgage Ends
A reverse mortgage typically becomes due when any of these occur:
The borrower dies
The borrower sells the home
The borrower moves out permanently
(usually defined as living elsewhere for 12+ consecutive months—for example, moving to assisted living)
The borrower fails to meet obligations
such as paying property taxes, homeowner’s insurance, or maintaining the home.
How the Loan Gets Repaid
Reverse mortgages are non-recourse loans, meaning repayment is limited to the value of the home.
The home is usually sold, and sale proceeds go toward paying off:
the loan balance
accrued interest
fees
If the home sells for more than the loan balance → heirs keep the extra.
If the home sells for less → the lender takes the loss; heirs do not owe the difference.
What Options Do Heirs Have?
When the borrower dies, heirs generally have 30 days to decide and up to 6 months (often extendable to 12 months) to settle the loan. They can:
1. Sell the home
Most common. Sale proceeds repay the loan.
2. Keep the home
They can repay the lesser of: the loan balance, or 95% of the home’s current appraised value. This protects heirs if the market dropped.
3. Walk away
They’re allowed to let the lender take the home via deed-in-lieu or foreclosure.
There is no personal liability for the remaining debt.
Obligations While the Borrower Is Alive
To keep the reverse mortgage in good standing, the borrower must:
live in the home as a primary residence
pay taxes and insurance
maintain the property
Failure in these areas can trigger the loan to become due early.
In Short
At the end of a reverse mortgage:
The loan becomes due.
The home is usually sold to repay it.
Heirs can keep the house by paying 95% of its value or the loan balance—whichever is lower.
They never owe more than the home is worth."
Go into it with your eyes wide open...
Vast majority (90%+) of RM are Home Equity Conversion Mortgages aka HECM & backed by FHA / HUD. That Federal backing guarantees to all HECM lenders that if - for whatever reasons - amount lent + interest due + fees are not fully paid then HUD pays lender the difference. You pay mortgage insurance on RM which essentially underwrites this. The RM company never takes a loss.
For borrowers or their family or potential heirs, they have to realize that bc of this a RM lender really has zero motivation to work with the elder struggling to do upkeep or pay prop taxes, zero motivation to cut the family any slack to buy it, zero motivation to do anything beyond what FHA/HUD requires.
And for more fun in all this…. If the RM lender has issues with servicing the loan, they can move the loan and it’s servicing to FHA / HUD. It’s done by an assessment of “claim value” btw the RM lender and FHA/HUD. Owner gets a notification but there’s nothing they can do to change it,
Moreover, interest is often very high.
A reverse mortgage worked wonderfully well for my MIL in her last year or so. She had a valuable property in Carefree, AZ which was quite a highly prized community at that time. She got a good monthly payout. And she was able to stay home with care 12 hours a day for the duration, watching her little back yard oasis formed with slow dripping hose, and the wild pigs, coyotes coming to drink. A room with a view.
When she died in her home the home was sold, the reverse mortgage paid, and the remainder of profit on the home was her son's inheritance.
So for some it works.
HOWEVER it's a huge gamble. Because if someone has to leave the home to go into care they both have too high an income to get help, too low to pay for in facility care AND the mortgage quickly comes due because they are no longer in the home. So the home must be sold, thus repaying the reverse mortgage AND raising their income again so that they must spend down everything.
Yes, the home is likely now to be lost.
You aren't the POA and it wasn't your decision. So there is little to do. It cannot be undone at this point. I sure wish all the best.
A reverse mortgage works best when the house has a significant value, so one can get enough out to live on, and have a good balance left at the end. They do NOT provide for the entire value of the house to be cashed out. It’s a stop-gap, not a long-term strategy. A few years, maybe. If the house value is relatively low, it may not provide enough money to achieve even short term goals.
They/you/sis really need to do the math, and accept that the house will have to be sold when the money no longer works out. There are online calculators available to get an idea. And ask the Mutual of Omaha rep for a printout of the expected revenue and costs. It is a pricy loan, between interest and fees, but also does have many virtues if it works for the given situation. A home equity loan from a bank or credit union may be a better option to look at.
Why do you think the parents will ‘end up in hospital’? Falls are already likely to happen with carers 24/7. If both parents end up in care, and apply for Medicaid, their $ will go first to pay for care, and then a Medicare lien will probably be put on their house. That is a bit complicated if they both go at the same time, but it may not take the full sale value of the house.
In home care 24/7 is the most expensive care option, and will lead quickest to financial ruin. Just waiting for it to go bad is not a good option.
If their house is paid for, take an old-school bank loan out on the equity in it. Many people take these kinds of loans when to do home improvements and renovating on their house. The interest on what you pay back is very low. 2% and 3% some of them. That's almost nothing.
Friends of ours did this recently. The parents' home needed some adjustments to meet their needs and the rest is being used to pay for their caregiving. The parents also make payments on it out of their income every month.
Go to your parents bank and ask to sit down with a loan officer and ask them about an equity loan on the home. Don't do a reverse mortgage. The fees on those are crazy.
These mortgages, as by example I gave of my MIL, can work well for some. Under some few circumstances. But for all the reason I give below they are VERY DANGEROUS to your average person, and they shouldn't be done without a whole lot of expert advice, I agree. And I surely do agree with the advice of a good banker. Problem here is that as elders they will not be getting a loan I am thinking. They are apparently out of money, and the bank knows the likelihood of their being able to pay any kind of loan. Sure is worth the time to get some answers though.
It can be frustrating to deal with parents who are determined to stay in their house no matter what, regardless of how unfit it is for current needs and how much higher in-home care is than AL/MC in most circumstances.
But it's not just about the house, or even primarily about it, for most people. Moving to care means accepting you're near a final stage of life, giving up privacy and dignity and control, accepting dependency, and tossing out the comfort of a place where you've long reigned as the master decision-maker. Those are all terrifying things to face and they end up with a "I'll leave this building when I'm dead" mindset or just a series of roadblocks and fits, anger and fear displays, once the subject of moving on is broached.
None of which is to say I disagree with anyone's wise counsel to set boundaries, prioritize your own health and happiness, and not accept responsibility for others' poor planning. My husband and I have had it fairly easy in dealing with his parents who are kind and accepting of help overall, but there were snags and pushback along the way -- it helped me to keep in mind that it was generally fear and grief behind those.
In your case, a mother who says she thinks your dead father wouldn't think well of you due to your size - that is beyond anything you should have to accept. Nope, nope, nope.
Don't take on fiscal or emotional responsibility for poor economic or other decisions - you've given them your input, leave it at that. Pay for your car repair and let them know you won't be using your car to transport her in future. Have some sayings queued up to very calmly state that you are leaving and are only willing to visit with her if she controls her impulses to be unkind/rude/hurtful.
And use what you learn to do a better job with your own retirement and late-stage-life planning :)
You can't do anything about this. I would say one more time why this is a bad idea, and then leave it at that. You have little power over any of this. I'm sorry. It's frustrating.
So if that is what’s going to happen, things you should be aware of:
- RMs tend to lend at 40-50% of appraised value.
- if they have a mortgage (!horrors!), RM $ must 1st be used to pay off that mortgage.
- if any other securitized lending using house as collateral, it too has to be paid off.
- property taxes are parents responsibility to pay
- property insurance is your parents responsibility. If they owned their home outright, they may have been underinsured. But with new mortgage, they have to update insurance. If where they Iive requires - in addition to standard Homeowners - Flood, Earthquake, Windstorm then their insurance coverage costs will be $$$. Some RMs do a fold over for insurance so they select coverage and add it as a cost.
- property must be maintained. It too is your parents responsibility. Something that is often glossed over, is that if this is an HECM RM (90%+ are), the lending is backed by FHA & HUD. This is very important as HUD has REAC aka Real Estate Assessment Center. Basically REAC checks as to condition and if below a certain point, the owner must do the repairs or gets a penalty placed. Fwiw REAC used to be pretty much only done on FHA loans on multi family housing units. But nowadays drones can do flyovers on individual property easily; and if they find something, then it gets a physical inspection by a FHA certified professional. Their report goes to FHA, HUD, RM lender, property owner. So LSS, your folks have to maintain their property. If you know house has serious deficiencies, think hard on what kind of answer you will have to your Sister when she calls asking you for help on this.
If taxes, insurance, repairs etc are not paid / not dealt with, lender will send a Notice of Deficiency and it nothing is done a 2nd Notice goes out and then they will start Foreclosure. If the house has serious safety or hoarding issues, APS may be asked to get involved.
- if the RM borrowing spouse goes into a NH or dies, the nonborrowing spouse can remain in the home till they die or move out. The RM loan is not yet “called in” for repayment in full. This is important for you all as it may be that Dad goes into a NH due to his Parkinson's but mom is able to stay living in the house. Should your mom move into a facility and if other family members live in the house (Sissy or her kids or other family), this protection does not apply.
- RM has to - HAS TO - be repaid eventually either by the owner repaying the loan + interest + fees or by family/heirs doing this or paying 95% of appraised value. Otherwise the RM acquires it and they will empty it out and sell it.
- Once a event happens that causes loan to be “called in”, the RM lender sends out a Notice and there is 30 days to get back to the lender as to what the intention is on the property with the expectation that if you are buying….. all can be done very very quickly & usually as an all cash sale.
I hope your folks and Sissy realize that their RM lender has the ability to call-in the loan in full if the owners status has changed (died or moved into a facility), if taxes are not paid, if property insurance is not paid, if repairs and upkeep are not done. If communication from the RM lender is ignored, they really do not care as they totally have the ability to do a foreclosure.
Unless this house is worth a good bit of $ (800-900K) and is in well maintained condition, doing an RM is only putting a bandaid on a more serious issue. I hope that they and Sissy realize that one of the parents has to remain in the home otherwise the loan will be called in. Either mom or dad can go into a facility but not both. 800-900K value home gives them maybe 350-500K to use (in addition to their SSA income & savings) for facilty care and inhome health care.
When/ if this causes problems like described below , DO NOT use any of your own money to pay for house repairs , the taxes , loan payments , or anything else your sister may ask for .
Your parents should be in a care facility as you seem to realize . The house should be sold and any proceeds left ( after paying off RM and any other mortgages ) used to pay for their care . When that runs out they go on Medicaid .
Good Luck . Tough situation . I’m sorry . You are rightfully upset with your sister’s plan.
Realtors tend to be clueless on dealing with these type of sales. And somehow I bet Sissy is the type of person who will want to do this as a FSBO…. it would be a trainwreck. So please PLEASE pls you make sure that you are in no way signed off on any responsibility for the folks house or their financials.
The other mention on the RM is how it affects their income should either enter a facility and applying to LTC Medicaid. Setting aside the RM layer on LTC Medicaid, please realize that if either go into a facility and file for LTC Medicaid, they are REQUIRED to have almost all their income go as their Share of Cost paid to the facility. For example, if this was Texas NH and elder paid $2,345 from SSA, then their NH SOC would be $2,207, the $75 is the only $ they can retain.
the RM $ paid adds a layer onto the usual SOC requirement. So if Dad goes into a NH then 1/2 of the $ paid to him by the RM has to be spent in-full by him within the month received (otherwise it becomes an asset and most State LTC Medicaid have a mere 2K asset max). It technically is not income (for tax purposes and for LTC Medicaid) but instead it is a “loan”. But it is $ that loaned to him that has to be reported for LTC Medicaid and has to be included in the required SOC. It is a separate category for LTC Medicaid. So all this will involve extra paper for your parents LTC Medicaid paperwork. And as they are a couple it gets quite complex. Couples and LTC Medicaid imho always always always needs an experienced with Medicaid elder law attorney. Not a DIY and especially not a DIY if there is RM $ paid.
Again let this all be Sissys snake pit.
We tried to plan. We really did. We bought long-term care insurance 30 years ago. We thought then that with Social Security, insurance, plus savings we'd be able to finance care in our old age. However, the premiums for 2026 are almost $20K (yes, that's 20K!) and the benefits have been reduced as the cost of care has risen exponentially. And we've both lived longer than we ever anticipated. So far, we haven't needed care, but it's a huge elephant-in-the-room worry. Welcome to old-old age!
What I see as a bigger problem is when the in-home care is not sufficient for their needs. Either one or both of your parents could require a skilled nursing facility soon, and when the loan money runs out, the house will have to be sold.
If both of your parents die, at home, with in-home care within the next two years, then it seems the reverse mortgage will have served its purpose.
Considering your scenario of just letting their money run out in two months, they could then apply for medicaid, which will pay for Home Based Community Services, allowing them to continue living in their home, with in-home care, although it will likely not be 24 hours a day. The house is exempt as long as they are living in it. But, if they get moved to a care facility, and Medicaid is paying for their care, the home will need to be sold, and that money spent down, or Medicaid could try and recover funds from the sale of the home after they die.
I have to agree with the sister in this case, that a reverse mortgage may be the best solution for now. Best case scenario, both parents die in their home with full time care before the money runs out in 2 years. If the money runs out and mom is still living, then she will need to be moved to a care home and the house will need to be relinquished to the lender, or sold, and she would apply for Medicaid assistance at that time. No matter what you choose to do, the house will end up being lost. This is the only asset they have and it is going to be used to pay for their care one way or another.
Your Mom is scared, because the years fly so quickly, and she is afraid of losing everything she has ever cared about! She is afraid of losing your Dad, not seeing her kids, possibly grandkids, the home and cars they worked so hard for, etc…. Knowing that your time here is almost over caused a lot of ANXIETY for many elderly. Even the o es with faith. The fear of the unknown.
Please try to have compassion for yourself and your parents.
Best of luck to you all!
🙏❤️🍀