What exactly is a reverse mortgage?

This is the situation. My husband wants to believe that there is nothing evil going on here, but it sure looks like there is to me.
My FIL died a couple of months ago. We know he has a will, but we cannot find it. It has evaporated. He was one that preached to EVERYONE his whole life that EVERY SINGLE ADULT should have a will. He and my husband used to argue about it.
It has come to light that his wife liquidated most of her own personal property a few months before he died. She took the money and disbursed it to her children. She turned over POA of all of HER funds to one of her daughters.
She THEN got POA over my FIL's accounts and took over his personal banking accounts (which he purposefully kept separate)after his Alzheimer's got out of control. She has depleted all of the funds in those accounts.
The only asset left in question is a house that is worth about $200k. There was $25k owed on it 3 years ago before my FIL lost his mental faculties.
ANYWAY...I told my husband right after his dad died that he needed to file papers to show his father was intestate to protect his assets and create an estate. If you die intestate in Texas, 50% goes to your spouse and 50% is divided among your surviving children.
His stepmother persuaded them to "wait and see" if they could find the will. She then showed them HER will showing that she provided for them in it with 1/2 of the house.
Well my brother-in -law overheard her talking to her daughter who is a paralegal for a large law firm in Florida that specializes in probate,estates, etc. and it seems she is considering a reverse mortgage on this house.
This is what it seems to me that they are doing and my husband says I am too suspicious.
1. She destroyed his will to create chaos.
2. She told them they were going to get something--see,it is in her will?
3. She liquidated her assets and distributed them to her kids so that if these idiot boys finally wake up and realize they have been screwed, they cannot file a claim against her estate because she doesn't have one.

It is my understanding that a reverse mortgage works by giving the equity to the person, then when they die, the mortgage company owns their home. Is this a correct understanding.
Thanks in advance.

who the attorney might be that he did his will with? They should have a copy.

How was the house titled? If it was joint ownership with right of survival, she owns the house and can do with it what she wants. However, you should see if filing papers is possible or even makes sense in this case. I'd say, find an attorney who handles estates and probate and see what he says.

Good luck.

He has banked at the same place for 30 or more years and we had hoped that he had a safe deposit box--but no luck.
OR, if he did, when his wife got POA she also took custody of the box and we will never know.
They both had grown children when they married and my FIL said that he protected his assets so that his kids would have an inheritance.
There were no survivors benefits on the house.

is equity still left when she dies, that would then go to her heirs, but probably as monthly payments in the same amount as when she was alive.

Did your FIL use an attorney to make his will? They usually have a copy on file.

died before he did. We have no idea who he might have used.
I wonder if she will let us have a second look at her will and see if perhaps they used the same attorney? I'm thinking she won't.
Doesn't it seem "odd" to you that one spouse would have a will and the other one wouldn't--especially since they were both so keen on protecting their own assets for their own kids?

It's in some lawyer's office -- I'd start calling.

It seems a tad suspicious that his will hasn't surfaced.

reverse mortgage: A reverse mortgage is one in which a person takes the equity out of a house, either getting an immediate lump sum or lifetime payments. In the end, generally, the lender owns the house. It makes sense for certain people with no other assets. How much money is generated depends on the value of the house and the age of the person obtaining the reverse mortgage.

specializing in probate

it may be possible to start an intestacy procedure and to ask to be the administrator

A New Kind of Loan: In Reverse

A "reverse" mortgage is a loan against your home that you do not have to pay back for as long as you live there. With a reverse mortgage, you can turn the value of your home into cash without having to move or to repay the loan each month. The cash you get from a reverse mortgage can be paid to you in several ways:

* all at once, in a single lump sum of cash;
* as a regular monthly cash advance;
* as a "creditline" account that lets you decide when and how much of your available cash is paid to you; or
* as a combination of these payment methods.

No matter how this loan is paid out to you, you typically don't have to pay anything back until you die, sell your home, or permanently move out of your home. To be eligible for most reverse mortgages, you must own your home and be 62 years of age or older.

Other Home Loans

To qualify for most loans, the lender checks your income to see how much you can afford to pay back each month. But with a reverse mortgage, you don't have to make monthly repayments. So you don't need a minimum amount of income to qualify for a reverse mortgage. You could have no income and still be able to get a reverse mortgage.

With most home loans, you could lose your home if you don't make your monthly payments. But with a reverse mortgage, there aren't any monthly repayments to make. So you can't lose your home by not making them. Most reverse mortgages require no repayment for as long as you — or any co-owner(s) — live in the home. So they differ from other home loans in these important ways:

* you don't need an income to qualify for a reverse mortgage; and
* you don't have to make monthly repayments on a reverse mortgage.

"Forward" Mortgages

You can see how a reverse mortgage works by comparing it to a "forward" mortgage — the kind you use to buy a home. Both types of mortgages create debt against your home. And both affect how much equity or ownership value you have in your home. But they do so in opposite ways.

"Debt" is the amount of money you owe a lender. It includes cash advances made to you or for your benefit, plus interest. "Home equity" means the value of your home (what it would sell for) minus any debt against it. For example, if your home is worth $150,000 and you still owe $30,000 on your mortgage, your home equity is $120,000.

Falling Debt, Rising Equity

When you purchased your home, you probably made a small down payment and borrowed the rest of the money you needed to buy it. Then you paid back your traditional "forward" mortgage loan every month over many years. During that time:

* your debt decreased; and
* your home equity increased.

As you made each repayment, the amount you owed (your debt or "loan balance") grew smaller. But your ownership value (your "equity") grew larger. If you eventually made a final mortgage payment, you then owed nothing, and your home equity equaled the value of your home. In short, your forward mortgage was a "falling debt, rising equity" type of deal.

Rising Debt, Falling Equity

Reverse mortgages have a different purpose than forward mortgages do. With a forward mortgage, you use your income to repay debt, and this builds up equity in your home. But with a reverse mortgage, you are taking the equity out in cash. So with a reverse mortgage:

* your debt increases; and
* your home equity decreases.

It's just the opposite, or reverse, of a forward mortgage. With a reverse mortgage, the lender sends you cash, and you make no repayments. So the amount you owe (your debt) gets larger as you get more and more cash and more interest is added to your loan balance. As your debt grows, your equity shrinks, unless your home's value is growing at a high rate.

When a reverse mortgage becomes due and payable, you may owe a lot of money and your equity may be very small. If you have the loan for a long time, or if your home's value decreases, there may not be any equity left at the end of the loan.

In short, a reverse mortgage is a "rising debt, falling equity" type of deal. But that is exactly what informed reverse mortgage borrowers want: to "spend down" their home equity while they live in their homes, without having to make monthly loan repayments. There's more about this important concept in an article called "A 'Rising Debt' Loan" in the Basics section of this site.

Exception

Reverse mortgages don't always have rising debt and falling equity. If a home's value grows rapidly, your equity could increase over time. Or, if you only get one loan advance and no interest is charged on it, your debt would never change. So your equity would grow as your home's value increases. But most home values don't grow at consistently high rates, and interest is charged on most mortgages. So the majority of reverse mortgages end up being "rising debt, falling equity" loans.

http://www.aarp.org/money/revmort/revmort_basics/a2003-03-21-newloan.html

I had two step parents and they both cheated my sister and I out of the inheritance our parents intended for us. Disappearing will and all.

It is my husband that just wants to play nicely because he believes everyone likes him and wishes him no harm.:puke:I know better.
If it were me, there would have been papers signed the day after they buried him. We wouldn't be sitting here like this watching her and her daughters raid the piggybank.
I have two kids in college--they are the ONLY grandkids (out of many) who have gone to college and their grandpa would have wanted to contribute to their education.

I watched my parents both get in bitter fights with their families when my grandparents died and I vowed I'd never do the same.

His favorite grandson never had a chance. His mom was a deadbeat, thief...etc...and these kids lived hand to mouth, mentally and physically abused, etc.
I called CPS more than once but they always gave them back.
Some pretty horrid child abuse.
Anyway, this boy was his first grandson. Rotten to the core, but he understood why.
Apparently, he took a check out of my FIL's account and wrote it for a couple thousand dollars.
My FIL knew he did it. He talked to him and tried to help him...again.
It wasn't a month before my FIL took a complete turn for the worse and completely had a break with reality.
When she took over his accounts, she filed that check THAT HE KNEW ABOUT with the District Attorney as stolen and forged.
My FIL had known about it and let it go. He had plenty of money. It didn't matter.
His favorite grandson ended up going to prison for that theft.
I'm not excusing what the kid did--I won't let him in my house. He had a horrible childhood, I get that.
It's just not someone I can trust to be around.
His grandfather knew him and still loved him and that was HIS business to deal with that matter how he saw fit, which he did and she undermined him.

a home without re-financing it. There are two methods for doing that, have the mortgage company make monthly payments to the owner or issue a line of credit for the amount of equity. If the need is for daily living expenses the monthly payment is usually preferable. The advantage to the line of credit is that a large one-time expense can be paid for, i.e. an injury or large repair.

When the owner dies the debt to the mortgage company is the responsibility of the estate. The home does not belong to the mortgage company. It is no different than having a few years left on a conventional home loan.

It is a popular method for increasing income for the elderly living on fixed income.

friend with one. First you have to be 62 or older to qualify and you have to own a home. With a reverse mortgage you get to take a loan against the house up to a certain amount (differs region to region). You can take the $ in a lump sum or in monthly amounts. You have no obligation to pay interest or principal on the loan as long as you live in the home until after your death. After you die, the loan is due (principal and all accrued interest) and can either be paid off by the heirs or refinanced with a conventional loan. It can also be paid off with the proceeds of the sale of the home. The person you are talking about could take out a reverse mortgage as long as she's over 62 and lives in the home. If the house is worth 200K, she could probably get 100k+ and she could get it in a lump sum and she can do whatever she wants with it. No, it is not true that the mortgage company owns the home after she dies but they will have a first lien on it and the loan will come due within several months (up to a year)after her death. Also, if there is a 25K mortgage on the home now, that will have to be paid off before the reverse mortgage goes on and it could be paid off out of the reverse mortgage money.

As far as the Will business goes. If Dad had a Will, someone should have a copy of it...his lawyer? Worth checking out. The stepmother may have gotten rid of her assets in case, in the future, she needs nursing home care. She still has the house which is an asset of her estate but she can squander that asset by tapping the equity with the reverse mortgage. You should be aware that if your husband stands to inherit the house with these other kids, they are going to have to figure out how to pay off that reverse mortgage after stepmom is gone.

federally insured which is important because after stepmom's death if the value of the house has declined and is lower that the mortgage amount, the feds pick up the shortfall, not the heirs. If stepmom is going to do this, try and make sure she gets one that is federally insured. The AARP website has some very good information on this and I think HUD has a website with a list of lenders that have the fed insurance.

My SIL died a little more than a year ago.
She was the light of my FIL's eyes. His only little girl. We are talking about a man that had some cash in the accounts that have been depleted. Quite a tidy sum of cash--in the 6-figure amounts when she took it over.
Anyway, her kids didn't have the money to bury her or for her funeral. If my FIL was of sound mind, he would have INSISTED on paying for the funeral. However, since the step MIL had control of his accounts, she REFUSED to pay for it. Said it wasn't her place to do so and these kids were just going to have to figure it out.
Anyway, they ended up having her cremated because they didn't have the money to do anything else. Cremation was something she would not have liked. But there simply were no choices.
There are other things that she has done to HIS family members that he would have divorced her over in a New York minute had he known it. She knowingly disrespected his wishes more than once and did things to his family he would have abhorred.
It is very sad.

With all due respect to the other posters on this thread, seeking advice on subjects as complex as estate and probate law and reverse mortgages in a thread on a public message board, regardless of how well intentioned or apparently accurate, may lead to inappropriate and/or conflicting suggestions and is ill advised to accept such suggestions at face value. You should seek the counsel of an attorney in your area that you trust that works specifically in these disciplines.

The fact that a will has "disappeared" should be a serious red flag and, as other posters suggest, the attorney who drew up the will should have a copy.

Something like this happened to me in 1988 when my father died. The (very bad word) he was married to haunted his hospital bedside for days with a lawyer and two witnesses (her sons-in-law) and hounded him until he signed his share of both their houses over to her.

I couldn't get there -- I was in NJ with a baby and toddler who both had the flu, and I didn't have any money for a plane ticket to Florida. I found out what happened from the hospital nurses, who were disgusted about what happened.

Their deal when they got married was that each would leave their assets to their own children. (She had a lot of money from having cleaned out her first husband, leaving him to die in a trailer. She bragged about it.)

Once she had her claws on the deeds to both properties, she chose not to file his will, which left all his assets to be divided between myself and my brother. Both properties were mainly purchased with my dad's money, though legally they were half hers until she harassed him into signing over the deed papers..

After my dad's first stroke, she had stripped him of every disposable asset she could, giving his car to her son, and so forth.
Since she had taken everything by the time he died, she didn't bother filing the will. My brother and I - both struggling financially -- got nothing. It would have meant college money for my kids. The (bad word)'s daughters ran around in mink and diamonds.

The kicker was that I spoke to several lawyers who said I had a good case for a lawsuit against her, but I didn't have any money to pay a retainer fee to hire one. Nobody would take it on contingency.

You can call your local county bar association for a referral. They'll do a consultation for a small fee - about $30-$50. It would be worth the fee to find out what your legal rights are.

Just that the mortgage isn't repaid until the house is disposed of one way or another -- depending on how much the mortgage was for, the lender may or may not get the whole house.

I practice probate and estate law in Houston. PM me if you want to talk some more.

however i have little sympathy for those who want to grab assets away from widows

unless the children are minors, then i don't understand why they should be trying to grab any assets while the surviving spouse still lives -- they can work, a little old widow lady not so much

Poor little thing...yeah her kids deserve HIS stuff much more than his kids do?:sarcasm:

It really pisses me off. Not even so much the money, but my step mom wouldn't give up anything - stuff that had been in my dad's family for generations that he wanted to go to my nephew - a coin collection that he inherited from his great uncle, some guns dating back to the civil war, stuff that even belonged to my mom's side of the family. My step mom's kids have all that stuff now, if they haven't sold it.

After my parents died, my brother and I told our kids (the grandchildren) to go through their house and take anything they wanted. These kids did just that and do you know what they took? Books. No silver, no jewelry...books. It was really heartwarming.

with 6 living children no less...my grandpa turned the house over to the kids. They all went in and got everything that was either sentimentally value and put it on a table.
They then went in and got everything else and had a huge garage sale. They gave that money to my grandpa.
Everything on the table they took turns taking something until all the sentimental things were gone.
There were no hard feelings, no fights, just memories.

That's the truth, as harsh as it sounds. It's her stuff now because there was no probate. Your only recourse now is to hire an attorney.

did your FIL ever mention a law firm that did his will? they generally keep a copy of the will.

faster is to go to the courthouse and do a search for the mortgage on the property when the house was purchased---deed of trust, etc.---and see who the closing attorney was on the loan. Perhaps your FIL used the same attorney to draw up his will as he did to do the closing on the home purchase.

And, the ONLY way in hell I would do a reverse mortgage is if it's the only asset I had to get enough money to live on. The bank sure won't pay back the interest they charged in the first place. I'd rather self-finance it to another buyer, with interest, with the provision that I had the right to live there until my death. (whether or not I did live there), and that my heirs were paid in full for the remainder of the loan when I died.

On edit: If there's a will, there should be an executor to the estate named in it, in the event that both your FIL and his wife died together. That executor (maybe the attorney, perhaps a son/daughter) should know how to get their hands on the will. Usually someone with a will lets other people know who the executor is. Start asking questions.

This form of preying on people and their heirs is widespread. I have a friend who was taking care of her mother who had developed Alzheimer's. A sleazy lawyer waltzed into the nursing home where she was staying and convinced her that her relatives were stealing from her. The lady signed POA to the slimy lawyer, who proceeded to steal everything from the estate that he could.

There is whale feces on the bottom of the ocean. On the bottom of it there is a fungus growing. These people, including heirs who scheme to rob others if their inheritance, are lower than that.

for sucking the last pennies of wealth out of the American middle class before they die.