Short Sales with a Reverse Mortgage
A reverse mortgage is a special home loan for homeowners aged 62 and older that lets them turn the home’s equity into cash without monthly payments. The borrower can receive the money as a lump sum, regular monthly income, or in flexible amounts as needed. The homeowner remains responsible for making payments on the property taxes, insurance, HOA fees and any other assessments on the home. In a reverse mortgage, the loan and interest only become due and payable when the home is sold, or the owner moves out permanently or passes away.
Sounds simple right? Theoretically, the balance of the loan would never exceed the home's value, and paying it off wouldn't be an issue when the loan became due and payable. However, sometimes the market value of the home may decrease; perhaps in a downward market, or due to property falling into disrepair. Sometimes, the interest and fees grow so much, that the loan value becomes higher than the home could sell for. What happens then?
Almost all reverse mortgages are backed by HUD. If you have a HUD HECM reverse mortgage serviced by Celink (Compulink Corporation), and the loan has become due, and the debt exceeds the value of the home, you have several options in this scenario:
- Pay off the loan in full.
- Complete a deed-in-lieu of foreclosure.
- Let the home foreclose.
- Sell the home in a short sale.
Will you qualify for a reverse mortgage short sale? Find out now!
Reverse Mortgage (HECM) Short Sales
If HUD insures the loan, as would be the case with a HUD HECM reverse mortgage, the lender and ultimately HUD would have to approve the terms of the short sale (a short sale is the process by which a home is sold for less than is owed on the loan).
A reverse mortgage short sale is not very different from a traditional short sale and follows the same basic process:
- The home is listed on the open market.
- A buyer is secured subject to the short sale approval.
- The short sale is initiated, processed, and negotiated with the lender.
- Once approved, the sale closes like any other.
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Need help with your reverse mortgage short sale?
Key to the process is having the right help! We've been specializing in short sales since 2008! We've helped hundreds short sell and move on with their lives, and we can help you!
Most realtors I contacted would not touch my situation (short-sale estate). Minna demonstrated expertise in short sales, and was not afraid to take it on. I was impressed with her calm and systematic approach, and with her responsiveness. I never felt neglected - she always responded, and followed through. I would very highly recommend her. Very impressed, very grateful, and relieved that it is all now complete.
KRISTINE
Last Updated on November 19, 2025 by Minna Reid
