A property we actually bought. No address and no names — the situation is the point.
Two frame houses with demolition orders, and a loan already due
A duplex in Little Haiti, which in practice meant two dilapidated frame houses on the one property. Both were carrying demolition orders.
The area has value, and that is worth saying first because it changes what the problem actually was. This was not a property nobody wanted. The land was worth something and the two structures standing on it were finished — and the city had already said so, in writing.
She had inherited the property, and she had inherited a reverse mortgage along with it. When the last borrower on one of those dies, the loan becomes due and payable. It does not turn into an ordinary mortgage with payments to pick up. It is simply due, and a clock starts.
Where there is equity — and here there was — the payoff is the loan balance. The sale clears it and what is left over belongs to the estate. So the equity was real and it was hers. What threatened it was never the appraisal. It was time. Interest accrues. So does the mortgage insurance premium, the servicing fees, the property inspections, the force-placed insurance. Every month the balance climbs against a number that does not, and the surplus at the end of it gets smaller.
The property was not sitting still either. There were squatters in it. The water had never been shut off, so a bill ran the whole time on a building nobody was living in lawfully. And the squatters were taking electricity from the neighbours, which made it the neighbours’ problem as well as hers.
So: two structures under demolition orders, a loan on a clock, a utility account still running, and people in the buildings. Repairing her way out was not a real option, because the city had already ruled on the structures. The only route that ended with money in her hands was a sale — and a sale before the balance ate what was left of it.
We bought it and the loan was cleared at closing, with the surplus going where it was supposed to go. Then the structures came down, which the demolition orders had already required of somebody, and two townhomes went up in their place.
An inherited reverse mortgage is a deadline more than it is a debt. The house is usually worth roughly what it is worth. What decides how much of that anybody actually sees is how quickly it gets dealt with.
