What happens if a reverse-mortgaged property is destroyed by a natural disaster? Does the loan become due?

You should check with the mortgage holder and the insurance company to see what the outcome is. I'd expect that the insurance policy would name the mortgage holder as the payee just as in a typical mortgage situation.

It wouldn't be any different than if you had a forward mortgage. No, the loan does not become due. The home would be rebuilt in coordination with the insurance company and your lender.

The loan does not become due.. There will be an insurance check issued to you and the bank.. the bank will have to sign off on it, but you can rebuild.... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Your insurance company will be on the hook to provide you with the funds to rebuild the home. Assuming you begin working on restoring the property, there should not be any issues. In the meantime, you need to notify your service provider of the loss. Should you choose to not rebuild, the insurance proceeds will be used to first payoff the debt to the lender and any funds let over would go to you. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

what type of disaster??

Unless you need to cash the insurance check, just keep paying the mortgage. If the home is distroyed and you want to rebuild the lender will need to be involved in order for you to cash the check. As Travis says above, talk to the lender and the insurance company. You may not want to give them any specifics at first, ask them as a "hypothetical question".

Hi JFranco, I agree with Travis, you should definitely check with your servicer. There may be a clause in your closing documents that states damages due to natural disaster. Easiest quickest way is to check with your Servicers, but then triple check by reading your closing papers. If you don't see what your looking for, an attorney can be an alternative as well.Good LuckManuel

That is what insurance is for... The loan does NOT automatically become due. Now assuming lack of insurance or not covered for the type of loss you had, and the property is not rebuilt?? I would assume that somewhere down the line the loan would be called due because the collateral is now gone.

It is no different than if you had a conventional mortgage and the home was damaged. You will work with your homeowners insurance company and repair or rebuild.

It is recommended that you speak with both your insurance provider as well as your lender. Your insurance provider should provide you with funds to rebuild or repair the home.