Is there any reason for a reverse mortgage heir to do a short sale rather allow the property to foreclose?

I can't see one if the home is underwater. Your name is not on the loan and a short sale can be a severe pain depending on who the servicer is, so probably best to allow it to foreclose. If you really want the home you may be able to pickit up pretty cheap after it forecloses.

NO. Most, but not all, reverse mortgages are HUD insured. This means that premiums are paid to HUD for the express purpose of paying off the debt in the event the borrower outlives the equity. If you are the heir, and the home is worth less than what is owed, you do not even have to arrange for the sale. Also, a loan that is returned to HUD in this manner is not considered a foreclosure, either. Simply contact the lender and advise them that the borrower is deceased and you want to arrange for them to take possession. Take the time to move out all of the possessions before you contact the lender though, so you do not have to scramble. If you DO have equity in the home, then you always have the option to sell the home, pay off the loan and keep the difference. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

So the balance is greater than the potential sales price? Just walk away then. Assuming this is a HECM (FHA), then the shortfall is covered by FHA Mortgage Insurance.

Do you want the house?? there are ways to do it ... linda yourloanpartnerforlife@live.com

Even if you want the house, it might be less expensive to buy it back at the foreclosure auction or from the lender after they take it.

No