Reverse mortgages are a good solution for many 62 plus homeowners and offer a way for them to remain in their homes. There are some issues with Reverse Mortgages and one of them is the obligation to maintain the home, pay the taxes and insurance. If necessary it is possible to short sale a home with a reverse mortgage under certain circumstances. Obtaining legal advice is always a good idea if you or your relatives / heirs are contemplating a short sale.
‘Mr. Cushman offered an example: On a home with an appraised value of $100,000, and a reverse mortgage balance of $120,000, the amount owed the lender would be $95,000. (No short sale would be approved for less than that amount.) Government-backed insurance on the loan would cover the $25,000 gap.’
From the New York Times: Reverse Mortgages for Baby Boomers
To read more about Reverse Mortgages: HUD Reverse Mortgages for Seniors (HECM)