Deed in Lieu of Foreclosure for deceased parent’s home

My sister in law’s father passed away with no will. He had a reverse mortgage. SIL has a lawyer who has filed paperwork. She heard from the FHA who said the property needs to be cleared (“broom clean”) before finalizing the Deed in Lieu of Foreclosure.

My SIL lives out of state from her father’s property and left most of the contents of the home behind. She is unsure if she is obligated to clear out the property, which will be complicated and possibly expensive.

What happens if the property isn’t cleared out? This is an issue because her father had an investment account, which she can’t access apparently without the FHA home issue settled.

Broom clean means you don’t need to scrub behind the toilet tank, but the property needs to be cleared of furniture, debris, etc.

There are companies which do this-- just because she’s out of state, doesn’t mean she can’t hire someone who will do the clean out. There are usually three steps- someone comes in and goes through the house noting anything of possible value, arranges it to be sold and moved out. Then they bring a truck and haul away couches, tables, etc. for donation (this is complicated by Covid right now in many parts of the country), and finally they’ll bring in a cleaning crew to empty out the medicine cabinet, trash anything that’s left like old shower curtains, vacuum, dust and “broom clean”. It’s not fancy and it won’t take a lot of time and it certainly isn’t complicated!

@blossom thanks.

I think the concern is that it’s probably quite expensive and she isn’t sure that she MUST do it. She doesn’t have much money.

The main thing she wants to know is this: What happens if the property isn’t cleared out?

She can find junk removal cost estimates on the web.

It would not be surprising if any contracts to be signed on the matter specified what the penalties were for leaving a house full of junk.

We used a local auction service to clean out my in laws’ place. They came in & assessed the contents. They offered a price they would pay us for the stuff. Then they charged $250 to get rid of everything they didn’t take … they emptied drawers, closets, cupboards, the garage. They didn’t clean, but it probably wouldn’t cost too much to get a service to do a surface cleaning in an empty house.

I have to wonder, doesn’t someone (executor, administrator, next of kin) need to check the house for important papers? Bank acct numbers, insurance policies,…? And nobody might want to check for keepsakes, family photos, money in the mattress?

@O2BonCC , that was done. As mentioned, SIL was OOS, couldn’t bring back furniture, etc…

Oh sorry! Missed the “left behind” reference.

It’s going to be cheaper for your sister-in-law to call 1-800 junk it than to have the lawyer end up making that same phone call, no? It costs her nothing to make a phone call- the lawyer will charge a few hours of billable time to “supervise” the cleaning out, a charge for the paralegal to find and schedule the truck, a charge for a certified check for the fee. Even out of state- not seeing why this is complicated?

If she signs the deed in lieu and the property becomes the FHAs. What happens if it isn’t clean? Probably nothing. If the FHA is controlling an account, they could assess a cleaning fee if that was part of the ‘deal’ which it may be in the reverse mortgage paperwork. Whatever is in the account may cover it or it may not.

I doubt the agent handling it will even go and inspect it on transfer. Probably won’t for months. There is a risk that they will charge a big fee.

If your SIL knows a former neighbor that might a way to get it cleaned out. Tell the neighbor they can take whatever they want, which might not be much. Or call the father’s old church? If it is just furniture, there might be a use for it. Rest goes into the trash.

@twoinanddone , thanks, that’s useful. I’ll have her read all this.

It all depends on whether there are valuables in the house. If there are, you can hire an auctioneer to do an estate sale. Then you can negotiate a deal if they will clean out the house afterward.
If the contents are all junk for sure, call around and get quotes using leads on the net, Craig’s List or local newspaper. Do not call 1-800-got-junk, they likely will be the most expensive.

Why not call the FHA & ask ?

I was curious about this and just googled something like “FHA deed in lieu broom clean,” and a lot of things popped up that suggest it is a condition of the deed in lieu that the property be “broom-swept,” which the FHA defines as “the condition of a Property that is, at a minimum, reasonably free of dust and dirt and free of hazardous materials or conditions, personal belongings, and interior and exterior debris.” This probably appears as a condition in whatever documents govern this particular deed in lieu, but it appears to be an obligation of the mortgage servicer to the government. Here is an explanation from Fannie Mae, although I am not sure it is relevant to your SIL’s situation. In any event, it seems quite risky just to leave all the stuff in the house and assume it will be OK.

A couple of years ago W was tasked with getting her mom’s home located in another state ready for sale. W hired an estate sale company to clean out the house. I was sent up ahead of this company arrival in order to get financial papers, pix, valuables, other sentimental items, etc. They arrived with two moving trucks (20 ft, 16 ft), 7 workers. These workers were like locusts and in 7 hours they had completed emptied house and packed each truck. I didn’t know what to expect but I was amazed at how diligently they packed everything including clothing boxes to hang stuff. I was told that after they left and went back to their facility, they had 5 more guys waiting to unload. The contract was a % split of the estate sale and anything not sold W agreed to accept a flat sum. W still had to replace carpeting, paint, etc to get house ready for sale, but getting the house emptied was easy peasy.

We have a company in our town that will clean out a home for free. Their business model is they get to keep whatever they find, and they either sell, donate, or upcycle the contents. Perhaps your city has something similar? I’m guessing they may need to visit first, to see if it is worth it ( enough content to warrant their time, or no hoarding situations for example).

I’m back at trying to figure out why they are giving up on the house and returning it??. A reverse mortgage cannot be more than about 80% of the value. There should be equity in that house unless the loan was taken during a boom. There’s got to be some investors in that town that will buy the house, assuming it is in poor condition. Although you only have 6 months to sell and that time may have elapsed.

Reason FHA needs broom clean is because they are never going to visit the place for months. It is going to take months before an agent is assigned to try and sell the place. They don’t want food or personal belongings left in the house. There are legal issues about personal belongings that require notifications. Also, it might invite burglaries or squatters