Question about Reverse Mortgage Loan payoff

[dyne]

Assuming a person dies AFTER 2010 and had a home and reverse mortgage, would the reverse mortgage LOAN balance which is paid off by the estate or heirs, etc. have any affect upon the heir's basis in the home? For example assume the house is worth
$100,000 at date of death and the reverse mortgage loan balance was $80,000, which
was paid off. What is the basis for the heirs? My daughter works for a bank and she advised me
that the only negative complaints that she has encontered was from heirs who complained about the reverse mortgage loan being required to be paid off.
I found on the internet that 97% of people who took out a reverse mortgage were happy with it.
Also it was reported that reverse loan fees are often high and as much as $15,000. It also appears
to me that a reverse mortgage is only worthwhile where the FMV of the home is substantial. I would appreciate all comments.

[Burke]

I guess they are upset because they want the house and have to pay off the bank? What is the difference; if there were a regular mortgage outstanding ---- they would still have to pay it each month or pay it off to keep the house. Or pay off the bank at time of sale. The bank doesn't suddenly forgive all the debt, just because the owner died. FMV is FMV. Loans don't enter into it. Would get stepped-up basis for full amt if executor chooses to allocate amt allowed (up to $1.3 Million.) to that asset.

[94nole]

Agreed...I can't increase the basis in my house if I pay off my mortgage loan even if that loan is 125% the value of the property (Actually, I'm not under water yet but it keeps getting closer).