Reverse mortgae lien?

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      In April my father-in-law passed away. At the time of his death, he had a reverse mortgage on his house. Appraised value of the house is about $ 80,000 and the amount owed to Well’s Fargo is about $ 50,000. With the reverse mortgage no payments are required until the house is sold. After his death, we found out that he had about $ 200,000 of IRS liens against his house for failure to pay back taxes of about 7 years. My mother-in-law was on some of the tax returns but not all.

      My mother in law has decided that she no longer wants to live in the house. With that I see we have a couple of options.

      1. We can sell the house and make about $ 25,000 at the most. However, that will go to the IRS as I understand it.
      So my first question is what happens with to the other $ 175,000 that is due to the IRS. Is my mother-in-law responsible for it.

      2. We can let the bank foreclose on the house. Because it is a reverse mortgage, the only reason they would foreclose on the house would be because of failure to carry insurance, pay property tax, or the home is remains unoccupied. The insurance and the taxes have been paid through next year.
      So my next question is similar to the first. What happens to the $ 200,000 lien that was placed on the house.

      My mother-in-law wants to move in a retirement village that determines the monthly rent based upon her income (only social security). So once the house is out of her possession, she would have very little assets other than a car and furniture.

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