What Happens To A Reverse Mortgage When You Die
When a borrower has died and no surviving borrower lives in the home, the reverse mortgage becomes due and payable unless a spouse deferral applies. The estate can pay it off, sell the home, or give it to the lender, and FHA’s rules set how each option works.
Quick answer
The HECM becomes due when the last borrower dies and the home is no longer the principal residence of a surviving borrower. The estate or heirs can pay the loan balance in full, sell the home for at least the lesser of the balance or 95 percent of the current appraised value, or give the lender a deed in lieu of foreclosure. Because the HECM is non-recourse, the estate never owes more than the loan balance or the home’s value, whichever is less.
What the estate can and cannot do
After the last borrower dies, the servicer’s notice lists the ways to resolve the loan. Some paths are not available, and it helps to know which ones early.
- Pay off the full loan balance. FHA’s rules allow prepayment without penalty.
- Sell the home for at least the lesser of the balance or 95 percent of the current appraised value.
- Give the home to the lender with a deed in lieu of foreclosure.
- Ask for more time to sell or pay off, with proof the home is being marketed or a sale is delayed.
- Heirs cannot take over the loan. A HECM is not assumable.
- If the loan is not resolved, the lender must start foreclosure within the time HUD allows.
Pay off the loan
Sell the home
Give a deed in lieu
Ask for more time
No takeover by heirs
Foreclosure if unresolved
How The Loan Comes Due
Under FHA’s HECM rules, the loan becomes due and payable automatically when a borrower has died, no surviving borrower still lives in the home as a principal residence, and no deferral period applies.
If one borrower dies and another borrower still lives in the home as a principal residence, the loan does not come due for that reason. When the last borrower dies, the lender may accept verbal notice of the death from the heirs or the estate.
The servicer must send a notice to the borrower’s estate, heir, or other party with legal title within 30 days of notifying HUD that the loan is due and payable. The notice lists the options: pay the loan off in full, sell the home, give a deed in lieu of foreclosure, or share information about a spouse who was not a borrower.
For a pending sale, the estate or an heir can ask for an appraisal. The lender must have the home appraised by an FHA Roster Appraiser within 30 days of the request and give the requestor a copy. While the loan is due and payable, the appraisal is at the lender’s expense, though the lender may be reimbursed from the sale proceeds. For how a surviving spouse is treated, see our reverse mortgage age requirements page.
What families should know
This page is for adult children, executors, and borrowers who want their family to know what comes next.
How Non-Recourse Works
FHA defines a HECM as a non-recourse loan. In our reverse mortgage program, the borrower or the estate will never owe more than the loan balance or the value of the home, whichever is less, and no assets other than the home must be used to repay the debt.
Keeping The Home
Heirs cannot take over the loan. To keep the home, they can pay the loan off, or pay the lesser of the balance or 95 percent of the current appraised value. FHA counts a transfer of title after death by operation of law as a sale for this rule.
When A Sale Falls Short
Where the home is sold for less than the full payoff under FHA’s rules, the lender may file a short sale claim with FHA.
Extensions Need HUD
With proof the home is actively marketed, a signed sale is delayed, or the family is trying to pay off the loan, the lender must send a 90-day extension request to HUD. No more than two of these may be submitted, and HUD decides whether to approve more time.
A Surviving Spouse
If the last borrower dies before a spouse who was not on the loan, a deferral period may delay the loan coming due. The spouse must meet every qualifying condition and all other FHA requirements, and no further loan money is paid out during a deferral.
Monthly Vacancy Checks
While the loan is due and payable, the lender must visually inspect the home each month to see whether it is vacant, and must take reasonable action to protect a vacant or abandoned home.
Hear From Homeowners Like You
Frequently Asked Questions
Questions adult children and executors ask.
The HECM becomes due when the last borrower dies and the home is no longer the principal residence of a surviving borrower. The estate or heirs can pay the loan balance in full, sell the home for at least the lesser of the balance or 95 percent of the current appraised value, or give the lender a deed in lieu of foreclosure. Because the HECM is non-recourse, the estate never owes more than the loan balance or the home’s value, whichever is less.
In our reverse mortgage program, the borrower or the estate will never owe more than the loan balance or the value of the home, whichever is less, and no assets other than the home must be used to repay the debt. Heirs who want to keep the home do need to pay the loan off or pay the lesser of the balance or 95 percent of the current appraised value.
When a borrower has died, no surviving borrower lives in the home as a principal residence, and no deferral period applies. The servicer must then send a notice to the estate, heir, or other party with legal title within 30 days of notifying HUD.
Yes, by paying for it. A HECM is not assumable, so heirs cannot take over the loan. They can pay it off, or pay the lesser of the balance or 95 percent of the current appraised value, since FHA counts a transfer of title after death by operation of law as a sale.
The home can be sold for at least the lesser of the balance or 95 percent of the current appraised value. A HECM is a non-recourse loan. Where the home sells for less than the full payoff, the lender may file a short sale claim with FHA.
For loans with FHA case numbers assigned on or after September 19, 2017, if the loan is not paid off or otherwise resolved, the lender must take the first legal step toward foreclosure no later than six months after it notifies, or should have notified, HUD of the death, unless HUD approves a longer time frame. The family can ask for more time with proof of active marketing or a delayed sale, and the lender may submit up to two 90-day extension requests to HUD.
It means deeding the home to the lender. The lender must accept it when it can get good and marketable title and HUD’s other conditions are met. Within 30 days of receiving it, the lender must deliver the canceled note and record the satisfaction of the lien.
On loans with FHA case numbers assigned on or after August 4, 2014, a deferral period may delay the loan coming due if the spouse meets every qualifying condition: married to the borrower at closing and for the borrower’s lifetime, named as a non-borrowing spouse at origination, and living in the home as a principal residence, and all other FHA requirements continue to be met. If not, the estate’s options apply.
Find out what you qualify for
Tell us about the home and your family’s plans, and we will walk you through how these rules apply.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.