Reverse Mortgage After Death: What Heirs Must Do

The Short Answer

When the last surviving borrower dies and no surviving borrower remains in the home as a principal residence, the whole loan balance comes due. The rule states it directly: the outstanding loan balance “will be due and payable in full if a borrower dies and the property is not the principal residence of at least one surviving borrower.”^[4]

The balance does not turn into a personal bill for the family. The federal rules direct the lender to enforce the debt only through sale of the property, and FHA mortgage insurance stands behind the loan for shortfalls when the sale rules below are met.^[4][1] What the family receives instead is a process: a Due and Payable Notice from the servicer, a 30 day window to act, and three ways to satisfy the loan.^[5][3]

The three ways, stated on the notice itself: satisfy the loan by paying the balance, sell the property for at least 95 percent of appraised value, or give the mortgagee a deed in lieu of foreclosure.^[5] If a non-borrowing spouse survives, deferral can change this picture, so read the role section below before anything else. And if the loan is an ordinary mortgage rather than a reverse mortgage, the mortgage after death guide is the right page.

What this page covers

This page covers the Home Equity Conversion Mortgage, or HECM, the FHA-insured loan the CFPB describes as the most common type of reverse mortgage.^[1] Every deadline and percentage here comes from the HECM regulations at 24 CFR part 206, from HUD mortgagee letters, and from the CFPB’s own answers for heirs.^[3][4][5][6]

Proprietary and jumbo reverse mortgages follow their own contracts. No federal source for their death rules is cited here, so this page makes no claim about them. If the loan paperwork does not say HECM anywhere, ask the servicer which program the loan belongs to before treating anything on this page as the rule for that loan.

Start with your role: co-borrower, spouse, or heir

Three roles read this page, and the first task differs for each.

• Surviving co-borrower. You signed the loan yourself. You can remain in the home and keep receiving loan payments as long as you meet the loan’s obligations. The CFPB advises verifying with the servicer that both names are actually on the loan records, because paperwork gaps surface at the worst time.^[2]
• Surviving non-borrowing spouse. You did not sign the loan. What happens next depends on the FHA case number date and, for older loans, on the lender’s own choice. The detail is just below.
• Heir or executor. Neither of the above. The rest of this page walks your path: the notice, the 30 days, and the three options.

If you are a non-borrowing spouse

For HECMs with FHA case numbers assigned on or after August 4, 2014, the lender or servicer determines whether you qualify as an Eligible Non-Borrowing Spouse. The criteria: married to the borrower at the time the loan documents were signed and still married at the borrower’s death; identified in the loan documents as a non-borrowing spouse; living in the home at loan closing and continuing to live there as your principal residence; and continuing to meet the loan requirements so the loan does not come due for some other reason.^[2] Qualifying defers the due and payable status, and an Eligible Non-Borrowing Spouse receives no money from the loan.^[2][4]

For case numbers before August 4, 2014, the choice belongs to the lender or servicer. It can enter the Mortgage Optional Election, or MOE, Assignment process, which allows an Eligible Non-Borrowing Spouse to stay in the home; the spouse provides a Social Security number or Tax Identification Number and agrees to receive no further payments from the loan. Or it can foreclose, and foreclosure proceedings must begin within six months of the borrower’s death. A spouse actively trying to sell the property or satisfy the debt in some other way can request a delay of the foreclosure of up to 180 days.^[2]

The CFPB describes qualifying as an Eligible Non-Borrowing Spouse as a process that may be difficult, and recommends an attorney or a HUD-approved housing counseling agency for this path.^[2] Treat that recommendation as your first task if this is your role.

The timeline: from death to the foreclosure clock

Here is the sequence in one place. Each row names the rule it comes from.

Scroll the table sideways to see every column. Use the arrow keys when the table is focused.

Sources for the rows: 24 CFR 206.27 and 206.125^[3][4], ML 2022-15^[5] and ML 2015-10.^[6]

Steps that need more explanation

The loan can also come due before death, and some families inherit a loan already in this process. The regulation lists the other triggers: the property stops being a borrower’s principal residence for reasons other than death, with no other borrower in residence; a borrower fails to occupy the property for more than 12 consecutive months because of physical or mental illness, again with no other borrower in residence; property charges go unpaid; or another obligation under the mortgage is not performed. Those triggers need Commissioner approval.^[4]

The notice clock changed in 2022. HUD Mortgagee Letter 2022-15 moved the deadline from 30 days measured from the date of death to 30 days after the servicer notifies HUD of the death.^[5] For mortgages with case numbers issued before August 4, 2014 where a Surviving Non-Borrowing Spouse exists, mortgagees follow the notice requirements of earlier mortgagee letters, so ask the servicer which notice rule applies to your loan.^[5]

The 30 day response window is for acting, and for loans that came due for a reason other than death, the same 30 days can instead be used to correct the condition.^[3] At the far end sits foreclosure: the mortgagee must commence foreclosure within six months of the due and payable date, or within additional time the Commissioner approves, and the CFPB describes the heir timeline as possibly extending up to six months so heirs can sell the home or obtain their own loan.^[3][6][1] Six months is a commencement boundary for the lender, and how long a foreclosure case then runs is state law, which this page does not cover.

Option A: repay the balance and keep the home

Heirs who want to keep the home pay the loan off. The CFPB lays out the amount: heirs repay either the full loan balance or 95 percent of the home’s appraised value, whichever is less, when the balance owed is more than the home is worth; when the balance is below the home’s value, keeping the home takes the full balance.^[2][1]

Heirs might need a loan of their own to finance the purchase, the CFPB notes, so the financing clock matters as much as the notice clock.^[1] If a new loan is the plan, start it the week the notice arrives, and record the application dates on the worksheet below.

Option B: sell the home

Selling satisfies the loan at a price the program sets. The regulation directs that the property be sold “for an amount not to be less than the amount determined by the Commissioner through notice, which shall not exceed 95 percent of the appraised value.”^[3] Read that carefully: the floor for your loan is the amount in the HUD notice, and it can land below 95 percent. Closing costs on these sales are capped at the greater of 11 percent of the sales price or a fixed dollar amount HUD sets by Federal Register notice.^[3]

The word sell is broad here. The rule states that “sell includes the transfer of title by operation of law,” so a probate transfer of title counts as a sale under this section.^[3]

The appraisal carries its own rule. The mortgagee has the property appraised by an appraiser on the FHA roster no later than 30 days after a request from an applicable party in connection with a potential sale, and when the loan is due and payable the appraisal is at the mortgagee’s expense.^[3]

No source promises that a sale will close inside any particular window. What the rules give you is the price floor the program accepts. When a sale needs more time, the extensions section further down covers the mechanics.

Option C: deed in lieu of foreclosure

The third option hands the property back. The mortgagee must accept a deed in lieu of foreclosure from the borrower or other party with legal right to dispose of the property, provided the deed is filed for recording within 9 months of the due date and the mortgagee is able to obtain good and marketable title.^[3]

A financial incentive may apply when the deed is delivered within 6 months of the due date. The rule calls it Cash for Keys, names no amount, and leaves the figure to the Commissioner, so this page quotes no number.^[3] In exchange for the executed and delivered deed, the mortgagee cancels the credit instrument and satisfies the mortgage of record.^[3]

What heirs do not owe

The HECM is written against the property, and the borrower’s side of that bargain is fixed in the regulation: “The borrower shall have no personal liability for payment of the outstanding loan balance. The mortgagee shall enforce the debt only through sale of the property.” The same clause bars a deficiency judgment against the borrower if the mortgage is foreclosed.^[4]

For heirs, the debt is repaid from the property, and FHA mortgage insurance covers shortfalls when the sale rules above are met.^[4][1] Heirs are not borrowers under this loan, and this page does not turn the borrower protections into a legal conclusion about any individual heir. For the HECM as one debt among the estate’s bills, read how creditor claims work.

Getting more time: extensions run on evidence

Every extension runs on documentation. Under HUD Mortgagee Letter 2015-10, owners of the property, meaning the mortgagor, the estate, or the heirs, can get additional time to market and sell the property or satisfy the balance when they give the mortgagee evidence of active marketing. That evidence includes documentation of delays in sales or payoffs, or of attempts to satisfy the mortgage balance. On that evidence, mortgagees may request from HUD no more than two 90 day extensions to take the first legal action to initiate foreclosure.^[6]

When the property is still not sold by the extended deadline, the mortgagee may use one additional 90 day extension of its own, conditional on the estate or heir having been actively marketing the property or attempting to satisfy the balance. That extra window exists for the mortgagee’s process, and the letter states it is not meant to hand the family more marketing time.^[6]

Adding the pieces into one flat total would mislead, because each part depends on evidence and approval, so this page does not do it. What you can do is collect the evidence as you go: listing records, a documented sales contract or closing delay, payoff attempts. The worksheet below gives each of those a place to live.

Keep the home insured meanwhile

The HECM mortgage itself obligates insurance on the collateral property. The borrower must insure all improvements on the property against the hazards the mortgagee requires, including fire and flood where required, maintained in the amount and for the period necessary to protect the mortgagee’s investment.^[4] Unpaid property charges are also one of the triggers that can bring a HECM due, so a lapsed policy on a HECM-secured home is a loan compliance problem as well as a risk to the house.^[4]

While the estate works through the options, keep the policy in force and keep the premium paid. The home insurance after death guide covers the policy side of an inherited home. For the carrying costs and for protecting an empty house during the sale period, see what it costs to hold an inherited home and how security cameras protect an inherited house.

Print the HECM heir decision timeline

The printable worksheet is your own paper record of this process: large type throughout, no login and nothing to upload. Block A holds the five dates behind every deadline: the date of death, the date you notified the servicer, the date the servicer said it notified HUD, the Due and Payable Notice date, and the 30 day response deadline. Block B records the option you choose. Block C tracks extension requests with their attached evidence, drawn from the list Mortgagee Letter 2015-10 names: active marketing records, a documented sales contract or closing delay, and payoff attempt records. Block D logs the appraisal dates, Block E holds servicer and counselor contacts, and Block F keeps the insurance status visible.

A completed fictional example appears next to the blank, labeled as invented, so you can see what a filled-in timeline looks like before you start yours. Keep the finished sheet with your own records and never mail or upload it. It needs no Social Security number, no loan number and no policy number, and it changes no deadline.

Download the HECM heir decision timeline (PDF)

Where to go next

The loan is one piece of the estate’s work. Record the home and the loan in your estate inventory, check whether your authority to act runs through letters testamentary, and see where a sale sits in how long an inheritance takes.

A specific payoff fight, a rejected sale price, or a spouse deferral question belongs with a probate attorney or a HUD-approved housing counselor. The CFPB draws that line for the spouse path, and the same boundary holds for the rest of this process.^[2]