Reverse mortgage

The reverse-mortgage letter has a clock. You have more rights than it sounds like.

When someone with a reverse mortgage dies, the loan becomes due — and the servicer’s “due and payable” letter reads like a demand to pay everything or lose the house. Neither is the whole truth. Here’s the actual timeline and the two protections most families don’t know they have.

This guide covers FHA-insured HECM loans — the large majority of reverse mortgages. Proprietary (non-FHA “jumbo”) loans follow their own contracts: first call, ask the servicer which type this is.

The two facts that change everything

Heirs can keep the home for 95% of its appraised value — even if the loan balance is higher. If the house appraises at $200,000 and the balance is $260,000, the family can satisfy the loan for $190,000. The servicer orders the appraisal; you can dispute a bad one.
The loan is non-recourse. Nobody inherits a shortfall. If the house sells for less than the balance, FHA insurance absorbs the difference — the estate and the heirs never owe it. Walking away is always an option, and it costs the family nothing beyond the house itself.

The timeline, step by step

The loan becomes due when the last borrower dies. (If a surviving spouse is on the loan, nothing happens — and even a non-borrowing spouse may qualify to stay under HUD’s deferral rules; tell the servicer immediately if this is the situation.)
The servicer sends a due-and-payable notice and typically asks for a response within 30 days: whether the family intends to pay off the loan, sell the home, buy it at the 95% figure, or sign it over (a deed in lieu). Respond inside the window — in writing — even if the answer is “we’re deciding.” Responding is what keeps the extensions available.
The family generally has six months to sell or arrange the payoff.
Two 90-day extensions are possible (with HUD approval, shown as actively marketing or closing the sale) — up to roughly a year in total. Ask for them in writing before the current period ends.
If nobody responds, foreclosure starts. The worst outcome here is almost always the result of silence, not of the loan itself.

What to send and ask for, this week

Send the servicer the death certificate and your contact details, and ask — in writing — for: the loan type (HECM or proprietary), the current payoff figure, and the deadline dates as they count them.
Ask whether a non-borrowing spouse deferral could apply before making any other decision, if a spouse still lives in the home.
Keep paying (or confirm escrow covers) property taxes and homeowner’s insurance — lapses there can accelerate foreclosure independent of everything above.
Free help exists: HUD-approved housing counselors handle HECM cases at no charge — find one at hud.gov or 1-800-569-4287.

General information, not legal or financial advice. HECM rules are federal (HUD/FHA), but servicer practices and state foreclosure law vary — a HUD-approved counselor or an attorney can confirm the specifics of your loan.

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