With a U.S. Home Equity Conversion Mortgage (HECM), the loan generally becomes due and payable after the last surviving borrower dies, unless a surviving co-borrower or an eligible non-borrowing spouse has a continuing protection. Heirs can usually keep the home by paying the required amount, sell it under the HECM program’s rules, or transfer it to the lender by deed in lieu. The servicer’s written notice, the home’s appraised value, the loan balance, title authority and the response deadline determine which choice works.
First determine which reverse-mortgage rule applies
“Reverse mortgage” is not one universal product. The federal Home Equity Conversion Mortgage (HECM) is the most common type and is insured through the Federal Housing Administration. Proprietary reverse mortgages are private products whose contracts can set different deadlines, valuation rules and protections. Before making a payoff decision, find the promissory note, mortgage or deed of trust and ask the servicer to identify the loan program in writing.
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HECM after the last borrower’s death
A HECM is generally due and payable when the last surviving borrower dies. The servicer must work through the notice process and tell the estate, heirs or another party with legal title how the loan can be resolved. The death of one borrower does not by itself make the loan immediately payable when another borrower remains obligated under the loan.
Surviving co-borrower
A surviving co-borrower can generally remain in the home and continue receiving reverse-mortgage payments while meeting the loan’s obligations. The loan can still become due for another reason—for example, failure to meet occupancy, property-charge or property-maintenance requirements—so the surviving borrower should contact the servicer promptly rather than assume that no action is required.
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Eligible non-borrowing spouse
A spouse who was not named as a borrower is treated differently. Certain non-borrowing spouses may qualify for a deferral of due-and-payable status under HUD requirements, but eligibility is fact-specific. Marriage alone does not guarantee an automatic right to remain in the home or to receive the borrower’s loan payments. The servicer must determine whether the spouse meets the applicable program conditions.
What the servicer’s notice does
After learning that the last surviving borrower has died, the mortgagee reports the due-and-payable status to HUD when the HECM rules require it. HUD’s regulation at 24 CFR § 206.125 and Mortgagee Letter 2022-15 describe the notice to the estate, heirs or another person with legal title. HUD states that the mortgagee must provide a Due and Payable Notice within 30 days after notifying the Secretary that the HECM became due and payable because the last surviving borrower died.
Do not confuse two different 30-day periods
- Mortgagee notice period: HUD’s 30-day requirement concerns how quickly the mortgagee sends the Due and Payable Notice after notifying HUD.
- Heir response period: CFPB guidance says heirs receive 30 days after the Due and Payable Notice to buy, sell or turn over the home. CFPB also says the time may be extended for up to six months to sell the property or obtain financing.
These are separate clocks. The date printed on the notice—not the date of death alone—usually controls the heir’s response period. Ask the servicer to state the deadline in writing, explain how an extension is requested, and confirm whether an extension has been approved before the original period expires.
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The notice should explain the available ways to satisfy the debt, including repayment, a sale that meets the HECM minimum-price rule, and a deed in lieu of foreclosure. It should identify the servicer and the file or loan number. Keep the envelope, the notice and every later letter because they establish when communications were sent and what instructions were given.
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The three ways heirs can resolve the lien
| Option | What the heirs do | When it can make sense | Key checks |
|---|---|---|---|
| Repay and retain | Pay the required payoff amount and keep the property. | The family wants the home and has cash or can obtain financing before the deadline. | Written payoff statement, appraisal rule if the balance exceeds value, title authority, other liens and closing costs. |
| Sell the home | Market and close a sale, then use the proceeds to satisfy the HECM according to the servicer’s instructions. | The property’s value and sale prospects justify selling, or the heirs do not want to retain it. | Servicer-approved valuation, minimum sale price, extension, marketing time, commissions, taxes, repairs and junior liens. |
| Deed in lieu | Transfer the property to the lender instead of completing a sale, if the lender accepts the deed. | The estate cannot or does not want to sell and the servicer offers this route. | Who can sign, title condition, written acceptance, treatment of other liens and confirmation of the debt’s resolution. |
Repay the balance and keep the home
Heirs who want to retain the property can pay the full amount shown on the servicer’s payoff statement. The statement should specify the balance through a particular date, interest or other amounts included, the acceptable payment method, wiring instructions and the date through which the quote is valid. Do not rely on the balance shown on an old annual statement; interest and servicing charges can change the amount.
If the HECM balance is greater than the home’s value, the HECM program generally allows heirs who retain the home to pay the lesser of the full loan balance or 95% of the home’s appraised value. The appraisal and the servicer’s calculation control. Request the appraisal instructions and the exact figure in writing before arranging financing or signing a purchase agreement.
Sell the home
For a HECM sale, CFPB says heirs can sell for at least 95% of the appraised value when the outstanding balance exceeds the home’s value. The Due and Payable Notice should explain the minimum sale amount and the documents the servicer requires. A sale at an amount below the required threshold may be rejected unless the servicer approves another resolution under the program.
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Calculate expected net proceeds rather than comparing the loan balance with the asking price. Include real-estate commissions, transfer taxes, recording charges, required repairs, condominium or homeowners’ association amounts, property taxes, insurance, utilities and any other liens. Ask the title company to identify lien priority and provide the servicer with the proposed settlement statement if required.
Provide a deed in lieu
A deed in lieu transfers the property to the lender instead of selling it. It is not automatic: the servicer must agree, and the person signing must have authority to convey the property. Obtain a written agreement explaining when the deed is accepted, whether the HECM debt is treated as satisfied, what happens to other liens and who pays taxes, insurance, maintenance and recording costs through the transfer date.
When the debt exceeds the home’s value
HECMs include a nonrecourse structure backed by FHA mortgage insurance. Under the CFPB’s HECM explanation, when the loan balance is higher than the home’s value, heirs can sell for at least 95% of the appraised value; the program’s mortgage insurance covers the eligible residual debt. Heirs who keep the home can generally pay the lesser of the full balance or 95% of appraised value.
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A practical timeline for heirs
- Locate the loan documents. Find the note, mortgage or deed of trust, recent statements and the servicer’s contact information. Confirm whether the loan is a HECM and list every borrower and spouse named in the records.
- Notify the servicer. Send a death certificate or other requested proof and ask for the due-and-payable status, the written notice, the current payoff amount and the exact deadline. Use a trackable delivery method and keep copies.
- Establish authority. Determine whether probate, a trust administration, a small-estate procedure or another state-law process controls. Obtain letters testamentary, trustee certification, court orders or other title documents the servicer and closing agent require.
- Request the valuation process. Ask who orders the appraisal, who pays for it, whether an existing appraisal is acceptable, how long it remains valid and how the 95% calculation will be made for a HECM.
- Compare the three paths. Set the written loan balance beside the appraised value, likely net sale proceeds, available cash, financing costs, property expenses and any other liens.
- Choose a path before the deadline. If selling or financing will take longer than the initial 30-day response period, request the available extension in writing and ask for confirmation of the new expiration date. CFPB describes extensions of up to six months, but the servicer must explain what applies to this file.
- Close or convey exactly as instructed. Use the servicer’s payoff letter and approved wiring or closing instructions. Obtain a recorded release, satisfaction or other evidence that the HECM lien has been resolved, as appropriate.
Documents and questions to prepare
Documents commonly requested
- Death certificate for the last surviving borrower.
- Loan number, recent statement and the recorded mortgage or deed of trust.
- Probate appointment, trust documents, court order or other proof of authority to act.
- Evidence of title, including a deed or recorded transfer documents.
- Insurance, property-tax and homeowners’ association records.
- Purchase contract, appraisal and preliminary settlement statement when selling.
Questions for the servicer
- Is this loan a HECM or a proprietary reverse mortgage?
- Who is currently protected: a surviving co-borrower or a potentially eligible non-borrowing spouse?
- What date did the due-and-payable notice start, and what is the exact response deadline?
- What extension is available, how must it be requested, and when will approval be confirmed?
- What is the payoff amount through the proposed closing date?
- What appraisal or valuation does the servicer require, and who orders it?
- For a HECM, how is the 95% figure calculated and what sale documents are required?
- Will the servicer accept a deed in lieu, and what written release will follow?
Common mistakes that put the property at risk
Assuming the home passes automatically to the family
Inheritance of the property and payment of the lien are separate issues. A will or trust may determine who receives the property, but it does not erase the reverse mortgage. The person with legal title still must choose and complete a permitted resolution.
Treating every spouse as a co-borrower
A surviving co-borrower and an eligible non-borrowing spouse have different rights. Check the loan documents and the servicer’s eligibility determination before promising that a spouse can remain or continue receiving payments.
Waiting for a buyer before contacting the servicer
The response period can run while the family is deciding what to do. Contact the servicer immediately, obtain the notice and seek an extension before the deadline rather than waiting for a listing or offer.
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Using an informal value estimate
Online estimates, tax assessments and an agent’s opinion may help with planning but do not replace the appraisal or valuation required for the HECM calculation. The formal value and the servicer’s instructions determine the 95% amount.
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Sending money to unverified wiring instructions
Confirm payoff instructions through a trusted phone number for the servicer and the closing agent. Reverse-mortgage files involve estate documents and large payments, making them attractive targets for impersonation fraud.
When professional help is worthwhile
CFPB recommends that heirs seek assistance from a HUD-approved housing counseling agency or an attorney when they need help understanding the options and deadlines. Counseling can clarify HECM procedures; an attorney can address probate, title, non-borrowing-spouse status, other liens and state-law conveyance issues. A real-estate broker and title company can help estimate net sale proceeds, but they cannot change the servicer’s contractual deadline or appraisal requirement.
Ask any professional to distinguish HECM rules from proprietary-loan terms and to put material advice, deadlines and payoff figures in writing. If a notice appears inconsistent with the loan documents or a co-borrower or spouse is being treated as unprotected, raise the issue promptly with the servicer and obtain legal advice rather than ignoring the notice.
How to choose among repayment, sale and deed in lieu
Use five decision points: whether someone has a continuing occupancy or deferral protection; the written balance compared with the appraised value; cash or financing available within the deadline; realistic sale proceeds after costs and other liens; and the extension and documentation the servicer will approve. A family that wants the home but cannot finance the payoff may find a sale more practical. A property with little market value or difficult title issues may make a deed in lieu worth discussing. The correct choice is the one the estate can complete on time under the loan’s actual rules.
What happens to any remaining equity
After the HECM lien and approved closing costs are paid, any remaining sale proceeds generally belong to the estate or other person entitled under the title and estate documents. The servicer does not decide who inherits that equity. The title company, personal representative, trustee or probate court handles distribution under applicable law. If other liens exist, they may be paid before heirs receive proceeds, depending on priority and the closing arrangement.
Official rules to consult
The Consumer Financial Protection Bureau’s guidance, including its page titled “With a reverse mortgage loan, can my heirs keep or sell my home after I die?” (last reviewed August 28, 2026), explains the 30-day heir response period, possible extension and 95% HECM option. CFPB’s “What happens to my reverse mortgage when I die?” distinguishes surviving co-borrowers and non-borrowing spouses. HUD Mortgagee Letter 2022-15 addresses the Due and Payable Notice, while 24 CFR § 206.125 covers acquisition and sale of the property and 24 CFR § 206.55 addresses deferral for eligible non-borrowing spouses. These authorities describe HECM procedures; a proprietary reverse mortgage must be read according to its own contract.
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