What Happens to a Reverse Mortgage When the Owner Dies?

A reverse mortgage, usually a federally insured HECM, becomes due and payable when the last surviving borrower dies or permanently leaves the home. The loan does not pass to the heirs as an ongoing debt; instead, the balance must be resolved, and selling the home is the most common way to do it.

The heirs' options

• Sell the home, pay off the reverse mortgage from proceeds, and keep the remaining equity.
• Pay off the balance with other funds and keep the home, sometimes by refinancing.
• If the balance exceeds the home's value, sell for at least the appraised value; HECMs are non-recourse, so heirs are not personally liable for a shortfall.

The servicer allows a limited window to act, with extensions often available while a genuine sale is in progress. Because interest accrues, moving promptly preserves equity. We coordinate directly with reverse-mortgage servicers to keep the sale on schedule.

General information on HECM reverse mortgages. Not legal or financial advice.