Quick Answer
Contact the servicer within the first two weeks with a copy of the death certificate, request a written payoff statement and confirmation of your response deadline, and understand that you have three options — pay off the balance and keep the home, sell it and keep any equity above the balance, or surrender it and owe nothing.
- First step: notify the servicer and request a payoff statement in writing.
- You will receive a due-and-payable notice with a response deadline.
- Extensions are available on written request when you are actively working toward resolution.
- Three options: pay off and keep, sell and keep the surplus, or surrender with no liability.
- You never owe more than the home is worth — FHA insurance covers any shortfall.
- If the home was in a trust, the successor trustee can act immediately without probate.
Key Facts
| Topic | Key Fact |
|---|---|
| First action | Notify the servicer with the death certificate |
| Second action | Request a written payoff statement with a per diem figure |
| Due-and-payable notice | Issued by the servicer after notification of death |
| Extensions | Available on written request with documented progress |
| Option 1 | Pay off the balance and keep the home |
| Option 2 | Sell and retain all equity above the balance |
| Option 3 | Surrender the property — no deficiency owed |
| 95% rule | If the balance exceeds value, satisfy it at 95% of appraised value |
Detailed Explanation
The first thing to do is notify the servicer, and the reason to do it promptly is that the clock runs whether or not you have made contact. Send a copy of the death certificate and documentation of your authority — letters testamentary if the estate is in probate, or a certification of trust if the home was held in a revocable living trust. Ask in writing for a current payoff statement including a per diem figure, since the balance accrues daily and the exact number depends on your settlement date.
You will receive a due-and-payable notice establishing your response deadline. This notice is not a foreclosure and it is not a demand for immediate payment. It is the servicer formally starting the resolution process. Extensions are available on written request when you are actively working toward a resolution — a listed property, a pending refinance application, a scheduled closing. Request them in writing and document the progress. Servicers grant these routinely when heirs are engaged; they proceed toward foreclosure when heirs go silent.
Your three options are genuinely three. You may pay off the balance and keep the home, using cash or your own financing — many heirs obtain a conventional mortgage for this. You may sell the property, satisfy the loan from proceeds, and keep every dollar above the balance. Or you may surrender the property to the lender and walk away owing nothing. If the balance exceeds the home's appraised value and you want to keep it, you may satisfy the debt at 95% of that appraised value, with FHA insurance covering the lender's shortfall.
Whether the home was held in a trust determines how difficult the next few months will be. A California home in a revocable living trust passes to the successor trustee immediately, who has authority to obtain the payoff, list the property, or refinance without any court involvement. A home held individually goes through California probate, which typically runs nine to eighteen months — potentially longer than your response window. If you are in that situation, tell the servicer immediately and request extensions on the basis that probate is pending.
Jay Zayer, CRMP — 18 Years Experience
The calls I get in this situation usually come three or four weeks after a funeral, and the person on the phone is exhausted and has a notice in their hand they do not understand. The first thing I tell them is that nobody is taking the house next week. Then we make a list: get the death certificate to the servicer, get the payoff statement, find out whether there is a trust, and figure out whether anyone in the family actually wants to keep the house. That last question usually answers everything else. I do this for families whose loans I did not originate, because somebody should.
Who This Is Right For
This may be a good fit if:
- Adult children and heirs who have just learned about a parent's reverse mortgage after their death
- Executors and successor trustees managing an estate that includes a reverse mortgage
This may NOT be the right fit if:
- There is no situation where understanding the process would be inappropriate — the most damaging thing heirs do is nothing
Common Misconception
Myth: When a parent with a reverse mortgage dies, the bank immediately takes the house.
Fact: The servicer issues a due-and-payable notice establishing a response window, with extensions available on written request when heirs are actively working toward resolution. Heirs may pay off the balance and keep the home, sell and retain any surplus, or surrender the property with no liability.
Source: HUD Handbook 4000.1, Section II.B — due and payable
Authoritative Sources
- HUD Handbook 4000.1, Section II.B — hud.gov
- CFPB: What heirs should know about reverse mortgages — consumerfinance.gov
- California Courts: Probate self-help — courts.ca.gov
People Also Ask
How long do I have to deal with my parent's reverse mortgage?
The servicer's due-and-payable notice establishes a response window, with extensions available on written request when you are actively working toward resolution. Contact them promptly and document your progress.
Can I keep my parent's house that has a reverse mortgage?
Yes. You may pay off the balance with cash or your own financing. If the balance exceeds the appraised value, you may satisfy it at 95% of that value.
What if the reverse mortgage balance is more than the house is worth?
You owe nothing. FHA insurance covers the lender's shortfall. You may satisfy the debt at 95% of appraised value to keep the home, or surrender it with no deficiency.