When a reverse mortgage borrower dies, heirs need to notify the servicer, prove who has authority, request a written payoff, and pick a HUD-allowed path under 24 CFR 206.125. Jay Zayer, CRMP, is a reverse mortgage specialist at reversemortgage.coach. Furniture arguments can wait. The lien clock cannot. 24 CFR 206.27(c)(1) makes the loan due unless an Eligible Non-Borrowing Spouse starts a Deferral Period under 24 CFR 206.55.
Suppose a borrower — Ellis, 68, occupying a house in Yuma, Arizona — dies, and three children in three states start a group text about listing photos. The first job is the servicer, not Zillow. See heirs timeline for the dated windows. Stay here for the to-do list: who calls, what to request, what not to do.
A HECM remains FHA-insured. A death is not a public debt-forgiveness event.
Who has to call the servicer, and with what papers?
The executor, administrator, or successor trustee. A death certificate. Letters testamentary or a trust certification when the shop asks. Ellis’s Yuma welcome letter names the number. My refrigerator magnet does not process a death. See how the servicer works.
Ask for a written payoff, the due-and-payable date, and the list of allowed actions in 24 CFR 206.125(a)(2). Do not mail a guessed check. Interest and 0.50% annual MIP of outstanding balance still accrue through the payoff date (Mortgagee Letter 2017-12).
Counseling cost $125–$175 at origination. The HUD certificate already did its job. Heirs do not re-counsel to pay the loan off.
What are the actual choices heirs have, without mixing the subsections?
Keep the house by paying the outstanding balance under 24 CFR 206.125(a)(2)(i). Sell under 24 CFR 206.125(a)(2)(ii), where the Commissioner-set amount shall not exceed 95 percent of appraised value. Deed in lieu under 24 CFR 206.125(f) when walking away is honest. An Eligible Non-Borrowing Spouse is a different clock under 24 CFR 206.55. Do not mix a child’s keep plan with a spouse’s deferral.
Ellis’s leftover cash at origination sat in the mid-30s to low-50s percent of appraised value, depending on age and expected rate. That origination worksheet is not the heir payoff. Do not use the calculator as a death quote. Request the servicer’s figure.
2026 originations used the $1,249,125 cap in Mortgagee Letter 2025-22. Origination was capped at $6,000 under 24 CFR 206.31. Those facts do not reprint as heir invoices. The payoff does.
If residual income required a LESA, that set-aside was origination-only. Jay confirmed it cannot be modified after closing. Heirs cannot add a LESA as an estate patch.
What should heirs not do in the first week?
Do not rent the house to “buy time.” Do not drop hazard insurance. Do not assume 95% of a family appraisal reconveys a keep-file. Do not ignore HOA dues under 24 CFR 206.205. Arizona Yuma has no Civil Code 1923.2(k) in this story; that statute was origination. California Fullerton estates still face the same 24 CFR 206.125 federal clock.
A second geography: a 81-year-old in Fullerton whose California living trust names a successor trustee. Authority may be faster. The keep price is still the outstanding balance.
An adjustable HECM still accrued at 1-month CMT plus lender margin until payoff. Expected rate had already been rounded to 0.125% under 24 CFR 206.3 when Ellis originated. While Ellis was alive, a complete refinance was still the ~30-day average I quote. After death is a servicing calendar, not that average.
How do siblings split authority when there is no will?
Intestate estates wait for an administrator. Until letters issue, the servicer may not take instructions from the loudest child. That wait does not freeze 24 CFR 206.125. It is why Hale’s Fullerton trust was the better origination story and why Ellis’s Yuma group chat is a stall. Designate one speaker. Get a death certificate. Ask for the written payoff. Then argue furniture.
Property charges still have to be kept current while the estate decides. Dropping insurance is how a due-and-payable occupancy-or-charges problem stacks on top of death. 24 CFR 206.205 did not retire because the borrower died. If an Eligible Non-Borrowing Spouse exists, that is a 24 CFR 206.55 conversation, not a child’s keep plan. I will help a family read the notice. I will not referee a will contest.
Who should not treat a group text as the estate plan?
This path does not help a sibling set that wanted listing photos before a payoff letter. Occupancy by an heir does not continue 24 CFR 206.39 for the dead borrower. I work with multiple lenders. I will help a family read a notice. I will not originate a HECM for a household whose only plan was “the kids will figure it out later” without this conversation up front.
If leftover cash after 2.00% of claim amount was decorative at origination, heirs inherit a thin story. The to-do list is still the same. Call the servicer. Then choose keep, sell, or deed-in-lieu with the real number.
Ellis’s children in three states can split furniture later. They cannot split the first phone call. One person with authority asks the servicer for a written payoff and the 24 CFR 206.125 menu. That is the first-week job. Listing photos are not the first-week job. Occupancy by a child does not continue the HECM. A death certificate and letters testamentary are how the Yuma shop knows who may speak. A group text is not. 24 CFR 206.27(c)(1) already made the loan due. The to-do list is notify, quote, then choose keep, sell, or deed-in-lieu with the real number.