A reverse mortgage due-and-payable process starts when an event in 24 CFR 206.27(c) occurs — death of the last borrower, conveyance, failure to occupy as a principal residence, or failure to pay property charges, among the listed items. Jay Zayer, CRMP, is a reverse mortgage specialist at reversemortgage.coach. The servicer notifies HUD and then the estate under 24 CFR 206.125. Underwater value is not, by itself, that event.
A common scenario: Greer, 72, occupies a house in Mesa, Arizona, and a relative saw a statement above a Zillow number and asked whether HUD was “calling the loan.” No. See when balance exceeds value. Stay here for the due-and-payable chain: what triggers it, who is notified, what happens next.
A HECM remains FHA-insured. Due-and-payable is not a public eviction lottery.
Which events actually start 24 CFR 206.27(c), and which rumors do not?
Death of the last borrower, unless an Eligible Non-Borrowing Spouse starts deferral under 24 CFR 206.55. Sale or other conveyance. Occupancy failure under 24 CFR 206.39. Unpaid taxes or insurance that servicing treats as a property-charge default under 24 CFR 206.205. A low appraisal on a statement is not on the list. A FICO drop is not on the list.
Greer’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 cell does not decide due-and-payable. The calculator does not call the loan. Do not interpolate HUD rows.
Counseling cost $125–$175 at origination. The HUD certificate lasted 180 days. It does not restart because a statement grew.
What does the servicer actually do after a triggering event?
Notify the Commissioner as 24 CFR 206.125(a)(1) requires. Then notify the borrower, Eligible Non-Borrowing Spouse, estate, and heirs as applicable. Those parties get a dated window to pay, sell, deed in lieu, or cure a curable condition. Request the notice in writing. Do not rely on a voicemail summary.
Mortgagee Letter 2017-12 already charged 2.00% initial MIP of claim amount at origination. Annual MIP of 0.50% of outstanding balance still accrues until payoff. 2026 files used the $1,249,125 cap in Mortgagee Letter 2025-22. Origination was capped at $6,000 under 24 CFR 206.31.
If a LESA was funded, it still follows the origination schedule until the loan ends. Jay confirmed it cannot be added later as a due-and-payable patch.
A second geography: a 69-year-old in San Bernardino whose California taxes went unpaid. Same 24 CFR 206.27(c) property-charge path. Civil Code 1923.2(k) is not a cure. That statute was origination.
How is foreclosure diligence different from the first notice?
Foreclosure diligence under 24 CFR 206.125(d) generally starts within six months of the 24 CFR 206.129(d)(1) due date, unless HUD grants extra time or state or bankruptcy law blocks it. Communication is how families get extra time that actually exists. Silence is how diligence runs. Arizona Mesa probate does not silently cancel HUD’s calendar.
An adjustable HECM still accrues at 1-month CMT plus lender margin until payoff. 24 CFR 206.3 already rounded expected rate to the nearest 0.125% when Greer closed. A living refinance I still describe as averaging near 30 days once the file is complete. Due-and-payable is a later servicing clock.
If Greer’s heirs keep the Mesa house, 24 CFR 206.125(a)(2)(i) still names the outstanding balance. A due letter does not rewrite that subsection into a 95% keep price.
Can a living borrower cure occupancy after the letter arrives?
Some 24 CFR 206.27(c) events are curable. Death is not. Occupancy failure sometimes is, when the borrower still can and will re-occupy as a principal residence under 24 CFR 206.39 and the servicer agrees the condition is cured. Unpaid taxes sometimes are, when the arrears are paid and 24 CFR 206.205 is satisfied. Ask which event the notice named. Do not assume a due letter is foreclosure next week, and do not assume every letter is a paperwork nothing.
Greer’s Mesa relative who saw an underwater statement still does not have a due-and-payable event. Value is not on the 24 CFR 206.27(c) list. Communication is how a curable file gets cured. Silence is how 24 CFR 206.125(d) diligence runs toward foreclosure. I will originate when borrowers understand that list. I will not originate for a household that intends to ignore mail.
Who should not ignore a due-and-payable letter because “reverse mortgages never get called”?
This path does not help a household that filed the envelope unopened. Occupancy is still 24 CFR 206.39 while Greer is alive. I work with multiple lenders. I will originate when duties are understood. I will turn away a “they never call these loans” plan whose only thesis is a seminar myth.
If leftover cash after 2.00% of claim amount was a token, the due-and-payable process is one more reason the origination should have been skipped. While the loan exists, name the 24 CFR 206.27(c) event. Then act on the notice.
Greer’s Mesa relative should name the 24 CFR 206.27(c) event in the letter, not a Zillow gap. If the event is curable, cure it in writing. If it is death, stop looking for a cure and start the 24 CFR 206.125 menu. Underwater value remains a statement fact, not a call of the loan. The servicer, not HUD’s consumer website, issues the dated notice. Keep the Mesa welcome letter. A refrigerator magnet from origination does not start or stop 24 CFR 206.125. If Greer is still alive, occupancy and property charges are how she stays off that list.