A recorded lis pendens typically stops reverse mortgage eligibility until it is released. Jay Zayer, CRMP, is a reverse mortgage specialist at reversemortgage.coach. A Home Equity Conversion Mortgage needs insurable first-lien title under 24 CFR 206.35. A lis pendens is recorded notice that a lawsuit claims an interest in the property. Title will not pretend that notice is gone.
Take a Stockton homeowner named Rhea, 70, whose sibling filed a partition action and recorded a lis pendens. The house is otherwise a fine HECM candidate: she occupies, she is 62, the taxes are current. None of that clears Schedule B. The file waits on a recorded release, a dismissal, or a judgment that actually ends the claim.
A HECM is FHA-insured. It is not a government benefit and it is not a lawsuit-settlement desk.
Does a recorded lis pendens make the house HECM-ineligible until it is released?
Yes, for a standard first-lien HECM I will originate. 24 CFR 206.35 requires mortgagors to hold the entire property. A pending action that claims title, occupancy, or a right to force a sale is a cloud. The title company, not a kitchen-table peace treaty, decides when the cloud is gone.
This page is the recorded notice. The sibling judgment lien page is a money judgment that can sometimes be paid at closing. Title errors is a vesting typo. A lis pendens is live litigation. Do not mash them together.
After the release, leftover cash still models in the mid-30s to low-50s of value after age and expected rate. I will not quote a live cell. Run the calculator after the release records, not while the case is on the docket.
A recorded notice does not discount the 2.00% initial MIP of claim amount under Mortgagee Letter 2017-12. Whenever a lis pendens finally clears, 2026 claim amount is still capped at $1,249,125 per Mortgagee Letter 2025-22. Origination is still capped at $6,000 under 24 CFR 206.31. A lis pendens does not discount MIP. It can prevent anyone from ever charging it.
Can I close if the lawsuit is “almost settled” but the notice is still of record?
No. “Almost” is not a recorded instrument. A stipulation sitting in email is not a release. An oral promise from a sibling in Stockton is not a release. The county recorder has to show the lis pendens is withdrawn or the case is over in a form title will insure.
If the lawsuit later becomes a money judgment, 24 CFR 206.36 can still limit paying that non-HECM lien from HECM proceeds unless the lien has been in place more than twelve months or cash to the borrower is $500 or less. That is a later file. Today the stop is the notice itself.
Counseling still costs $125–$175. The HUD certificate lasts 180 days. California still runs Civil Code 1923.2(k)‘s seven-day post-counseling pause once a lis pendens file can actually apply. A Stockton partition that will take six months will eat that certificate.
If residual income requires a LESA, that set-aside is still origination-only — and it is irrelevant until title can close. A LESA does not settle a lawsuit.
A second geography: a 64-year-old in Tucson with a quiet-title lis pendens after a forged deed scare. Arizona recording looks different. HUD’s first-lien requirement does not. The notice still has to come off.
How is a lis pendens different from a money judgment that can be paid at closing?
A judgment has a dollar figure title can demand. A lis pendens advertises a fight about the land. Partition, quiet title, specific performance, and some family-law claims do not have a simple payoff. Paying “something” at closing does not remove a notice the plaintiff will not withdraw.
An adjustable HECM, once it exists, still accrues at 1-month CMT plus lender margin. Expected rate still rounds to 0.125% under 24 CFR 206.3. The lawsuit does not freeze either index. It prevents origination.
Jay’s about-30-day refinance average assumes a complete file, and a live lis pendens is not complete. That is not a guarantee. A live lis pendens means the file is not complete.
Who should not start counseling while a quiet-title or partition action is pending?
This path does not help a household that wants me to close and “let the lawyers finish later.” I will not. It does not help a household that hides the notice and hopes the title search misses it. It will not miss it.
Heirs who later keep a house that finally closes repay the outstanding loan balance under 24 CFR 206.125(a)(2)(i). Winning or losing the lawsuit does not rewrite that subsection.
Rhea’s partition case may settle. Until the recorder shows a withdrawal, I treat the Stockton house as uninsurable for a first-lien HECM. A stipulated judgment that still has to be signed is not a recorded release. Pay the lawyer to finish the paperwork before you pay a HUD counselor. I work with multiple lenders. I will originate after the lis pendens is released and title is insurable. I will turn away a pending action whose owner wanted the line this month.