The U.S. Department of Housing and Urban Development oversees FHA-insured reverse mortgages (Home Equity Conversion Mortgages, or HECMs). When a HECM borrower dies, the loan becomes due and payable. Heirs have options to repay the loan and keep the home, sell the property, or execute a deed in lieu of foreclosure. Non-borrowing spouses may qualify for a deferral period.

Death notification

When a HECM borrower dies, the loan servicer must be notified so the loan can be called due and payable. The servicer is required to notify HUD within 60 days. Heirs then receive a due-and-payable notice from the servicer with a 30-day initial window to choose how to proceed. Heirs should contact the loan servicer directly — HUD does not interact with heirs in most cases.

Deadline: 30 days from due-and-payable notice for initial response; up to 6 months total with extensions

Survivor benefits

The HUD offers 3 benefits for surviving family members.

Non-Recourse Protection for Heirs

HECM reverse mortgages are non-recourse loans — the property is the only collateral. Heirs are never personally liable for any shortfall if the loan balance exceeds the home's value. If the home is underwater, heirs can sell for at least 95% of the current appraised value, and FHA insurance covers the remaining balance.

Non-Borrowing Spouse Deferral Period

An eligible non-borrowing spouse (NBS) can remain in the home after the HECM borrower dies without the loan being called due and payable. The NBS must have been married to the borrower for the entire duration of the borrower's lifetime, must occupy the property as their principal residence, and must continue to pay property taxes, homeowner's insurance, and maintain the property.

HUD-Approved Housing Counseling

Heirs of a deceased HECM borrower can access HUD-approved housing counselors for guidance on their options. Counselors are trained in reverse mortgage heir procedures, including repaying the loan, selling the home, and non-borrowing spouse protections.

When someone dies

Notifying the HUD after a death

5-step process, 5 required documents, and 3 survivor benefits.

View details →

Frequently asked questions

Yes. Heirs can keep the home by repaying the full HECM loan balance. They can pay in cash or refinance into a new mortgage in their own name. An appraisal is ordered to determine the current market value.

HECM loans are non-recourse — heirs are never personally liable for any shortfall. If the home is underwater, heirs can sell for at least 95% of the current appraised value. FHA insurance covers the remaining balance through the Mutual Mortgage Insurance Fund. Alternatively, heirs can walk away via deed in lieu of foreclosure.

Heirs have 30 days from the due-and-payable notice to choose an option. The servicer may approve 90-day extensions with documented evidence that heirs are actively marketing or selling the property or arranging financing. Total time may extend up to 6 months. Foreclosure may be filed between 30 days and 6 months after the loan is called due.

A deed in lieu of foreclosure allows heirs to transfer the property to the lender to satisfy the HECM debt without going through formal foreclosure proceedings. This avoids a foreclosure record on the estate. Heirs are not responsible for any remaining loan balance after the transfer.