reverse mortgage how long after death

Reverse mortgages are complex and, even after attending a required counseling session before getting one, many borrowers still don’t completely understand all the terms and requirements of this kind of loan.

Following the death of the borrower, the reverse mortgage loan servicer will send a Condolence Letter to all known heirs. This letter provides information to the heirs and borrower’s estate about the options available to them for satisfying the reverse mortgage loan balance.

When a person with a reverse mortgage dies, the heirs can inherit the house. But they won’t receive title to the property free and clear because the property is subject to the reverse mortgage. For example, say the homeowner dies after receiving $150,000 of reverse mortgage funds.

A reverse mortgage loan is a financial instrument that allows seniors access a portion of the equity. Seniors must be a minimum age 62, live in their own home, and have equity in it.

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The borrower can be away from the home-for example, in a nursing home facility-for only up to 12 months due to physical or mental illness; however, if the move is permanent, then the loan becomes due and payable. The borrower fails to meet the obligations of the mortgage.

A reverse mortgage only "ends" when both the borrower and spouse have died or permanently moved out of the residence. If the borrower dies but the spouse still lives in the home, the reverse mortgage.

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The time frame for repayment, if the heirs receive all time extensions allowed by the Department of Housing and Urban Development, is one year from the time the loan becomes due. Specifications on time extensions are provided by HUD in its handbook. Because a reverse mortgage is a negative amortized loan, the loan balance grows over time.

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