The letter shows up faster than you expect. Sometimes before the thank you cards go out. It uses the phrase "due and payable," it names a number that makes your stomach drop, and it reads like the house is already gone. It isn't. Families hand over homes with real money still in them every year, almost always because nobody told them two things.
That's the first thing. A reverse mortgage backed by the federal government is what's called a non recourse loan. Your family can never owe more than the home is worth. Not the estate, not the kids, not anybody.
The second thing is that you have more time than that letter makes it feel like you have. Real deadlines, yes. But months, not days.
I'm Kady. I help Florida families through inherited houses, hardship, and the decisions nobody gets to practice for. I'm not a lender and I don't work for one. I wrote this because I've watched too many people sign a house back over in week three, exhausted and scared, and find out later there was equity in it. No pressure. Just someone in your corner.
When the last borrower dies, the reverse mortgage becomes due and payable. It does not mean the lender owns the house. Title stays with the estate, and the family chooses what happens. Because the loan is non recourse, heirs who want to keep the home repay the loan balance or 95 percent of the appraised value, whichever is less, and any shortfall is covered by mortgage insurance rather than by your family. Respond to the notice within 30 days to protect your options. The servicer generally must start foreclosure within six months, but HUD allows up to two 90 day extensions when you're actively selling or arranging financing, which can stretch the window to about a year. And if the home is worth more than the balance, the leftover money belongs to your family.
- Nobody in your family owes the shortfall. These loans are non recourse. That's the whole design.
- 95 percent is the ceiling. If the balance is higher than the home's value, that's what it takes to keep it.
- Leftover equity is yours. The lender is owed a balance, not a house.
- Answer the letter within 30 days. Responding preserves options. It doesn't commit you to anything.
- Extensions exist. Two of 90 days each, when you're genuinely working on a sale.
01What That Letter Actually Means
Somewhere in the paperwork your parent signed, there was a line saying the loan comes due when the last borrower dies, sells, or permanently moves out. That's the whole mechanism. They borrowed against the house and lived there without payments, and now the balance gets settled.
The servicer is required to notify the estate that the loan is due and payable, and they do it on a schedule, not out of malice. The tone is legal because it has to be. That's not the same as a threat.
😕 What the letter feels like
They want the house. We owe an enormous number we don't have. We have days, not months. There's nothing to decide, only paperwork to sign.
✅ What is actually true
Title is still in the estate's name. The loan is owed, not the property. There are four ways this can end and your family picks one. No monthly payments come due while you work it out.
Do open it, though. Ignoring it is the one move that costs you everything, because the clock runs from the date of death whether anybody responds or not.
02The Number Nobody Tells You
Short answer: heirs pay the lesser of the full loan balance or 95 percent of the home's current appraised value. That's federal rule, confirmed by HUD and the Consumer Financial Protection Bureau.
It matters most in exactly the situation that frightens people, which is when the balance has grown past what the house is worth.
| Situation | Loan balance | Home appraises at | What your family pays to keep it |
|---|---|---|---|
| House worth more than the loan | $180,000 | $300,000 | $180,000, and roughly $120,000 of equity stays with the family |
| House worth about the same | $250,000 | $255,000 | $250,000, with a little left over after costs |
| Loan grown past the value | $300,000 | $250,000 | $237,500, which is 95 percent of value. The other $62,500 is not your family's debt. |
Read that third row again, because it's the row that changes decisions. The shortfall is covered by the mortgage insurance your parent paid for over all those years. It was built into the program on purpose, precisely so a family wouldn't inherit a debt bigger than the house.
And the first row is the one people forget entirely. If the home is worth more than the balance, that difference is your family's money. Selling and paying off the loan puts it in your pocket. Handing the keys back does not.
03The Real Timeline
Short answer: respond within 30 days, expect a six month window, and know that two 90 day extensions exist.
The notice
Servicer notifies the estate
30 days
Respond and state your intent
Early on
Appraisal and payoff figure
6 months
Resolve, or foreclosure begins
Extensions
Two, of 90 days each
Up to a year
If you keep documenting progress
Two details make a real difference here.
First, the clock generally runs from the date of death, not from the day the servicer found out or the day you opened the envelope. Waiting to tell them doesn't buy you time. It spends it.
Second, the extensions aren't automatic and they aren't given to people who go quiet. HUD expects documentation that you're genuinely working on it. A listing agreement, a signed contract, a probate filing, a loan application. Families who stay in contact and send paper generally get the time. Families who avoid the calls generally don't.
Got the letter and don't know what it's worth? Send me the address and what the payoff says. I'll help you work out whether there's equity here worth protecting, and what your realistic window looks like. Costs nothing. I'm Kady: call or text 904-400-2131, or email kady@helpinghandhomesfl.com.
04Your Four Options
That's genuinely all there are. Pick the one that fits your family.
If the house needs work and you're wondering whether that rules out a sale, I went through exactly what changes a number and what doesn't in some people see a distressed property, I see possibilities.
05If Someone Is Still Living There
This one deserves care, because getting it wrong puts a widow or widower out of a house they may be entitled to stay in.
If both spouses were borrowers on the loan, nothing happens when the first one dies. The surviving borrower stays, and the loan doesn't come due until they die or move out permanently.
If the surviving spouse was not on the loan, they may still be able to stay. HUD created protections for a qualifying Eligible Non Borrowing Spouse, allowing repayment to be deferred while they continue to live in the home and keep meeting the conditions. Older loans work differently, and for some there's a voluntary process a lender may or may not participate in.
Call the servicer, tell them there's a surviving spouse living in the home, and ask specifically whether a deferral applies. Then call a HUD approved housing counselor at 800-569-4287 and get a second read on the answer. This is also a fair reason to spend money on an attorney, because the difference between qualifying and not qualifying is somebody's home.
Do not let anyone rush a surviving spouse into signing anything before that question is answered clearly and in writing.
06The Mistakes That Cost Families the Most
I've seen all four of these. The first one is by far the most expensive.
😰 The costly mistake
Handing the house back without ever finding out what it's worth. If there was equity, your family just gave it away.
💚 What to do instead
Get the payoff figure in writing and get a value on the home. Two phone calls. Do them before you decide anything.
😰 The costly mistake
Not telling the servicer for months, hoping it goes quiet. The clock started at the date of death regardless.
💚 What to do instead
Notify them, respond in writing, and keep a record of every call with a date and a name.
😰 The costly mistake
Letting the insurance lapse or the taxes go unpaid on a house nobody is living in.
💚 What to do instead
Keep the property insured and the taxes current while you resolve it. A vacant uninsured house in Florida is a disaster waiting for weather.
😰 The costly mistake
Assuming the debt follows the family. People pay balances out of their own savings that they never owed.
💚 What to do instead
Remember the loan is non recourse. Nobody's wages, savings, or other property are on the line for a shortfall.
If probate is also part of your situation, and it usually is, I walked through the whole thing in my writing on Florida homes and life changes and in the inherited property guide on this site.
"Your mom took that loan so she could stay in her house. That was the point of it, and it worked. What happens now is just arithmetic, and arithmetic is a lot easier to face than grief. You don't have to have all the answers when you call me. You don't have to have opened all the mail. You just need somebody who can help you find the right option for your family's situation, and there is almost always one worth more than the letter suggests."
Find out what it's worth before you decide anything.
Tell me what the payoff says and where the house is. I'll help you understand whether there's equity to protect, what your window really looks like, and who to call. If selling turns out to be the right move, I'll give you a fair, no obligation cash offer that works inside your deadline.
Get My Cash Offer Just Talk to Kady07Questions People Ask Me
Do we have to pay off the whole balance?
No. An FHA insured reverse mortgage is non recourse. Heirs who want to keep the home repay either the full balance or 95 percent of the home's current appraised value, whichever is less. If the balance has grown past the home's value, the difference is covered by mortgage insurance and is not your family's debt.
How long do we have?
Respond to the due and payable notice within 30 days to preserve your options. The servicer generally has to begin foreclosure within six months of the borrower's death unless HUD approves more time, and HUD allows up to two 90 day extensions when you document that you're actively selling or arranging financing. That can stretch the window to roughly a year.
If the house is worth more than the loan, do we keep the difference?
Yes. The lender is owed a balance, not a house. Sell it, pay the loan, and what's left belongs to the estate and passes to the heirs. This is exactly why you should get a value before you consider handing the property back.
Can a surviving spouse who wasn't on the loan stay?
Possibly. A surviving spouse who qualifies as an Eligible Non Borrowing Spouse may be able to defer repayment and remain in the home while the conditions continue to be met. Older loans have different rules and some involve a voluntary process not every lender participates in. Call the servicer immediately and get a HUD approved counselor or an attorney involved.
Does the lender own the house the moment they die?
No. Title stays with the estate. The loan becomes due and payable and the family chooses what happens next. No monthly mortgage payments come due while you resolve it, though property taxes, insurance, and upkeep still matter.
What happens if we just do nothing?
The servicer forecloses. Because the loan is non recourse nobody gets chased for a shortfall, but any equity above the balance is likely lost along with the house. Doing nothing is the only option here that can cost your family money it was entitled to.
A gentle note: I'm a Florida home buyer, not an attorney, accountant, or housing counselor, and this article is general information rather than advice for your situation. It describes FHA insured HECM reverse mortgages, which are the most common kind. Privately issued reverse mortgages can have different terms, older loans follow different rules, and HUD guidance changes over time. The figures in the table are illustrative examples, not your numbers. Please confirm everything with the loan servicer in writing, and talk with a licensed Florida attorney and a free HUD approved housing counselor before making a decision about the property.
- Consumer Financial Protection Bureau: what happens to my reverse mortgage when I die, and heirs' options
- U.S. Department of Housing and Urban Development: inheriting a home secured by an FHA insured HECM
- Congressional Research Service: HUD's reverse mortgage insurance program, report R44128
- HUD Mortgagee Letter 2022, number 15: notification requirements when a HECM becomes due and payable
- National Reverse Mortgage Lenders Association: what to do when your loan is due
- HUD approved housing counselors: free guidance, at 800-569-4287