Inherited a house with a reverse mortgage? The 30-day notice and your choices

A reverse mortgage lets an older owner borrow against the house and make no monthly loan payments while they live there. When the last borrower dies, the loan comes due, and the heirs receive a letter with a short deadline. Here is what the federal rules say, and how to use the time.

These rules cover the FHA-insured reverse mortgage, called a Home Equity Conversion Mortgage, or HECM. Check the loan papers or the lender's letter to see which kind you have. A private reverse mortgage follows its own contract.

The due and payable notice

Under 24 CFR 206.125(a), after the last borrower dies, the lender tells HUD within 60 days that the loan is due and then sends a notice to the estate and the heirs that the loan is "due and payable." The notice gives you 30 days from its date to choose one of these:

1. Pay the loan in full, with interest, insurance and lender advances.
2. Sell the house and send the net sale money to the lender.
3. Give the lender a deed in lieu of foreclosure, which means you sign the house over to the lender.
4. Another action HUD allows by notice.

Open the letter the day it arrives. Write down its date. Call the lender and tell them in writing that you plan to sell, if that is your choice.

Who gets the notice

Section 206.125(a)(2) says the lender sends the notice to the borrower, an Eligible Non-Borrowing Spouse, the borrower's estate and the borrower's heirs, as applicable. An Eligible Non-Borrowing Spouse is a spouse who was not on the loan but may be allowed to stay in the house for a deferral period under the HUD rules. If such a spouse lives in the house, ask the lender in writing whether the deferral applies before anyone plans a sale.

You do not owe the balance personally

24 CFR 206.27(b)(8) says "the borrower shall have no personal liability for payment of the outstanding loan balance." The lender can collect only through a sale of the house, and it "shall not be permitted to obtain a deficiency judgment" if it forecloses.

So if the loan is bigger than the house is worth, the heirs do not pay the difference from their own money.

The 95 percent rule

Interest on a reverse mortgage adds up over the years, so the balance can grow past the house's value. 24 CFR 206.125(a)(2)(ii) deals with that case. The heirs may sell for at least an amount HUD sets by notice, and that amount may not be more than 95 percent of the appraised value. The lender then releases the loan, as long as all the net sale money goes to it and there are no other liens (206.125(c)).

When the loan is due and payable, the lender orders the appraisal and pays for it, and is repaid from the sale (206.125(b)).

The appraisal

The 95 percent figure is measured against an appraisal. Section 206.125(b) says:

• The lender has the house appraised by an appraiser on the FHA roster, or another appraiser HUD accepts.
• The appraisal is done no later than 30 days after a request made for a possible sale.
• When the loan is due and payable, the lender pays for it and is repaid from the sale.
• Before any foreclosure sale, the house must be appraised again, with a date no more than 30 days before that sale.

Ask for the appraisal in writing as soon as you decide to sell. You need the number to know the lowest price the lender will accept.

Closing costs on the sale

The same rule limits what can come out of the sale before the lender is paid. Under section 206.125(a)(2)(ii), closing costs may not exceed the greater of 11 percent of the sales price or a fixed dollar amount that HUD sets by notice. When you sell to BIMINIO, we pay the closing costs.

What to ask the lender in writing

A phone call leaves no record. Send the lender a short letter or email that asks for each of these, and keep a copy:

• The date of the due and payable notice, so you know when the 30 days end.
• The payoff figure for the loan.
• The appraisal, and the date it was done.
• Whether a spouse who was not on the loan qualifies as an Eligible Non-Borrowing Spouse.
• A named person at the lender who will take your signed contract and closing date.

Written answers let the title company and every heir work from the same numbers.

A checklist for heirs

1. Find the loan papers and the lender's letter. Write down the date of the notice.
2. Within 30 days of that date, tell the lender in writing what you plan to do.
3. Keep the house insured and secured while it is empty.
4. Ask for a payoff figure and, if you will sell, an appraisal.
5. Get a written offer and compare it with the payoff or with 95 percent of the appraisal.
6. Send the signed contract and the closing date to the lender.

How much time you have in total

The 30 days is the time to tell the lender your choice. The lender then has a deadline of its own. Section 206.125(d) says it must start foreclosure within 6 months of the due date, or within extra time HUD approves. If you are selling, keep the lender updated with a signed contract and the closing date.

If there is money left over

When the house is worth more than the loan, a sale pays the lender in full and the rest goes to the estate. That money is part of the inheritance, so the estate's process decides who signs and who is paid. Our posts on inherited houses in Florida and in Arizona explain those steps.

Selling quickly and as is

Heirs who live far away may not want to manage repairs and showings while a lender's deadline runs.

BIMINIO buys houses as is in Tampa, Miami, Orlando, Lakeland, Phoenix and Glendale. A cash offer is below full market value, and in return there are no repairs, no clean-out and no buyer's loan to wait for. You get a written offer within 24 hours, with the comparable sales we used. A licensed title company gets the payoff from the reverse mortgage lender and pays it at closing, on the date you pick from 7 to 35 days out. We pay the closing costs.

See our page for inherited houses.

Sources

• Code of Federal Regulations, 24 CFR 206.125: acquisition and sale of the property, read November 8, 2026
• Code of Federal Regulations, 24 CFR 206.27: mortgage provisions, read November 8, 2026

Situations this helps with

• Inherited a house or probate

Guides

• What happens at closing
• Property taxes when you sell
• Selling an inherited house

This post is general information. BIMINIO does not give legal, tax or financial advice.