Chron.com: What Reverse Mortgage Heirs Need to Know

What happens following the death of a reverse mortgage borrower is a critical, yet easily misunderstood process that can puzzle heirs concerned about what becomes of their parents’ home once the loan is due.

A recent article from the Houston Chronicle (Chron.com) provides some insight about how to pay off the reverse mortgage following the death of the borrowing spouse or spouses.

“The first thing adult children should know about HECMs is that these reverse mortgages technically become due and payable when the borrower dies,” the article states. 

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What usually happens in the event that a reverse mortgage borrower has died, according to the article, is that the loan servicer sends a letter informing the heirs of the rules.

While the borrowers’ heirs are not required to sell the property in efforts of paying off the reverse mortgage, the article notes that they will have to pay off the loan via other means if they want to keep the home. 

“If they want to get a loan in their own name and pay off the reverse mortgage, they can. But if they can’t and there are no other assets, like life insurance, other property or a 401(k) that they could use to pay off the loan, they will have to sell the property,” said Cara Pierce, a housing and reverse mortgage counselor at ClearPoint Credit Counseling Solutions, in the article. 

Read the Chron.com article.

Written by Jason Oliva

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