A reverse mortgage comes due the day the last borrower dies. If you’ve inherited the house, you’ll usually have 30 days to answer the servicer’s letter. You can earn more time by documenting a plan and you’ll never owe more than the home is worth. Those three facts, in that order, are the whole game.
This guide walks through the letter, the deadline as it exists in the federal rules rather than in internet folklore, and the four ways forward. If your parent is still alive and the family is planning ahead instead of reacting, buying your parents’ house now is a different and often better project. What follows is for heirs whose clock has already started.
The Due-and-Payable Letter, Decoded
Within weeks of the death, the loan servicer sends the estate a due-and-payable notice. The letter says the loan is due now, and it asks for your plan within 30 days: pay off and keep the house, sell it, deed it back, or walk away. HUD standardized that timing in 2022, so the letter doesn’t mean your servicer is being aggressive. Every servicer sends the same clock.
Answer it in writing, even though probate hasn’t started, and keep copies. State your intent and attach one piece of proof, a probate filing receipt or a signed listing agreement. Heirs rarely lose houses by choosing the wrong option first. They lose them by going silent, because silence is the one response the rules treat as a decision.
The Six Month Clock Isn’t Yours
The number everyone repeats, six months, comes from a real rule that works differently than people think. Under HUD’s HECM regulation, 24 CFR 206.125, the loan is due immediately at death, and six months is the deadline by which the servicer must begin foreclosure unless HUD approves more time. You get to use that window, but it’s a foreclosure clock running against you, not a grace period granted to you.
More time exists, and you earn it with paper. The servicer can request 90-day extensions from HUD, typically up to two, when your file shows progress on one of these tracks.
- Selling: An executed listing agreement, evidence of showings, then a signed purchase contract.
- Keeping the home: A payoff loan application in motion, lender document requests, underwriting milestones.
- Authority: Probate filings showing you’re getting the legal power to sign and convey title.
Roughly a year is the practical ceiling on a well-documented file. Start the paperwork in the first week and the deadline behaves like a timeline. Start in month four and every remaining step gets compressed.
Week One, in Order
- Confirm the loan type. Check a recent statement or the recorded mortgage for whether it’s an FHA-insured HECM or a proprietary reverse mortgage. The 95 percent rule and the HUD extensions are HECM features; a proprietary loan follows its own contract.
- Call the servicer, then follow up in writing. Ask what they need as proof of death, where documents go, and what belongs in your 30-day response.
- Request the written payoff statement and the full due-and-payable packet.
- Open probate, or confirm who already has authority. In Massachusetts nothing closes until someone can legally sign; Mass.gov explains the probate types. The filing receipt doubles as extension support.
- Don’t order your own appraisal. On a HECM, the servicer orders the appraisal that counts, from an FHA roster appraiser.
- If there are several heirs, agree on a point person now. One heir keeping the house while the others take their share is its own project; our guide to buying out siblings on an inherited Massachusetts house covers it.
Your Four Paths From Here
| Path | What you do | What happens | Main tradeoff |
|---|---|---|---|
| Sell | List it, sell it, pay the loan off from the proceeds | The estate keeps everything above the payoff | The sale has to move fast enough to keep the extension file alive |
| Pay off and keep | Satisfy the loan, usually with a regular mortgage in your name | The house stays in the family on a normal payment | You have to qualify for the new payment like any borrower |
| Deed-in-lieu | Sign the property over to the servicer | A faster, cleaner exit than foreclosure | You give up the home and any upside |
| Walk away | Don’t respond, don’t act | The servicer forecloses | No personal liability, but you lose the timeline and any equity |
The 95 Percent Rule and the Underwater House
An FHA-insured HECM can always be satisfied for the lesser of the full loan balance or 95 percent of the home’s current appraised value. If the house appraises at $400,000 and the balance has grown to $450,000, the payoff is $380,000. The servicer orders that appraisal from an FHA roster appraiser, so it isn’t a number you shop for.
The loan is also non-recourse. The lender collects from the house and from nothing else, never from your income, your savings, or the estate’s other assets, and FHA insurance absorbs any shortfall. A HECM foreclosure doesn’t touch your credit either, because you never signed the note. An underwater, unwanted house is a situation with a clean exit, and the exit is built into the loan.
Get the appraisal-backed payoff figure from the servicer in writing and anchor every family conversation to it. Families under stress sometimes pay debts nobody owes.
Keeping the House in Massachusetts
Keeping the house means paying off the reverse mortgage, usually by refinancing into a regular mortgage in your name, and Massachusetts adds a timing catch. A lender needs someone with legal authority to sign and convey title. That authority comes from probate, and probate won’t be finished the week the letter lands.
So run both tracks at once. File to open probate immediately, tell the servicer in writing that you intend to pay off, and let the probate filings plus your loan application milestones feed the extension requests. Once your appointment comes through, the new loan closes, the reverse mortgage is satisfied, and the house stays in the family. One caution worth hearing early is that you qualify for the payoff loan on your own income and debts, and wanting the house isn’t underwriting.
Selling, and What Reaches the Check
Selling pays the loan off at closing, and the estate keeps whatever remains. List early. The signed listing agreement and then the purchase contract are exactly the documents that keep the extension file alive while probate catches up.
Budget the seller-side costs before you count the money. Massachusetts deeds excise runs $4.56 per $1,000 of the sale price in most counties, about $2,736 on a $600,000 sale and higher in Barnstable County, and broker commission and closing costs come off the top with it. A lower listing fee moves real money on an estate sale. Capital gains are usually the good news: inherited property gets a step-up in basis to its value at death, per IRS Publication 551, so a prompt sale typically produces little taxable gain. Confirm both points with the estate’s tax preparer rather than taking a blog’s word for it, ours included.
When Handing It Back Is the Right Call
Sometimes the house is underwater, or the septic failed, or nobody wants it. Letting it go can be the soundest financial decision on the table, and it doesn’t dishonor anyone. You don’t inherit the debt, and you don’t owe the house a year of your life.
The orderly version is a deed-in-lieu of foreclosure. HUD requires the servicer to accept one recorded within nine months of the due date with good, marketable title, and since 2024 servicers have been able to offer Cash-for-Keys incentives, up to $7,500 for completing a deed-in-lieu or short sale plus up to $5,000 in documented probate costs. Ask in writing what the servicer needs and what they’re offering. Most heirs never hear about the incentives because they never ask.
The Surviving Spouse Exception
If your other parent is alive and was married to the borrower, stop, because the rules change completely. An Eligible Non-Borrowing Spouse can stay in the home for life under a HUD deferral that pauses the due-and-payable status, as long as the home stays their principal residence and the taxes and insurance stay current. The spouse’s certification has to reach the servicer within 30 days of the death and annually after that, which makes it a first-week task. HUD loosened these protections considerably in 2021, so older advice on this reads too grim.
One planning note. The deferral pauses repayment, but no new money can be drawn after the borrower’s death, so a household budget that leaned on the unused line of credit needs a replacement plan quickly. And a family weighing a reverse mortgage today, with everyone still healthy, should read up on the alternative before this chapter ever gets written.
Where We Come In
GoldCoast Mortgage Service is an independent mortgage broker in Beverly. John Donlon, who owns it, has spent more than 25 years financing homes across Massachusetts, New Hampshire, and Maine, and the payoff loan that keeps an inherited house in the family is exactly the kind of file a broker should shop hard. A bank offers its own programs. A broker runs your file across many lenders, conventional and FHA both, which matters when the deadline is real and the first answer isn’t the best one.
We’ll pre-qualify you at no cost and tell you plainly whether the payoff numbers work. Wondering what you qualify for? Two minutes, no pressure. Set up a quick chat.
Questions Heirs Ask
Do I really only have six months to deal with a reverse mortgage after a death?
The loan is due immediately, and six months is the point where the servicer must begin foreclosure unless HUD grants more time. Answer the letter within 30 days and keep documenting progress, and 90-day extensions, roughly a year in practice, are routine.
Does probate have to finish before I can do anything?
No, and waiting is the classic mistake. Open probate immediately and run the sale or the payoff loan in parallel. The filings themselves are the proof of progress that earns extensions.
Will I owe the balance out of my own pocket or from other estate assets?
No. An FHA-insured HECM is non-recourse, so the debt is collectible only from the house, never from you personally or from the estate’s other assets.
Can I keep the house if the balance is higher than the home’s value?
Often, yes. With a HECM you can satisfy the debt for the lesser of the full balance or 95 percent of the current appraised value, and FHA insurance covers the gap.
Will a reverse mortgage foreclosure hurt my credit?
Generally no, because you never signed the note and you owe nothing on it. What going silent costs you is control of the timeline and any equity you might have kept.