A reverse mortgage has no monthly payment, so people assume it cannot be foreclosed. It can. The loan comes due when the borrower stops paying property taxes, insurance or association dues, stops living in the house, or dies. Then the servicer sends a notice, the estate or heirs get 30 days to say what they plan to do, and the lender has to start foreclosure within six months unless HUD approves more time. Most families who call me about a parent's reverse mortgage still have equity in the house. The job is to get it out before the clock and the interest eat it. Here is how the loan works, what the deadlines really are, what the heirs can do, and how I handle a house that holds forty years of a life.
- Missing a mortgage payment cannot trigger a reverse mortgage default, because there is no payment. Taxes, insurance, HOA dues, occupancy and upkeep are what trigger it.
- The balance grows every month. Interest and mortgage insurance are added to what is owed, so the equity shrinks while you wait.
- When the borrower dies, the heirs get a 30 day notice and the lender must start foreclosure within six months unless it gets extensions. Extensions exist, but you have to be actively selling to get them.
- Heirs can never owe more than the house is worth. If the balance is bigger than the value, the house can be sold for at least 95 percent of appraised value and FHA insurance covers the rest.
- A surviving spouse who is not on the loan may be able to stay. The rules depend on when the loan was made. Get the servicer's answer in writing.
- If the house has equity and you have five or six months, list it. A cash sale earns its place when the deadline is close, the roof will not insure, or nobody can face the cleanout.
01. How a reverse mortgage actually works
Most reverse mortgages I see in Northeast Florida are Home Equity Conversion Mortgages, or HECMs. That is the FHA insured version, available only to homeowners 62 and older, and it is the one this article is about. Private reverse mortgages can differ, so if the paperwork does not say HECM or FHA, read the loan documents before you trust anything here.
The plain version. The homeowner borrows against the equity and keeps the title. The lender pays them as a lump sum, a monthly check, a line of credit, or a mix. Nobody makes a monthly payment. Instead, interest and FHA mortgage insurance are added to the balance every month. HUD charges an initial insurance premium of 2 percent and an annual premium of 0.5 percent of the balance, on top of interest. The loan is repaid when the last borrower dies, sells, or moves out for good, almost always by selling the house.
The part families do not understand until they are at my table is that the arrow points the wrong way. On a regular mortgage the balance goes down and the equity goes up. On a reverse mortgage it is the reverse. A parent who borrowed $120,000 in 2013 can easily owe $200,000 today, and the number keeps growing every month the house sits after they pass.
One thing about the design protects people. A HECM is non recourse. The lender can collect only by selling the house and cannot get a deficiency judgment, so if Mom's balance is bigger than the house is worth, the kids do not inherit the difference.
02. The four things that trigger a default, and the one that cannot
People hear "foreclosure" and think "missed payments." On a reverse mortgage there is no payment to miss. What the borrower agreed to instead is a short list of obligations, and breaking any of them makes the loan due and payable in full. Here is the list, from the federal regulation.
| Trigger | What it means | How it goes wrong in Florida |
|---|---|---|
| Property taxes | Pay the county tax bill on time, including special assessments. | The bill mails around November 1 and goes delinquent April 1. A servicer that sees an unpaid bill often pays it and starts the default clock. |
| Homeowners and flood insurance | Keep the house insured against hazards including fire and, where required, flood. | The growing one. A nonrenewal or a premium that doubles is a default the borrower did not choose. |
| Occupancy | The house must be the principal residence, certified every year. | Away more than six months for a non medical reason, or more than twelve consecutive months in a hospital or nursing home with no co borrower at home, and the loan is due. A missed annual certification letter can start the same process. |
| HOA and condo dues, and upkeep | Association fees are property charges under the rule. The house must be kept in good repair. | A Florida HOA can lien and foreclose on its own for unpaid dues, and the servicer treats the same dues as a default. Two lawsuits from one missed bill. |
Notice what is not on the list. Missing a mortgage payment. There is no such thing. If a caller tells a senior their reverse mortgage is "behind on payments," ask for the actual notice in writing.
Loans made before April 27, 2015 are the ones I worry about
A missed bill is not an instant default. If loan funds are still available, the servicer advances the money, adds it to the balance, and gives the borrower 30 days to explain. The loan becomes due and payable only when there is no money left in the loan to cover the bill. Since April 2015, lenders have had to run a financial assessment before closing and, for borrowers likely to struggle, set aside part of the loan to pay taxes and insurance. Older loans mostly have no set aside, and those borrowers are now in their 80s and 90s, budgeting for a Florida insurance bill nobody imagined in 2010. My first question to an adult child is what year the loan was made.
03. Florida insurance is the trigger that is growing
I wrote a whole piece on what the insurance crisis is doing to Florida home sales. Here is how it collides with a reverse mortgage. A senior with a regular mortgage gets the increase folded into an escrow payment. A senior with a reverse mortgage and no set aside gets the renewal as a lump sum on a fixed income. If the carrier does not renew because the roof is from 2008, the borrower has to find a policy on a house most carriers will not write, and the servicer will force place coverage that protects only the lender. Either way the loan is in default for a reason that has nothing to do with the borrower's judgment. I have watched it happen to people who never missed a bill in their lives.
If you are the adult child, find out this month whether your parent's policy renewed, what it costs, and whether it is being paid. Ask the servicer, in writing, whether there is a set aside or an open line of credit and how much is left. If the answer is no and no, you are the insurance plan now, and a premium is far cheaper than a foreclosure. The CFPB points people to Area Agencies on Aging, at 800 677 1116, for programs that help older homeowners with taxes and insurance.
04. When the borrower dies or moves to care: the clock
This is the call I get most. A parent has passed, or gone into memory care, and the kids have found a statement from a company they have never heard of showing a balance that made them sit down. Here is what happens next, and where each date comes from.
| Step | What happens | Source |
|---|---|---|
| 1 | The loan becomes due and payable when the last borrower dies (unless an eligible non borrowing spouse qualifies to stay) or the house stops being the principal residence, which for a care facility means more than 12 consecutive months. | 24 CFR 206.27(c) |
| 2 | The servicer sends the estate or heirs a due and payable notice within 30 days of the death. You get 30 days to say what you will do: pay it off, sell, or deed it back. An appraisal is ordered within 30 days and sets the 95 percent floor. Ask for a copy. | HUD 2015 Mortgagee Letter; 24 CFR 206.125(a) and (b) |
| 3 | If nothing is resolved, the servicer must start foreclosure within six months of the death. In Florida that means a lawsuit in circuit court. | 24 CFR 206.125(d); Florida Statutes Chapter 702 |
| 4 | If you can show you are actively marketing the house or working on a payoff, the servicer can ask HUD for up to two 90 day extensions before it files, and may take one more 90 day extension of its own. | HUD 2015 Mortgagee Letter |
| 5 | A deed in lieu must be recorded within nine months of the due date. HUD can pay a cash for keys incentive when the house is deeded back within six months. | 24 CFR 206.125(f) |
| 6 | Once a foreclosure suit is served, you have 20 days to answer. Selling remains possible right up until the clerk's sale. | Fla. R. Civ. P. 1.140; Florida Statutes 45.0315 |
So the honest answer to "how long do we have" is thirty days to respond, six months before a lawsuit is required, up to a year if you are visibly working the problem, and then the Florida court process on top. That is more time than families think they have when they first call, and less than they think once they start on the garage. Every month adds interest to the balance, and the balance comes out of the equity.
The spouse who was not on the loan
This is the saddest version. Only one spouse is on the loan, usually because the other was under 62 at the time, and when the borrower dies the survivor gets a letter saying the loan is due. Federal rules protect many of these spouses, but it depends on when the loan was made and it is not automatic. For loans with FHA case numbers assigned on or after August 4, 2014, the survivor may qualify as an eligible non borrowing spouse and stay without repaying if they were married to the borrower when the loan was signed and stayed married, were named in the loan documents as a non borrowing spouse, lived in the house at closing and still do, and keep up the taxes, insurance and other obligations. HUD requires the spouse's certification to reach the servicer within 30 days of the death. For older loans, the servicer can choose a process HUD calls a Mortgagee Optional Election that lets an eligible spouse stay, or it can foreclose. The CFPB says plainly the process may be difficult. Get an attorney or a HUD approved counselor.
What I tell every surviving spouse: a spouse who stays gets no more money from the loan, ever. Staying is often still right, but it is a decision, not a default. Sometimes the equity buys a safer decade somewhere smaller.
05. The heirs' options, honestly, with the catch on each
The week after a funeral I get the choices down to four, because four is what the rule gives you.
| Option | What it takes | Best when | The catch |
|---|---|---|---|
| Pay it off and keep it | Pay the full balance, usually with a new mortgage in an heir's name. | A child wants to live there and can qualify for a loan. | HUD's guidance says keeping the house means paying the balance in full. Other HUD materials describe satisfying the loan for the lesser of the balance or 95 percent of value, and the regulation counts a transfer of title by operation of law as a sale. Servicers read this differently. Get the payoff position in writing before you count on 95 percent. |
| Sell it | Sell for at least the lesser of the full balance or 95 percent of current appraised value. Net proceeds go to the lender first. | Almost everyone. If there is equity you keep it. If there is not, the 95 percent floor caps what the house has to bring. | It has to close inside the timeline, and you will likely need probate authority to sign a deed. See my probate house sale page. |
| Deed in lieu | Hand the lender the deed. Debt satisfied, no judgment, no deficiency. | No equity, nobody wants it, and you want it over. | Must be recorded within nine months of the due date with clean title. A second lien can block it. You get nothing for any equity. |
| Walk away | Do nothing. The lender forecloses, sells the house and files its FHA claim. | Almost never. Even underwater houses have a better exit above. | You cannot be chased for the shortfall, but a preservation crew throws out the belongings and a foreclosure is recorded in your parent's name. |
The 95 percent rule is the most valuable thing on this page for a family whose parent's loan grew past the value of the house. Say Dad's balance is $260,000 and the appraisal comes in at $230,000. The heirs can sell for $218,500, the lender has to take it and release the mortgage, and nobody owes the other $41,500. That is what the mortgage insurance Dad paid for fifteen years was buying. Families who do not know this walk away from a house they could have sold cleanly, or pay a "shortfall" they do not owe.
06. The equity math for heirs
Before any option makes sense you need one number: real equity. It takes four figures. A written payoff from the servicer, good through a date, because the balance grows daily and includes any advances and attorney fees. The servicer's appraisal, which sets the 95 percent floor. The real as is value, which is not the appraisal and not Zillow but what the house sells for this quarter in its condition. I will pull closed sales for any family at no charge. And every other lien, which a title search finds and the closing table finds too late.
What that looks like with real numbers
These are illustrative figures, not a specific client. Three siblings in three states inherit their mother's house in Orange Park. She took a HECM in 2013 at 74. The written payoff today is $198,000. The servicer's appraisal came back at $315,000. The house has a 2009 roof, the original kitchen, and every room is full. My as is number from closed sales is about $305,000, and a buyer with a mortgage will need a new roof to get insurance bound, call it $22,000.
Path one, list it. Sale at $305,000. Subtract about 8 percent in commission and closing costs, $24,400. Subtract the roof, $22,000. Subtract five months of taxes, insurance, utilities and lawn while it is cleaned out, listed and under contract, roughly $6,000. Subtract five months of interest and mortgage insurance growing the payoff, roughly $7,000. Subtract the $198,000 payoff. Net to the estate about $47,600, split three ways.
Path two, sell to me. I start from what the house is worth fixed up, around $345,000, and subtract the roof, kitchen, floors and paint, my carrying costs, my resale costs and my margin. That lands around $228,000, closing in three weeks, house full, no roof, no showings. Subtract the payoff and a month of interest. Net to the estate about $29,000.
That is an $18,600 difference in favor of listing, and I will say so to the family, because I would rather list it and earn a commission than buy it wrong. The cash sale wins when the numbers change. If the family cannot front $22,000 for a roof and retail buyers keep losing their insurance, the listing stalls while the interest runs. If the siblings cannot agree on who flies down to empty the house, five months becomes nine and the extensions run out. If a sale date is next month, there is no listing path at all. The cash offer versus listing calculator runs both paths with your numbers.
Two more notes. Heirs generally get a stepped up basis to the date of death value under Internal Revenue Code section 1014, so appreciation during Mom's lifetime is usually not taxed at sale, though gain after the date of death can be. And whoever signs the deed needs authority, which in Florida usually means a personal representative appointed by the court. My inherited house page covers that.
07. The house is full of a lifetime, and what I do about it
Every reverse mortgage house I have ever walked into was full. Not cluttered. Full. A reverse mortgage borrower has lived there long enough to build the equity, usually thirty or forty years, and often the last years were spent unable to sort through any of it. Photo albums, tax returns back to 1988, a china cabinet, a piano. This is the real reason families freeze. It is not the paperwork. It is the idea of standing in that living room with contractor bags. And every week they freeze, the balance grows.
Here is how I handle it. When I buy from an estate, the family takes what they want, on whatever timeline the closing allows, and leaves the rest. There is no cleanout fee. It is built into my renovation number, and I show you that number. Before anything goes to a dumpster, my crew pulls out the categories families always regret losing: photos, letters, documents, jewelry, military items, anything with a name on it. Those get boxed and handed back, even after closing. I was a Marine. I have found flags folded in the back of closets, and they go home with the family, not to a landfill.
If you list instead, you still have to solve this before photos, and I can refer you to a cleanout crew and an estate sale company. Either way, decide in the first thirty days, because the house full of things is the reason so many families run out of extensions.
When to list and when to sell for cash
The rule is the same one I use on my foreclosure page. If the house has equity, the roof will insure, and you have five or six months, list it. You will net more, and I can do it for you as a licensed agent. A cash sale is right when the deadline is inside sixty days, the house has a condition problem a retail buyer's lender or insurer will not accept, or the people who have to decide cannot be in the house to do the work. With reverse mortgage estates, one of those is true about half the time. The other half, I list it.
08. The people who circle a senior's house
Reverse mortgage borrowers are targets before the default and their families are targets after, because probate filings and lis pendens are public record. Here is what shows up in Northeast Florida.
- The contractor who wants Mom to take a reverse mortgage to pay for a roof. The CFPB warns about this one specifically. If a contractor is arranging the financing, walk away.
- "VA reverse mortgages." The Department of Veterans Affairs does not offer a reverse mortgage. Any ad that says otherwise is lying to a veteran.
- Money up front to "save the home." HUD approved counseling is free at 800 569 4287.
- Surplus recovery letters after a sale. If the house sells at the courthouse for more than the balance, the surplus belongs to the estate and the clerk is holding it. My surplus funds page shows how to claim it yourself.
Three questions that work on everybody, including me. What is your Florida license number? What do you get paid, by whom, and when? What happens if this does not work? Mine is SL3389080, and I get paid when the house I buy resells.
09. What to do this week, in order
- Find the servicer and call them. The company on the statement, not the lender from 2013. Ask in writing for the payoff with a good through date, any due and payable notice, and the appraisal if one has been ordered.
- Confirm the insurance and the taxes. Is the policy in force, who is paying it, and is the November tax bill covered. A lapse on a vacant house in hurricane season is the fastest way to lose the equity.
- If there is a surviving spouse not on the loan, get the certification in. Thirty days from the death.
- Call a probate attorney and a HUD counselor. The attorney to get someone the authority to sign a deed. The counselor, at 800 569 4287, because it is free. My Help Calendar lists free legal clinics by county.
- Pick a path in the first thirty days and document it. If you are selling, get it listed or under contract and send the servicer proof. The 90 day extensions go only to families who can show they are actively marketing. Silence gets a lawsuit at month six.
- Start on the house. Take what matters and decide what happens to the rest. This step decides whether the timeline works.
The real reason families wait is grief. Nobody wants to be the sibling who says "we have to sell Mom's house" the week after the service. So the letters go in a drawer, the balance grows, and the call comes in month five with a foreclosure filing on the way and her coat still on the hook. Nobody has ever told me they wished they had waited longer. Decide on purpose, while there is still equity to decide about.
10. Questions people ask me
Can a reverse mortgage really be foreclosed if there are no payments?
Yes. The loan becomes due and payable when the borrower stops paying property taxes, insurance or association dues, stops living in the house, does not keep it in repair, or dies. Then the servicer can foreclose, which in Florida means a lawsuit in circuit court under Chapter 702.
My mother died and the servicer says we have 30 days. Is that real?
The 30 days is real but not the whole story. It is 30 days to tell the servicer what you intend to do. The servicer then has to start foreclosure within six months of the death unless HUD approves more time, and HUD allows up to two 90 day extensions if you can show you are actively selling or paying off the loan. Answer the notice, in writing, inside the 30 days.
The balance is more than the house is worth. Do we owe the difference?
No. A HECM is non recourse, so the lender can collect only by selling the house and cannot get a deficiency judgment. The house can be sold for at least 95 percent of its current appraised value and the lender must accept the net proceeds as full satisfaction. FHA insurance covers the rest.
Can we keep the house by paying 95 percent of the appraised value?
Maybe, and I would not plan on it without a letter. HUD's guidance says keeping the house means paying the balance in full, but the same materials say the estate may satisfy the loan for the lesser of the balance or 95 percent of value and that any post death title transfer counts as a sale. Get the servicer's position in writing with the payoff figure.
My father is in a nursing home. Is the loan due?
Not immediately. A borrower can be out of the house for physical or mental illness for up to 12 consecutive months before the loan becomes due. If a co borrower or an eligible non borrowing spouse still lives in the house, the loan continues.
I was not on my husband's loan. Do I have to leave?
Not necessarily. For loans with FHA case numbers assigned on or after August 4, 2014, a spouse who was married to the borrower at closing, was named in the documents as a non borrowing spouse, still lives in the house, and keeps up taxes and insurance may qualify to stay without repaying. For older loans the servicer can let the spouse stay or it can foreclose. Get the certification in within 30 days and get an attorney or a HUD counselor.
What happens to everything in the house if we walk away?
Once the lender takes the house, a preservation company clears it, and you will not get a call first. Take what matters before you sign or before the sale date. If you sell to me, you take what you want and leave the rest, and my crew returns photos, documents and personal items that get left behind.
Where these numbers come from
- 24 CFR 206.27 (due and payable events, non recourse), 206.125 (30 day notice, 95 percent sale, six month foreclosure deadline, deed in lieu, cash for keys), 206.205 (property charges, set asides). eCFR, current as of September 22, 2026.
- HUD Mortgagee Letter of April 23, 2015, "Home Equity Conversion Mortgage (HECM) Due and Payable Policies" (notice timing, foreclosure deadline, 90 day extensions).
- HUD, "Inheriting a Home Secured by an FHA insured Home Equity Conversion Mortgage" (September 2019); HUD, "What you need to know if you inherit a home that is security for an FHA HECM" (2019); HUD, "How the HECM Program Works" (counseling line, MIP rates).
- Consumer Financial Protection Bureau, Ask CFPB: "What is a reverse mortgage?" and "With a reverse mortgage loan, can my heirs keep or sell my home after I die?" (reviewed August 28, 2026); "What happens to my reverse mortgage when I die?" (January 2, 2025); "When do I have to pay back a reverse mortgage loan?" and "What should I do if I have a reverse mortgage loan and I received a notice of default or foreclosure?" (September 11, 2024); "What are my responsibilities as a reverse mortgage loan borrower?" (August 9, 2024).
- Florida Statutes Chapter 702 (judicial foreclosure) and section 45.0315 (redemption), Florida Rule of Civil Procedure 1.140 (20 days to answer), Internal Revenue Code section 1014 (stepped up basis).
A plain note: I am a Florida home buyer and a licensed real estate agent, not an attorney, an accountant or a housing counselor. This is general information about FHA insured HECM reverse mortgages, not advice for your particular loan. Rules have exceptions, HUD changes its guidance to servicers, and every case turns on its own documents. References reflect the law as I understand it in September 2026. Please confirm the specifics for your own circumstances, and if there is any doubt at all, get a licensed Florida attorney or a HUD approved counselor involved. The counselor costs nothing.