Selling a House With a Reverse Mortgage in Florida
When a parent or relative with a reverse mortgage passes away, the loan usually becomes due. The heirs have a short window to decide what to do with the house. Here’s what the federal rules say about the most common type, an FHA-insured Home Equity Conversion Mortgage (HECM), and how selling works.
What happens when the borrower dies
A HECM becomes due and payable when the last surviving borrower dies, sells the home or no longer lives there as a primary residence. At that point no more money can be paid out from the loan. If a spouse who wasn’t on the loan still lives in the house, special rules may let them stay. They have to contact the lender quickly.
The deadlines
- 30 days. According to HUD, the loan must be satisfied within 30 days of the borrower’s death.
- 90-day extensions. The lender may approve 90-day extensions if the estate or heirs show they are actively trying to sell the house or repay the loan.
- Taxes and insurance. Property taxes and insurance stay the estate’s responsibility until the title is transferred.
Contact the loan servicer right away, tell them you plan to sell, and ask what documents they need for an extension. Keep copies of everything.
Your options
- Sell the house and pay off the loan from the sale.
- Keep the house by paying off the loan balance in full, often with a new mortgage.
- Give the house to the lender through a deed-in-lieu of foreclosure, if there’s no equity and no one wants it.
What if you owe more than the house is worth?
HUD’s rule: if the loan balance is more than the home is worth, the estate or heirs may sell for at least 95 percent of the current appraised value, and the lender will accept the net proceeds as payment of the loan. HECMs are insured by FHA, so the heirs generally don’t owe the difference.
Selling a reverse-mortgage house that needs work
Many homes with reverse mortgages belonged to older owners and haven’t been updated in years. Making repairs to list the house can take more time than the deadlines allow. A cash sale as-is can close in as little as 7 days, which helps you meet the lender’s timeline. If the house is in probate, we work with the personal representative and the estate attorney. See selling an inherited house in South Florida and how selling a house in probate works.
Free help
HUD-approved housing counselors can explain your options at no cost. Find one, along with other official resources, on our page of free help for South Florida homeowners. You can also call the FHA Resource Center at (800) 225-5342.
Source: HUD, “Inheriting a Home Secured by an FHA-insured Home Equity Conversion Mortgage”.
Get a cash offer on the inherited house or call (954) 478-3466. We’ll give you an honest answer, even if selling to us isn’t the right fit.
This article is general information, not legal or financial advice. Talk to a Florida real estate attorney about your situation.
