Information for Children of
Reverse Mortgage Prospects
Is it possible for the homeowners heirs to purchase the house after the homeowners pass?
  • Yes. However, if one of the family members wants to keep the house, they must repay the lender the entire amount of the loan, regardless of its current market value.
What happens after the homeowners have passed away and their heirs want to sell the property, but the amount owed on the reverse mortgage is greater than the value of the property?
  • Because the reverse mortgage is federally insured, the heirs will not have to pay more than it’s current value. If this is the case, the heirs will have to notify the lender who will then send an appraiser to value the house. After the lender has confirmed the house is worth less than what is owed, the heirs may surrender the deed in lieu of foreclosure.
Who has the responsibility for selling the property after the homeowners have passed away?
  • When all of the borrowers have passed away, the responsibility for selling the property falls to whomever has been appointed to be in charge of the estate.
How long do the heirs of a property with a reverse mortgage have in order to sell the property?
  • After the last borrower leaves the house either after moving out or passing away, there is an initial six month period to sell the house, with an additional six month extension if necessary. The lender will want to see that the heirs are actively pursuing a sale of the property and will allow the heirs this time to maximize the equity in the house.
Does having a conservator or power of attorney affect the reverse mortgage program?

  • The rules are essentially the same except that the conservator will need probate court approval in order to obtain a reverse mortgage for the conserved parent or parents. After probate court approval has been given, the conservator will have to attend the federally mandated reverse mortgage counseling session. In the case of a person acting as a power of attorney, both that person and the borrower must attend the counseling.

    It is important to note that the probate courts generally attempt to keep the homeowners in their home, and that it is not uncommon for the proceeds of a reverse mortgage to be used for around the clock care for the homeowner.

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