A reverse mortgage Due and Payable notice is the servicer’s formal demand that the Home Equity Conversion Mortgage balance be repaid, and it starts a short clock: 30 days to respond in writing, and six months from the due date before the servicer is required to begin foreclosure. For most families, the letter arrives after the last borrower dies. The estate or heirs then choose among selling the home, paying off the loan, or surrendering the title, and because a HECM is non-recourse, the family never owes more than the property is worth.
Why the Notice Was Sent
Federal regulations list the specific events that end the deferral of a reverse mortgage and force repayment. The trigger determines which options and timelines apply, so identifying it is the first step.
The most common trigger is the death of the last surviving borrower with no other borrower still living in the home. If a non-borrowing spouse qualifies for HUD’s Deferral Period, the loan stays in place while that spouse continues to occupy the property; once the deferral ends or the spouse moves out or dies, the loan becomes due.1eCFR. 24 CFR 206.27 – Mortgage Provisions
A borrower who stops using the home as a primary residence also triggers acceleration. The regulation draws a specific line at 12 consecutive months of absence for physical or mental illness when no other borrower still lives there. A move into a nursing home or assisted living facility past that mark qualifies even when the borrower intends to return.1eCFR. 24 CFR 206.27 – Mortgage Provisions
Falling behind on property charges is another path. Unpaid property taxes, lapsed hazard insurance, or letting the home deteriorate all count as default, because the lender needs the property to hold its value as collateral.2eCFR. 24 CFR 206.27 – Mortgage Provisions
Finally, transferring ownership without the lender’s prior written approval makes the full balance due. That includes adding a family member to the deed, selling the home, or moving it into an irrevocable trust.1eCFR. 24 CFR 206.27 – Mortgage Provisions
How Long You Have to Respond
The notice gives the estate 30 days to submit a written response stating what the heirs intend to do: sell the property, pay off the loan, or surrender the title.3U.S. Department of Housing and Urban Development. Mortgagee Letter 2015-11 – Loss Mitigation Guidance for HECMs in Default Due to Unpaid Property Charges Missing that window does not automatically trigger foreclosure, but it gives the servicer less reason to work with the estate.
The harder deadline is six months. Federal regulations require the servicer to begin foreclosure proceedings within six months of the date the loan became due and payable, unless HUD grants additional time.4eCFR. 24 CFR 206.125 – Acquisition and Sale of the Property The six months runs from the due date, not from when the letter arrives, so the clock may already be running when heirs learn about the loan.
If the estate is actively trying to sell, the servicer can request up to two additional 90-day extensions from HUD. These are not automatic. Heirs must show concrete progress, such as an active listing agreement or a pending sale contract, and the servicer must present that evidence to HUD for approval.5U.S. Department of Housing and Urban Development. Mortgagee Letter 2015-10 – HECM Due and Payable Policies In the best case, that stretches the total window to roughly twelve months.
Your Three Options for Settling the Loan
Which path makes sense depends on whether the home is worth more or less than the loan balance.
- Sell the property. The most common resolution. If the home sells for more than the debt, the estate keeps the surplus. If it sells for less, the non-recourse protection covers the shortfall. The servicer will require an appraisal to establish fair market value before approving a short sale.
- Pay off or refinance. If heirs want to keep the home and it has equity, they can pay the balance in full or refinance into a conventional mortgage. When the loan balance exceeds the appraised value, HUD lets heirs purchase the property at 95% of the current appraised value rather than the full debt amount.
- Deed in lieu of foreclosure. If no one wants the home and the debt exceeds the value, the estate can transfer title to the servicer. This avoids the cost and delay of foreclosure but forfeits any remaining equity.
The Non-Recourse Protection You Need to Understand
A HECM is a non-recourse loan. The estate will never owe more than the home’s current appraised value, regardless of how large the loan balance has grown. If the reverse mortgage balance is $350,000 but the home appraises at $280,000, the estate can settle by selling the home at fair market value; the lender absorbs the shortfall through FHA insurance, and the estate walks away without owing the difference.
Heirs sometimes ignore the notice because they assume the family will owe money. That assumption costs them the surplus equity they would have received from a market sale, and it costs them the 95%-of-appraised-value buyout price when the debt exceeds the home’s value.
There is also a tax point worth knowing. Because HECMs are non-recourse, the IRS does not treat any forgiven balance as cancellation-of-debt income. The transaction is treated as a sale of the property, which may produce a capital gain or loss depending on the property’s adjusted basis, but not ordinary income on the forgiven portion.6Internal Revenue Service. Topic No. 431, Canceled Debt – Is It Taxable or Not?
What to Send the Servicer
A complete first submission avoids weeks of back-and-forth. The core of the response is a letter of intent naming the resolution path. If the plan is to sell, include a copy of the listing agreement signed by a licensed real estate agent. If the plan is to buy the home at 95% of appraised value, say so explicitly.
The servicer also needs proof of authority. A certified copy of the death certificate is always required. In most cases, the servicer needs letters testamentary or letters of administration from the probate court, which prove the executor or administrator has legal standing to act for the estate. Obtaining these requires a probate filing, and fees vary by jurisdiction.
An appraisal establishes fair market value. Federal rules require the appraisal to be performed by an FHA-approved appraiser and completed within 30 days of the request.4eCFR. 24 CFR 206.125 – Acquisition and Sale of the Property Residential appraisals typically cost a few hundred dollars. The servicer may order the appraisal directly, but confirm upfront who pays for it.
Keep every confirmation number, email, and mailed letter. Send anything on paper by a method that produces a signed delivery record. Servicers handle thousands of these files, and your documentation is what protects the estate if something is lost.
Your Rights as a Successor in Interest
Federal servicing rules give heirs concrete rights that many people do not know about. Under CFPB mortgage servicing regulations, a “successor in interest” includes anyone who inherits a property or receives ownership through a transfer after the borrower’s death. Once the servicer confirms your identity and ownership interest, you are treated as a borrower for servicing purposes.7eCFR. 12 CFR Part 1024 Subpart C – Mortgage Servicing
That status entitles you to the same communications, notices, and loss mitigation information the original borrower would have received. Even before the servicer formally confirms your status, you have the right to request information about the loan, submit error notices, and request a payoff statement. The servicer is required to tell you exactly what documents it needs to confirm your identity and then make that determination promptly once you provide them.7eCFR. 12 CFR Part 1024 Subpart C – Mortgage Servicing
If a servicer refuses to share loan details or claims you have no standing to discuss the account, that likely violates federal servicing requirements. Knowing the rules exist gives you leverage in those conversations.
When the Servicer Won’t Cooperate
If the servicer refuses to process extension requests, ignores your documents, or fails to communicate in good faith, file a complaint with the Consumer Financial Protection Bureau. The CFPB accepts mortgage servicing complaints online or by phone at (855) 411-2372, Monday through Friday. When filing on behalf of a deceased borrower’s estate, attach written authorization showing your legal authority to act.8Consumer Financial Protection Bureau. Submit a Complaint
Once filed, the CFPB forwards the complaint to the servicer, which generally has 15 days to respond and up to 60 days for complex issues. Include every relevant date, amount, and piece of correspondence in your initial submission; the CFPB generally does not allow a second complaint about the same problem. You can also file with HUD’s Office of Housing, which oversees the HECM program directly. Between the two agencies, most servicer compliance issues get resolved before the estate has to hire an attorney.