Selling an Inherited House With a Reverse Mortgage in Florida

Did you inherit a Florida house that had a reverse mortgage? You are not alone, and you have more options than it may seem. Home Rescue Team buys inherited houses for cash across Miami-Dade, Broward, and Palm Beach — as-is, with no repairs, no cleanout, no commissions, and no closing costs for you. Call or text (305) 699-9763 for a free, no-obligation cash offer.

First, what is a HECM reverse mortgage?

A reverse mortgage lets an older homeowner turn part of their home’s value into cash. The most common kind is the Home Equity Conversion Mortgage, or HECM, which is insured by the Federal Housing Administration (FHA).

The borrower does not make monthly loan payments while living in the house. Instead, interest and fees are added to the loan balance each month, so the amount owed grows over time.

When the last borrower dies, the loan generally has to be repaid. Most heirs repay it by selling the house.

When does the loan come due after a death?

Federal rules say a HECM becomes due and payable in full when a borrower dies and the house is not the main home of at least one surviving borrower. Once that happens, no more money can be paid out from the loan.

There are a few important exceptions:

• A surviving co-borrower. If someone else is also a borrower on the loan and still lives in the home, the loan generally does not come due yet.
• An eligible non-borrowing spouse. A spouse who was not on the loan may be able to stay in the home under special “deferral” rules, depending on when the loan was made and other requirements. If this may be you, call the servicer right away — there are short deadlines.

If neither applies, the loan servicer will send the estate or heirs a “due and payable” notice. That letter starts the clock.

Your options as an heir

When a HECM comes due after a death, HUD rules give the estate or heirs a few paths:

• Pay off the loan and keep the house. If you want to keep the home, the loan has to be paid off. Many families do this with their own mortgage or other funds. Ask the servicer in writing for the exact payoff amount they will accept.
• Sell the house. This is what most heirs do. The sale proceeds go toward the loan at closing.
• Sign the house over to the lender. This is called a deed in lieu of foreclosure. It can be a way out when the house is worth much less than the loan and the family does not want to deal with a sale. In some cases the lender may offer a small “cash for keys” payment for signing the house over quickly — ask your servicer whether that is available.

Before you choose, get the facts from the servicer in writing: the current loan balance, the deadlines on your notice, and whether any extensions are available.

The HECM “95 percent rule” for heirs, in plain English

Say the loan balance has grown larger than the house is worth. Under HUD rules, the heirs generally can sell the house for at least 95% of its current appraised value, and the lender will accept the net proceeds as payment of the loan. The Consumer Financial Protection Bureau (CFPB) puts it simply: heirs pay the full loan balance or 95% of the appraised value, whichever is less.

What about the rest of the balance? A HECM is a “non-recourse” loan. Federal rules say the borrower has no personal liability for the balance, the lender can collect only through the sale of the property, and the lender cannot get a deficiency judgment if the loan is foreclosed. The remaining balance is covered by FHA mortgage insurance. In short, heirs generally never have to pay more than the house is worth out of their own pockets.

A few details to know:

• The appraisal. When the loan is due and payable, the lender orders the appraisal at its own expense, and it can be paid back from the sale proceeds. The lender is supposed to get the appraisal done within 30 days of a request tied to a possible sale.
• All the net proceeds go to the lender when the house is “underwater.” In that case there is usually nothing left over for the heirs — but there is also nothing more to pay.
• Other debts on the house still matter. The rules expect the lender’s loan to be the only lien being paid off in this kind of sale. Unpaid property taxes, HOA or condo dues, or code fines need to be sorted out at closing, too.
• Any buyer’s price has to meet the servicer’s minimum. That includes us. If our as-is cash offer does not reach the amount the servicer requires, we will tell you so honestly.

How much time do heirs have?

The timeline is short, which is why it pays to act early. Here is how the federal rules and HUD guidance generally work:

• 30 days after the notice. The due and payable notice generally gives the estate or heirs 30 days to act — to pay off the loan, sell, or give the lender a deed in lieu. The CFPB says this can sometimes be extended for up to six months so heirs can sell or get their own loan.
• Six months from the death. HUD guidance says the lender must generally take the first legal step to foreclose within six months of the last borrower’s death, unless a deferral period applies or HUD approves more time.
• 90-day extensions. If the heirs show the lender proof that they are actively marketing the house or working to pay off the loan, the lender may ask HUD for up to two 90-day extensions before starting foreclosure.

Every case is different, and your notice controls. Keep copies of everything, and keep records that show you are actively trying to sell — a signed purchase contract or listing agreement can help support an extension request.

Also remember: property taxes and insurance on the house stay the estate’s responsibility until the title is transferred. Letting them lapse can create new problems.

Does Florida probate matter?

Often, yes. Before anyone can sell the house, someone needs the legal authority to sign. In Florida that usually means going through probate, unless the house was held in a trust or passed another way.

Florida offers a faster process called summary administration for smaller estates. Under Florida Statute 735.201, it may be available when the estate subject to administration in Florida (not counting property that is exempt from creditors) is not more than $150,000, or when the person has been dead for more than two years. Because this limit was recently changed, ask your attorney which limit applies to your case.

Probate can take time, and the HECM clock does not stop for it. That is why many families contact the servicer, a probate attorney, and a buyer at the same time. Learn more on our selling a house in probate page.

This page is general information, not legal advice. Please talk with a Florida estate attorney or a HUD-approved housing counselor about your situation.

Step-by-step: what to do after a parent with a reverse mortgage dies

• 1. Call the loan servicer. The servicer’s name and number are on the loan statement. Tell them about the death and ask for the loan balance, the deadlines, and your options in writing.
• 2. Find out who has authority to sell. Check whether there is a will, a trust, or a need for probate. A Florida estate attorney can tell you what is needed.
• 3. Protect the house. Keep insurance active, keep taxes paid if you can, lock it up, and keep up the yard or pool to avoid code or HOA fines.
• 4. Get a sense of value. Compare the loan balance to what the house is worth. This tells you whether you are likely looking at a regular payoff or a sale under the 95% rule.
• 5. Pick your path and put it in writing. Pay off, sell, or deed in lieu. If you are selling, share your purchase contract with the servicer.

Why heirs sell a reverse-mortgage house to Home Rescue Team

• As-is, contents included. Older homes with reverse mortgages often need work. We buy as-is — no repairs, no cleanout, no staging.
• Cash and quick. No bank financing or buyer appraisal contingency. We can close in as little as about 15 days once you have authority to sell and the servicer’s approval, which can help when a HECM deadline is coming.
• No commissions or closing costs for you. The price we agree on is not reduced by agent commissions.
• We work with the title company and servicer. We help coordinate the payoff or the 95% sale paperwork so the closing lines up with the servicer’s requirements.
• Local to South Florida. We buy houses across Miami-Dade, Broward, and Palm Beach.

Selling for cash is not right for every family. If the house is worth well more than the loan and in good shape, listing it may bring a higher price. We are happy to talk through the trade-offs honestly.

Facing other challenges too? See our guides for heirs who live out of state, heirs who disagree, and houses facing foreclosure, plus our Florida foreclosure timeline.

Frequently asked questions

Do heirs have to pay off a reverse mortgage out of their own money?

Generally, no. A HECM is a non-recourse loan: the lender can collect only through the sale of the house, not from the heirs personally. If the loan balance is more than the house is worth, HUD rules generally let heirs sell for at least 95% of the appraised value, and FHA mortgage insurance covers the rest. If you want to keep the house, though, the loan must be paid off.

What is the HECM 95 percent rule?

When a HECM comes due after the borrower’s death and the balance is more than the house is worth, the estate or heirs generally may sell the house for at least 95% of its current appraised value. The lender accepts the net proceeds as satisfaction of the loan. The CFPB describes it as paying the full balance or 95% of the appraised value, whichever is less.

How long do heirs have to sell a house with a reverse mortgage?

The due and payable notice generally gives heirs 30 days to act, and the CFPB says this can sometimes be extended up to six months. HUD guidance says lenders generally must start foreclosure within six months of the death, but may ask HUD for up to two 90-day extensions if the heirs show they are actively selling or working to pay off the loan. Your notice controls, so read it closely.

Do I need probate to sell an inherited house with a reverse mortgage in Florida?

Often, yes. Someone must have legal authority to sign the sale, and in Florida that usually comes through probate unless the house was in a trust or passed another way. Smaller estates may qualify for faster summary administration. Ask a Florida estate attorney which process and which limit apply to you.

Can you buy the house if it is worth less than the reverse mortgage balance?

Possibly. In that case the servicer must approve the sale price, which generally must be at least 95% of the current appraised value. If our as-is cash offer meets the servicer’s minimum, we can move quickly. If it does not, we will tell you honestly so you can consider other options.

What does it cost to sell to Home Rescue Team?

Nothing out of pocket for you. We charge no commissions or fees and we pay the closing costs. The reverse mortgage and any other liens are paid from the sale proceeds at closing.

Inherited a house with a reverse mortgage? Call or text (305) 699-9763 for a free, no-obligation cash offer. We also help with inherited houses, probate properties, and situations where heirs disagree, across Miami-Dade, Broward, and Palm Beach.