Families dealing with an aging parent’s home often run into a reverse mortgage they did not know existed until a lender’s notice arrives, or they know one is in place but are not sure what happens next. If a parent or loved one in the Richmond area has a HECM, a Home Equity Conversion Mortgage, and they have moved into assisted living, passed away, or are considering selling, this article walks through the actual mechanics: when the loan becomes due, what options the borrower or their heirs have, and the protection built into the loan that limits what anyone ever has to pay back.
This is a mechanics explainer, not financial or tax advice, and it is not a recommendation about whether a reverse mortgage was or is the right choice for anyone’s situation. Every family’s numbers and circumstances are different. If you are the borrower, an heir, or someone acting under a power of attorney, talk to a HUD-approved housing counselor, a financial advisor, and, for anything involving an estate or a trust, an elder-law or estate attorney before making decisions.
Written by the Mission Realty Team, Real Broker LLC, 3701 Cox Rd, Richmond, VA 23233, (804) 601-4960.
What a HECM Is, Briefly
A HECM is the FHA-insured version of a reverse mortgage, and it is by far the most common type. It allows a homeowner, generally 62 or older, to borrow against their home’s equity without a monthly mortgage payment. Instead of the homeowner paying the lender, the loan balance grows over time as interest and fees accrue, and it is not due for repayment as long as the borrower continues to live in the home as their primary residence, keeps up with property taxes and insurance, and maintains the property.
When the Loan Becomes Due and Payable
The loan comes due when the last remaining borrower, or an eligible non-borrowing spouse, permanently leaves the home. According to the Consumer Financial Protection Bureau, a reverse mortgage “becomes due and payable after your death and after the death of any coborrowers or of an eligible nonborrowing spouse.” The same trigger applies if the borrower moves out permanently, for example into assisted living or a family member’s home, and the property is no longer their primary residence, or if the home is sold. There is no single fixed date built into the loan the way there is with a traditional mortgage’s maturity date; the trigger is tied to the borrower’s occupancy and life circumstances, not a calendar.
This is often the exact moment a family finds itself also handling other paperwork for an aging parent, whether that is a power of attorney, a trust, or probate. If any of those apply to your situation, our related guides on selling a parent’s home under a power of attorney when they move into care, selling a home held in trust, and selling an inherited home through probate cover those processes in detail and pair directly with what happens once a HECM becomes due.
What Happens Once the Lender Sends Notice
Once the servicer is notified of the triggering event, typically the borrower’s death, they send a due-and-payable notice to the estate or heirs. From that point, the CFPB notes that heirs generally have “30 days to buy, sell, or turn the home over to the lender,” though in practice extensions are commonly available, often in increments that can add up to roughly six months total, to give the family time to arrange financing, list the home, or settle the estate. It is worth confirming the specific extension terms and deadlines directly with the loan servicer in writing, since timelines and documentation requirements can vary.
From there, the estate or heirs generally have a few paths available:
- Pay off the loan and keep the home. This usually means either paying the balance in cash or obtaining new financing, such as a traditional mortgage, in the heir’s name to retire the reverse mortgage balance.
- Sell the home and pay off the loan from the proceeds. If the home is worth more than the loan balance, the estate keeps the difference after the loan and closing costs are paid. This is the most common path when the family does not intend to keep the property.
- Turn the home over to the lender (deed in lieu) if the loan exceeds the home’s value. Because of the non-recourse protection described below, the estate is not required to make up the difference out of other assets.
Deciding What the Home Is Actually Worth
Whether the plan is to sell, refinance, or evaluate a deed-in-lieu, the family’s decision almost always starts with knowing what the home would realistically sell for today. A free home valuation gives the estate or heirs a current, no-obligation number to bring to the servicer, the CPA, or the estate attorney before any deadline forces a decision.
The Non-Recourse Protection: Heirs Never Owe More Than the Home Is Worth
This is the detail that gives most families the most relief once they understand it. A HECM is a non-recourse loan, which means neither the borrower nor their heirs are ever personally liable for more than the home’s value if the loan balance has grown larger than what the home is worth. In practice, per CFPB guidance, if the home sells for less than the amount owed, heirs “can pay off the loan by selling the home for at least 95 percent of the home’s appraised value,” and the remaining gap between that sale price and the loan balance is covered by the FHA mortgage insurance the borrower paid into throughout the life of the loan, not by the family’s other assets or savings. No other cash, savings, or property belonging to the heirs can be pursued to cover a shortfall. This protection is a core feature of how HECMs are structured, and it is one of the most important things for a family to understand before assuming a reverse mortgage has left them with a debt larger than the house itself.
Selling While the Borrower Is Still Living
A reverse mortgage does not prevent a sale while the borrower is alive, either. If a parent who has a HECM decides, or a family acting under a valid power of attorney decides on their behalf, that a move to a smaller home, a senior living community, or a family member’s house makes sense, the home can be listed and sold like any other property. The loan balance is paid off from the sale proceeds at closing, exactly like a traditional mortgage, and whatever equity remains after the loan and closing costs belongs to the borrower. This is often the more common scenario locally, whether the home is in Henrico County, Chesterfield County, or Hanover County, and it does not require waiting for a due-and-payable notice to trigger the process.
Handling This With Care
None of this is meant to suggest a reverse mortgage was a good or bad decision for any particular family. It is one tool among several that some homeowners use to access equity in retirement, and the right call depends on a person’s full financial picture, health, family situation, and goals, which is exactly why this is a conversation for a HUD-approved housing counselor and a financial or elder-law professional, not something to work out from a blog post alone. What we can help with, as a local brokerage, is the real estate side once a decision is being considered: what the home is actually worth, what a realistic sale timeline looks like, and how to coordinate a listing with a servicer’s deadline if one is in place. If a due-and-payable deadline is already on the calendar, contact our team and we can talk through what a realistic timeline looks like on the real estate side. You can see recently sold homes in the area on our recently sold properties page for context on current values, and the Richmond Association of REALTORS and Central Virginia Regional MLS publishes broader housing market reports for the region as well. The CFPB’s general Owning a Home resource center is also a good starting point for understanding home financing terms referenced above.
Frequently Asked Questions
What triggers a reverse mortgage becoming due?
A HECM becomes due and payable when the last borrower or an eligible non-borrowing spouse dies, permanently moves out of the home (such as into assisted living), or the home is sold. It is tied to occupancy and life events, not a fixed maturity date.
How much time do heirs have after a borrower passes away?
Heirs typically get an initial 30 days after notice from the servicer, with extensions commonly available that can add up to roughly six months in total to arrange a sale, refinance, or other resolution. Exact terms should be confirmed with the loan servicer in writing.
Do heirs have to pay off a reverse mortgage themselves?
Not out of their own other assets. The loan is paid off from the sale of the home, from other funds if the heirs choose to keep the property, or, due to the loan’s non-recourse structure, the shortfall is covered by FHA mortgage insurance if the home is worth less than the balance owed.
Can heirs owe more than the house is worth?
No. A HECM is a non-recourse loan, meaning heirs are never personally liable for more than the home’s value. If the home sells for at least 95 percent of its appraised value and that is not enough to cover the balance, FHA mortgage insurance covers the remaining gap.
Can a home with a reverse mortgage be sold while the borrower is still alive?
Yes. The borrower, or someone acting under a valid power of attorney, can sell the home at any time. The loan is paid off from the sale proceeds at closing, and any remaining equity belongs to the borrower.
What if the family wants to keep the home instead of selling it?
Heirs can generally pay off the loan balance, often by obtaining new financing in their own name, and keep the home. This is a separate path from selling, and it depends on the heirs’ ability to qualify for financing or pay the balance directly.
Does a power of attorney or trust change how this works?
It can affect who has authority to act on the borrower’s behalf while they are alive, or how the estate is administered after death, but it does not change the underlying loan mechanics. Our guides on POA sales, trust sales, and probate sales cover how those authority questions typically play out locally.
Where should a family start if a HECM notice just arrived?
Start with the servicer directly to confirm the exact deadline and required documentation, and loop in a HUD-approved housing counselor, financial advisor, or estate attorney early. Getting a current home valuation is also a practical early step, since most decisions depend on what the home is actually worth today.
A reverse mortgage becoming due after a move, a sale, or a death is a process with real deadlines, but it is also a process with real protections built in, particularly the non-recourse limit that keeps heirs from ever owing more than the home is worth. If your family is navigating this in Richmond, Henrico, Chesterfield, or anywhere in the area and need a current, no-obligation sense of what the home is worth before talking to the servicer or an attorney, start with a free home valuation from our team.
