The Reverse Mortgage Inheritance Strategy

The loan becomes due and payable. The servicer has 60 days to notify HUD and then 30 days to notify the estate or heirs. The letter gives the family 30 days to state, in writing, what they intend to do: keep the house by paying off the balance, sell it, or hand it back. It is 30 days to state an intention, not 30 days to close a sale. The servicer must take the first legal step toward foreclosure no later than six months from the start of its clock, and HUD allows up to two 90-day extensions when the family is actively working toward a sale or payoff, so twelve months is the outside edge of the family's time.

No, but it changes what the inheritance is. The house is still part of the estate. What heirs inherit is the equity left after the loan balance is paid, and that balance grows every month because interest and mortgage insurance are added to it rather than paid. Whether anything is left depends on the home's value, how long the loan ran, and how much was drawn. The book walks through how to estimate that number on any given date.

Yes. Title passes through the estate the same way it would without the loan. The difference is that the lender's lien must be satisfied. Heirs who want to keep the house pay off the balance, typically with a new mortgage or cash. Heirs who do not want it can sell, or sign a deed in lieu of foreclosure and walk away with no personal liability.

Yes, and they have a specific advantage when the loan balance exceeds the home's value. Under the 95 percent rule, the estate or heirs may satisfy the loan by paying the lesser of the full balance or 95 percent of the current appraised value. If the house is worth more than the balance, heirs simply pay the balance, usually by refinancing into a conventional mortgage in their own names.

No. The Consumer Financial Protection Bureau's answer is that title to the home remains with the borrower. In fact, holding title in your own name or living trust is a condition of getting the loan at all. The lender holds a lien, the same way any mortgage lender does. The borrower can sell, refinance, or leave the house to heirs at any time, subject to paying the loan off.

The HECM is non-recourse and insured by FHA. Neither the borrower nor the heirs ever owe more than the home is worth, and the lender cannot come after other assets or the estate for the shortfall. The estate or heirs can sell the house for at least 95 percent of appraised value and the FHA insurance fund absorbs the rest, or they can deed the house to the lender and owe nothing.

Practically, six months from the servicer's clock, with up to two 90-day extensions for a total of twelve months. The extensions are not automatic. The family has to show it is actively listing the property or arranging a payoff. The book's Chapter 16 is a working checklist for using that time well.

The largest items are the FHA upfront mortgage insurance premium of 2 percent of the home's maximum claim amount (the appraised value, capped at the HECM lending limit), an origination fee that is capped at $6,000 and can be negotiated lower, third-party closing costs, and an annual mortgage insurance premium of 0.50 percent of the outstanding balance that accrues onto the loan rather than being billed. In the worked example in the book, putting the loan on a $480,000 house costs roughly $19,000, which is why the loan rewards a long stay and punishes a short one.

No. The HECM is a federal program and the rules in the book apply nationwide. The book is written for any family in the United States. Florida-specific details, like documentary stamp taxes on the closing statement, are covered separately on this site.

The content is identical across editions. The paperback and hardcover are on Amazon. The ebook is on Apple Books, Kobo, Google Play Books, and the other retailers listed on this page, and the Google Play edition is free.