By Steven Hyde, Founder, Hyde Funding · NMLS #391380. Reviewed October 21, 2026. Hyde Funding is a mortgage lender headquartered in San Diego, lending nationwide since 2015.
Short answer: When the last borrower passes away, the loan comes due. Heirs can keep the home by paying the balance or 95% of the current appraised value, whichever is less. They can also sell the home and keep any remaining equity, or turn it over to the lender. Because HECMs are non-recourse, heirs never owe more than the home is worth.
The servicer contacts the estate. Heirs generally have 30 days to respond and up to six months to sell or pay off, with possible extensions while actively marketing the home.
If the balance exceeds the home’s value, heirs who want to keep it can pay 95% of the appraised value. FHA insurance covers the rest.
Any proceeds above the loan balance and selling costs go to the estate.
Tell your family about the loan, keep documents accessible, and consider an estate attorney.
Only if they want to keep the home. They aren’t personally liable.
Yes, a new mortgage can pay off the reverse mortgage.
HECMs can be held in many living trusts. The lender reviews the trust.
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Steven Hyde, NMLS #391380 (NMLS Consumer Access). Equal Housing Opportunity. Reverse mortgage borrowers must live in the home as their primary residence, keep paying property taxes, homeowners insurance and HOA dues, and maintain the home, or the loan may become due. The loan balance grows over time. HECMs are insured by FHA. Hyde Funding is not affiliated with HUD, FHA or any government agency. This is general information, not a commitment to lend. Consult a financial or tax advisor.