Inherited a Home With a Reverse Mortgage? What Central Texas Families Should Know

When a parent passes away and their home had a reverse mortgage, the family often finds out from a letter from the loan servicer. It can feel urgent and confusing. The good news is that most reverse mortgages follow a fairly predictable process, and heirs usually have real options. Here is a general overview for Central Texas families.

What Happens to a Reverse Mortgage After a Death

Most reverse mortgages today are federally insured Home Equity Conversion Mortgages (HECMs). In general, the loan becomes due when the last borrower (or an eligible non-borrowing spouse) passes away or permanently leaves the home.

• The servicer typically sends a "due and payable" notice to the estate or heirs.
• The home is not automatically taken by the lender; the estate generally keeps ownership while the loan is settled.
• Interest and fees keep adding to the balance until the loan is paid off, so time matters.

Typical Timelines (and Why to Call the Servicer Early)

Exact deadlines depend on the loan and current HUD rules, so treat these as general guidance only:

• Heirs are commonly asked to respond within about 30 days and state their plans.
• Many families then have roughly six months to sell or pay off the loan.
• Extensions may be available if you are actively marketing the home or arranging financing, but they usually must be requested.

Keeping the servicer informed in writing, and saving copies of everything, can help avoid a foreclosure filing simply because no one answered the mail.

Your Main Options as an Heir

• Sell the home and use the proceeds to pay off the loan. Any remaining equity generally goes to the estate.
• Keep the home by paying off the balance with savings or a new mortgage.
• Walk away through a deed in lieu of foreclosure if the home is worth less than what is owed.

HECMs are generally "non-recourse," which means heirs typically are not personally responsible for a balance larger than the home's value. Rules on buying the home for less than the full balance are specific, so confirm the details with the servicer and your attorney.

Probate Still Matters

To sign a listing agreement or closing documents, someone usually needs legal authority to act for the estate. In Texas, that may mean letters testamentary or another probate path. Starting that process early helps you meet the servicer's deadlines. A Texas probate attorney can tell you which route fits your family.

Protecting the Equity

Because the loan balance keeps growing, a smooth, well-planned sale often preserves more for the family. A few practical steps:

• Get a current market value early, not just a guess.
• Keep the home insured, secured and maintained while it is vacant.
• Ask about extensions before a deadline passes, not after.
• Talk with a CPA about any tax questions on the sale.

Need Help With an Inherited Home?

Southern Luxe Group helps families settling an estate with a reverse mortgage from the Greater Austin Area to Bryan College Station. Get a no-pressure plan for the property or call Trina at (512) 629-9050.

This article is general information, not legal advice. Please consult a Texas probate attorney about your situation.