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What happens to my reverse mortgage when I die?

Reverse mortgage loans typically must be repaid when you die.

If you have a reverse mortgage when you die the loan has to be paid back. However, what happens to the reverse mortgage will depend on a number of factors, including whether:

  • You have a co-borrower on the reverse mortgage loan,
  • When the reverse mortgage loan was taken out, and
  • Whether you were married when the loan documents were signed and continued to be married up until your death.  

If there’s a co-borrower on the loan

When there is a co-borrower on the loan, both you and the co-borrower receive the benefits of the loan and both are responsible for meeting the obligations of the loan. If one borrower dies, the co-borrower will be able to remain in the home and receive loan payments so long as they meet the obligations of the reverse mortgage loan. 

It’s a good idea to check with your reverse mortgage servicer to make sure its loan records are accurate and that you and your co-borrower are both on the loan. Call your servicer to find out what names are listed on your loan. See your reverse mortgage loan statement for the phone number, and ask them to send you this information in writing for your records. You can also write a letter requesting this information.

If your spouse is not a co-borrower

If your spouse is not a co-borrower, they are called a “non-borrowing spouse.” When you die, the non-borrowing spouse will not receive any additional loan payments and may have to move out if they do not meet certain requirements set by the U.S. Department of Housing and Urban Development.

As explained below, what is required of the Non-Borrowing Spouse is complicated. After your death, it is a good idea for your Non-Borrowing spouse to talk to an attorney or housing counseling agency right away.

For reverse mortgage loans with case numbers assigned on or after August 4, 2014

Generally, case numbers are assigned right before the borrower signs the loan documents. When the last borrower dies, the loan becomes due and payable. However, if the reverse mortgage case number was assigned after August 4, 2014, the due and payable status of the loan may be deferred, and the non-borrowing spouse may stay in the home if they are able to show that they:

  • Have legal title to the property or a legal right to remain in the home for life. The non-borrowing spouse will need to provide evidence of their right to be in the home within 90 days of the borrower’s death.

  • Were married to you from the time the reverse mortgage loan documents were signed up until your death.           
    • Note, there is an exception for couples in a committed relationship who were unable to be legally married because of their gender at the time the reverse mortgage loan was signed. Such couples must show that they were legally married by the time of the borrower’s death.

  • Were specifically named as an Eligible Non-Borrowing Spouse in the reverse mortgage loan documents at the time the loan documents were signed. 

  • Currently lives and has lived in the home as their principal residence since the beginning of the reverse mortgage loan.

  • Continue to fulfill all other obligations of the reverse mortgage loan including keeping the home in good condition and paying the homeowners insurance and property taxes on-time.

For reverse mortgage loans with case numbers assigned before August 4, 2014

If you die and the non-borrowing spouse still lives in the home, the lender or servicer has two options: (1) to foreclose on the home; or (2) allow the non-borrowing spouse to stay in the home through a process called Mortgagee Optional Election Assignment (“MOE Assignment”).

It’s your lender who makes this decision.

Foreclosure  

If the lender decides to foreclose on the home or finds that the non-borrowing spouse does not qualify for MOE Assignment, they must begin foreclosure proceedings within six months of the borrower’s death.   

Mortgagee Optional Election (MOE) Assignment  

If your lender or servicer chooses the MOE Assignment, to qualify the non-borrowing spouse must show that they:
  • Were married to the borrower at the time the reverse mortgage loan documents were signed and remained married up until the borrower’s death.   
    • Note, there is an exception for couples who were in a committed relationship who were unable to be legally married because of their gender at the time the reverse mortgage loan was taken out. Such couples must show that they were legally married by the time of the borrower’s death.
  • Currently lives and has lived in the home as their principal residence since the beginning of the reverse mortgage loan. 

The non-borrowing spouse will also need to provide their Social Security number or Tax Identification Number, and certify that they will:

  • No longer receive any payments from the reverse mortgage loan.
  • Continue to meet all loan obligations, including paying property taxes and homeowner’s insurance.
  • Ensure that the reverse mortgage loan does not become due and payable for any other reason.

The non-borrowing spouse will need to certify to the above each year.

If you or your spouse are not on the loan but believe that you should be, promptly seek legal advice. You can also try to add your spouse to the loan as a co-borrower by refinancing into a new reverse mortgage. You’ll have to have enough equity to qualify for a refinance and you’ll need to pay the loan fees again for the new loan.

What your heirs need to know about your reverse mortgage loan 

If your heirs want to keep your home after you and your spouse die, they will have to repay either the full loan balance or 95% of the home’s appraised value–whichever is less. 

Talk to your children and heirs now and make a plan for any non-borrowing family members living in the home.  Make sure your adult children or any family members living in the home know what to expect when your reverse mortgage loan comes due. If they wish to keep the home, contact your reverse mortgage company for written information that explains their options. Discuss this information with your family and follow up with the reverse mortgage company for anything that you don’t understand.

Note: This information only applies to Home Equity Conversion Mortgages (HECMs), which are the most common type of reverse mortgage loan.