The first thing that usually happens is a letter from the servicer. When the last borrower on a reverse mortgage dies, the loan becomes due and payable, and the servicer is supposed to send a notice to the estate or the heirs. Don’t ignore that envelope. Open it, read it, and call the number on it to confirm they have the right contact person. The notice generally explains that the loan is due, what the current balance looks like, and what options exist for settling it. Keep copies of everything you send and write down who you talked to and when.

The due and payable process itself is fairly straightforward in concept. The loan doesn’t have to be paid off the day of the funeral. Federal rules give heirs some time to work things out, but how much time and what paperwork applies depends on your situation, so don’t rely on hallway gossip. The key point is that interest and fees keep accruing while the loan stays open, so waiting without a plan gets expensive. If nobody communicates with the servicer, the loan can move toward foreclosure. That’s the part to avoid.

You basically have three paths. You can buy the house, meaning you or another heir pays off the reverse mortgage, often by refinancing or with other funds, and keeps the property. You can sell the house and use the proceeds to pay the loan, keeping whatever is left after costs. Or you can hand the house back to the lender, sometimes called a reverse mortgage house after a death deed in lieu, which is simpler but means walking away from any equity. Which one makes sense depends on the balance owed, the condition of the house, and what the heirs want.

Before deciding, get the payoff statement from the servicer and have a HUD-approved housing counselor walk you through it. That counseling is typically free or low cost. If there’s any question about the estate, the will, or who has authority to sign, talk to a lawyer. If selling, a CPA can help you understand tax consequences, which vary by situation. In Sacramento County, the county assessor and recorder can answer questions about how title and property tax reassessment work after a death. Don’t sign anything from the servicer until you understand it. And don’t let a stranger who knocks on the door offering to « help » rush you into a deal. There is a fuller write-up at a reverse mortgage house after a death.