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The House Has a Mortgage or Reverse Mortgage: What to Do
When a homeowner with a mortgage dies, the loan does not disappear. Understand the loan status, communicate with the servicer, and act within applicable deadlines.
Whether the property has a traditional forward mortgage or a reverse mortgage (HECM), the estate needs to understand the loan status, communicate with the servicer, and act within applicable deadlines. The steps below help you gather information and protect the property while you determine the right path forward.
Important Disclaimer:
Bill Ross is a licensed Texas real estate agent, not an attorney, CPA, or title professional. Mortgage and reverse-mortgage issues involve federal regulations, servicer requirements, and legal deadlines that require professional guidance.
Consult a probate attorney and, if applicable, a HUD-approved housing counselor before making decisions about the loan.
What to Address Now
Identify the loan
Determine whether the property has a traditional mortgage, a reverse mortgage (HECM), or an unknown loan type. Locate the most recent statement, the promissory note, the deed of trust, and any riders or modifications.
Identify the servicer
Find the name, phone number, and address of the mortgage servicer (the company that collects payments and manages the account). This is not always the same as the original lender.
Notify the servicer of the death
Contact the servicer in writing to report the borrower's death. Request written confirmation of the loan balance, payment status, due date, and any requirements for the estate or heirs. Do not rely on verbal information alone.
Determine payment status
Find out whether payments are current, delinquent, or in default. Ask whether the servicer requires immediate action or whether there is a grace period during the probate process.
Preserve the property
Continue maintaining insurance, property taxes, and essential utilities. A lender can accelerate the loan or declare default if insurance lapses or taxes go unpaid.
Review insurance
Confirm that hazard insurance, flood insurance (if applicable), and mortgage insurance (for FHA loans) are current. Ask the servicer whether the policy needs to be updated to reflect the estate as the insured party.
Keep all correspondence
Document every communication with the servicer: dates, names, reference numbers, and what was discussed. This record is critical if disputes arise later.
Forward Mortgage Specifics
- The estate is generally responsible for the mortgage payments during administration.
- An heir may assume the loan, refinance, or sell the property to satisfy the debt.
- If the property is underwater (the loan balance exceeds the value), the estate and heirs should understand their options before committing to a course of action.
- A probate attorney can advise whether the mortgage is a secured claim against the estate and how it affects distribution.
Reverse Mortgage (HECM) Specifics
- A reverse mortgage becomes due and payable when the last surviving borrower dies, unless an eligible non-borrowing spouse qualifies for a deferral period.
- The servicer will send a due-and-payable notice. Respond to this notice in writing within the timeframe specified.
- Heirs may satisfy the loan for the lesser of the outstanding balance or 95% of the appraised value (for FHA-insured HECMs).
- Heirs may sell the property to pay off the loan, or the estate may pursue a deed in lieu of foreclosure.
- Do not ignore reverse-mortgage correspondence. Deadlines are real, and interest and mortgage insurance continue to accrue during any extension period.
- Consult a HUD-approved housing counselor (free or low-cost) for guidance specific to the HECM.
What Not to Assume or Do Yet
Do not assume the mortgage disappears at death.
It does not. The loan remains attached to the property and must be addressed by the estate.
Do not assume an heir can simply take over the loan without the servicer's approval.
Loan assumption requires the servicer's review and approval, and not all loans qualify.
Do not ignore correspondence from the servicer, especially for reverse mortgages.
Deadlines in reverse-mortgage due-and-payable notices are real and carry consequences.
Do not cancel the property insurance without first confirming with the servicer and the estate's attorney.
Do not sign any assumption, payoff, or deed-in-lieu documents without attorney review.
Documents to Locate
Questions to Ask the Probate Attorney
- Is the mortgage a secured claim against the estate?
- Does the estate have the authority to sell the property to satisfy the loan?
- Are there any personal liability concerns for the executor or heirs?
- How does the mortgage affect the timeline for estate administration?
Questions to Ask the Title Company
- Are there any additional liens or encumbrances beyond the mortgage?
- What documents will the title company need to issue a policy if the property is sold to satisfy the loan?
Property and Sale-Planning Work
A property with a mortgage may be a candidate for sale, refinance, or retention depending on the equity, the loan terms, and the estate's objectives. A real-estate professional can help you understand the market value and timing. Bill Ross helps families evaluate estate properties and plan sales that satisfy outstanding obligations.
This does not create a legal obligation to sell or a binding listing relationship.
Decisions Likely to Come Next
Whether to sell the property to satisfy the mortgage
Market value and loan balance determine the options.
Whether an heir can or should assume the loan
Requires servicer approval, and not all loans permit assumption.
How to handle the reverse-mortgage due-and-payable process
Deadlines are real and interest continues to accrue.
Whether to pursue a deed in lieu of foreclosure
An option when the property has little or no equity.
Related Guides and Resources
What Happens to the Mortgage When a Homeowner Dies
Mortgage and reverse-mortgage obligations after death
Reverse Mortgages After Death
What executors and heirs need to know about HECM due-and-payable rules
The Homeowner Just Died
First steps for executors and family members
Executor Estate Home Sale Checklist
Full 15-section checklist for Texas estate home sales
Author: Bill Ross, Hill Country Homesteads Group. This content is educational and does not constitute legal, tax, or financial advice. Consult a qualified Texas probate attorney, a HUD-approved housing counselor, a licensed title company, and a CPA or enrolled agent before making decisions about estate property.
Bill Ross is a licensed Texas real estate agent (License #778434) and Certified Probate Expert serving Boerne, Fair Oaks Ranch, San Antonio, and the surrounding Hill Country communities. Hill Country Homesteads Group, brokered by KW Boerne. Information current as of July 19, 2026.