{"id":"how-do-heirs-sell-a-house-with-a-reverse-mortgage-california","url":"https://realestateworks.com/journal/how-do-heirs-sell-a-house-with-a-reverse-mortgage-california","json":"https://realestateworks.com/api/catalog/how-do-heirs-sell-a-house-with-a-reverse-mortgage-california","title":"How do heirs sell a house with a reverse mortgage in California?","excerpt":"When the last borrower on an FHA reverse mortgage (HECM) dies, the loan becomes due, and under HUD's rule heirs get 30 days from the lender's due-and-payable notice to pay it off, sell, or give the home to the lender. Extensions may be approved while the home is actively marketed, and if the balance is more than the home is worth, HUD says a sale for at least 95% of the appraised value can satisfy the loan.","category":"selling","publishedAt":"2026-10-22","updatedAt":"2026-10-23T00:57:49.631Z","author":"Sidney Manzo","license":"CA DRE #01108914","cities":[],"topics":["reverse mortgage","HECM","heirs","95 percent rule","selling an inherited house"],"audience":"sellers","intent":"inform","sourceQuestion":"How do heirs sell a house with a reverse mortgage in California?","sourceUrls":["https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-C/subject-group-ECFRd09050999b4dfd2/section-206.125","https://www.hud.gov/sites/dfiles/SFH/documents/inheriting_hecm_09-23-19.pdf","https://www.hud.gov/sites/dfiles/OCHCO/documents/2022-15hsgml.pdf","https://www.hud.gov/sites/documents/15-10ml.pdf","https://www.consumerfinance.gov/ask-cfpb/with-a-reverse-mortgage-loan-can-my-heirs-keep-or-sell-my-home-after-i-die-en-242/","https://answers.hud.gov/housingcounseling/s/?language=en_US","https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=2924","https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC&sectionNum=10147.5"],"seo":{"title":"Selling a House With a Reverse Mortgage After a Death (CA)","description":"Inherited a home with an FHA reverse mortgage (HECM)? See the 30-day notice, extensions, the 95% rule and what heirs can do, plus who to call first.","image":"/api/media/journal/1792700913974-lfdeja.webp","imageAlt":"Documents labeled reverse mortgage and heir sale, a house key, pen and digital tablet sit on a wooden table."},"faqs":[{"q":"How long do you have to sell a house with a reverse mortgage after death?","a":"For an FHA reverse mortgage (HECM), 24 CFR 206.125 gives heirs 30 days from the date of the lender's due-and-payable notice to pay off the loan, sell, or give the home to the lender. Under HUD Mortgagee Letter 2015-10, lenders may request extensions from HUD while the home is actively marketed, and the CFPB says the timeline might be extended up to six months. Ask your servicer."},{"q":"What is the 95% rule on a reverse mortgage?","a":"If the HECM balance is more than the home is worth, HUD says the estate or heirs may sell the home for at least 95-percent of the current appraised value, and the lender will accept the net proceeds as satisfaction of the loan. Under 24 CFR 206.125, the lender orders the appraisal, and closing costs on that sale are capped. Ask your servicer for the figures that apply to your loan before you set a price."},{"q":"Do heirs have to pay back a reverse mortgage?","a":"To keep the home, HUD says the HECM loan balance must be paid off in full. If heirs sell, the CFPB says they repay the loan and keep the difference, or, if the home is worth less than the balance, sell for at least 95 percent of the appraised value, and the rest of the loan is covered by the mortgage insurance. A HUD-approved housing counselor or an attorney can review your situation."},{"q":"Who pays the property taxes and insurance after the borrower dies?","a":"HUD's flyer for heirs says property taxes and insurance on the property remain the responsibility of the borrower's estate until title is transferred. Ask your estate attorney how the estate should handle those bills while the house is on the market, and keep records of what is paid and from which account."},{"q":"Can you sell a house with a reverse mortgage before the borrower dies?","a":"HUD's flyer says the loan balance becomes due and payable when the borrower sells the home. Under 24 CFR 206.125, where the HECM is not due and payable, the borrower or an authorized representative of the borrower may sell the property for at least the lesser of the outstanding loan balance or the appraised value. For anything else, check your loan documents and ask your servicer or a HUD-approved housing counselor."}],"body":"Sidney Manzo, CA DRE #01108914, can review this property. A request does not create a listing agreement.\n\nGeneral information, not legal or tax advice. Sidney Manzo is a real estate agent, not an attorney or tax adviser. Talk to the loan servicer, a HUD-approved housing counselor and an estate attorney about how HUD's rules and the Civil Code apply to your family's loan. This note covers FHA-insured reverse mortgages (HECMs) only; for any other reverse mortgage, check your loan documents and ask your servicer. Rules as of October 22, 2026.\n\nWhat happens to a reverse mortgage when the owner dies? HUD's flyer for heirs says the loan balance \"becomes due and payable when the borrower either sells the home, no longer occupies it as their primary residence, or upon the death of the last surviving borrower\". Under HUD's regulation, 24 CFR 206.125, the lender then notifies \"the borrower, Eligible Non-Borrowing Spouse, borrower's estate, and borrower's heir(s), as applicable\" that the mortgage is due and payable. Selling is the common path. The CFPB says that if the home is worth more than the balance, \"your heirs can sell the home, use the money to repay the loan, and keep the difference\", and if it's worth less, they can pay off the loan by selling for at least 95 percent of the appraised value, and \"The rest of the loan is covered by the mortgage insurance that the reverse mortgage borrower paid during the duration of the loan\". HUD's first action step is plain: \"Contact the HECM lender immediately to review your responsibilities and options\". The FHA's line is (800) CALL FHA (225-5342). A surviving spouse who isn't on the loan HUD says special provisions may let a non-borrowing spouse stay in the home, and that a Non-Borrowing Spouse Certification is due to the lender within 30 days of the last surviving borrower's death, among other requirements. Eligibility depends on the loan, so ask the servicer and a HUD-approved housing counselor.\n\nHow long do heirs have to sell? The 30-day notice The clock runs from the lender's notice, not from the date of death. Under 24 CFR 206.125, \"The mortgagee shall give the applicable party 30 days from the date of notice\" to pay the balance in full, sell, or give the lender a deed in lieu of foreclosure. The CFPB puts it this way: \"Once your heirs receive a due and payable notice from the lender, they have 30 days to buy, sell, or turn the home over to the lender to satisfy the debt\". HUD Mortgagee Letter 2022-15 changed when lenders send that notice, to \"within 30 days of providing notice of the borrower's death to the Secretary\". Extensions while you market the home Under HUD Mortgagee Letter 2015-10, if the owners give the lender evidence of \"active marketing of the property\" or attempts to satisfy the balance, lenders may \"request from HUD no more than two 90-day extensions\" to take the first legal action to start foreclosure. The CFPB says \"it might be possible for the timeline to be extended up to six months so your heirs can sell the home or obtain their own loan to purchase the home\". Extensions are requested, not automatic. Your servicer may ask for proof that the home is on the market, so keep the listing date, showings and offers. If nothing happens Under 24 CFR 206.125, the lender \"shall commence foreclosure of the mortgage within six months of the due date\", or \"within such additional time as may be approved by the Commissioner\". In California, the foreclosure process is governed by Civil Code section 2924 and related sections. If the lender's notice has arrived and the home isn't sold, talk to the lender, a HUD-approved housing counselor and an attorney right away.\n\nWhat are heirs' options, and what is the 95% rule? To keep the home, HUD says \"the HECM loan balance must be paid off in full\". To give the home back, 24 CFR 206.125 says the lender \"shall accept a deed in lieu of foreclosure\" if it \"is filed for recording within 9 months of the due date and the mortgagee is able to obtain good and marketable title\". Ask the servicer about that path. To sell when the balance is more than the home is worth, HUD's flyer says \"the estate or heirs may sell the home for at least 95-percent of the current appraised value and the lender will accept the net proceeds as satisfaction of the loan\". The regulation, 24 CFR 206.125, sets the amount by HUD notice, \"which shall not exceed 95 percent of the appraised value\", and the lender satisfies the mortgage \"provided that there are no junior liens\" and \"all the net proceeds from the sale are paid to the mortgagee\". The CFPB says a sale for more than the balance lets heirs repay the loan \"and keep the difference\". HUD says \"Any post death transfer is considered a 'sale' for these purposes\", and 24 CFR 206.125 says \"sell includes the transfer of title by operation of law\". So even heirs who plan to keep the house deal with the lender. The appraisal and closing costs Under 24 CFR 206.125, the lender has the home appraised \"no later than 30 days after receipt of the request by an applicable party in connection with a potential property sale\". When the loan is due, \"the appraisal shall be at the mortgagee's expense but the mortgagee shall have a right to be reimbursed out of the proceeds of any sale\". On a sale under the 95% rule, \"Closing costs shall not exceed the greater of: 11 percent of the sales price; or a fixed dollar amount as determined by the Commissioner through Federal Register notice\". Your servicer confirms what HUD allows. Under California Business and Professions Code section 10147.5, \"The amount or rate of real estate commissions is not fixed by law. They are set by each broker individually and may be negotiable between the seller and broker\".\n\nTaxes, insurance and the estate side HUD says \"Property taxes and insurance on the property remain the responsibility of the borrower's estate until title is transferred\". Ask your estate attorney how the estate should pay them during the sale, and ask a CPA about income taxes on the sale. Who can sign the sale depends on how title was held, so ask your estate attorney. If the estate goes through court in Los Angeles County, see how a court-supervised estate works in LA County . If the house needs work, read selling a house as-is in California , and if the heirs live in another state, see selling a Los Angeles house from out of state . Selling a house after a parent dies (link when published). Who to call: the loan servicer (the number on the statement); the FHA at (800) CALL FHA (225-5342); a HUD-approved housing counseling agency (HUD's agency locator is listed in the sources below); and an estate attorney."}