Reverse Mortgage Foreclosure Timeline (When Does a Reverse Mortgage Become Due and Payable?)
A home equity conversion mortgage (HECM) becomes due and payable in one of the following circumstances:
The property is sold, or its title is transferred.
After you have sold the home or transferred the title for some reasons, a reverse mortgage becomes due and payable. Generally, the escrow company uses the money obtained by selling the house to pay off the reverse mortgage along with other liens. With title transfer, the loan becomes due and payable.
You do not occupy the home as a principal residence.
With a HECM, if you do not live in the house as your principal residence or, after your death, the property ceases to be the surviving spouse’s primary residence, the reverse mortgage becomes due and payable. In this scenario, you can again occupy the home as your primary residence or pay the full balance.
You can also sell the property for the lesser of the mortgage balance or 95% of its appraised value and use the proceeds to pay off the reverse mortgage. Another option is complete a deed in lieu of foreclosure, or the loan servicer will pursue foreclosure.
You do not occupy the home for over 12 consecutive months due to an illness.
If you stay away from your home in a senior care facility for up to 12 consecutive months because of mental or physical illness, and no other borrower occupies the property as the primary residence, the mortgage becomes due and payable. To pay the debt, you can fix the matter, pay the full balance, or sell the property for the lesser of the mortgage balance or 95% of its appraised value and use the proceeds to repay the loan.
Alternatively, you can complete a deed in lieu of foreclosure, or the loan servicer will pursue foreclosure.
You do not meet the loan obligations.
On a reverse mortgage, you have to pay property taxes, maintain the reverse mortgage insurance and make necessary home repairs. Failing to meet any of these criteria constitutes a violation of the mortgage, and the lender can announce the loan due. The lender should allow you to cure the default to avoid a foreclosure.
Reverse Mortgage Foreclosure Heirs
Reverse Mortgage Foreclosure Extensions
Reverse Mortgage Foreclosure After Death
- Pay back the loan and keep the house.
- Sell the house on a reverse mortgage
- Deed the house to the lender
- Let the lender foreclose