Losing a parent or loved one is devastating. Discovering that their home has a reverse mortgage — and that the lender is demanding payment or threatening foreclosure — makes an already difficult situation feel overwhelming. But you have options, you have time, and you have legal protections. Understanding them is the first step.
This guide explains exactly how reverse mortgage foreclosure works in Florida, what options heirs have, how to get more time, and the specific rules that protect you. You are not powerless in this situation, and you do not have to lose the home if you act promptly.
How Does Reverse Mortgage Foreclosure Work in Florida?
A Home Equity Conversion Mortgage (HECM) — the most common type of reverse mortgage — allows homeowners 62 and older to borrow against their home equity without making monthly payments. The loan becomes due and payable when certain "triggering events" occur:
- The last surviving borrower dies
- The borrower sells the home
- The borrower permanently moves out (including to a nursing home for more than 12 consecutive months)
- The borrower fails to pay property taxes or homeowners insurance
- The borrower fails to maintain the property
When a triggering event occurs, the servicer sends a "due and payable" notice. This starts the clock. Heirs typically have 6 months to satisfy the loan through payoff, sale of the property, or deed in lieu of foreclosure. If the loan is not satisfied, the servicer can begin foreclosure proceedings under the Florida foreclosure process.
What Options Do Heirs Have?
Heirs have several paths — and the best choice depends on your financial situation, the home's value, and the loan balance. Barrett Henry, a REALTOR with 23+ years of real estate experience and Broker Associate at REMAX Collective, helps Florida families evaluate these options:
Option 1: Pay Off the Loan and Keep the Home
Heirs can pay off the reverse mortgage balance and keep the property. Here is the critical rule: you only need to pay the lesser of the loan balance or 95% of the home's current appraised value. If your parent owed $350,000 but the home is only worth $280,000, you can keep the home by paying 95% of $280,000 = $266,000. The remaining balance is absorbed by FHA insurance.
You can pay with personal funds, a new mortgage, or a combination. Some heirs obtain a conventional mortgage on the property to fund the payoff.
Option 2: Sell the Home
If you do not want to keep the home, you can sell it. If the sale price exceeds the loan balance, you keep the difference. If the home sells for less than what is owed, the FHA insurance covers the shortfall — heirs owe nothing more. This is the non-recourse protection built into HECM loans.
Selling is often the most practical choice. You can list the property with a licensed real estate agent to maximize the sale price. Read our guide on selling a home in foreclosure for more information.
Option 3: Deed in Lieu of Foreclosure
If the loan balance exceeds the home's value and you do not want to purchase the home at 95% of appraised value, you can offer a deed in lieu of foreclosure. You transfer the deed to the lender, and the debt is satisfied. You owe nothing more.
Option 4: Let the Foreclosure Proceed
If the home has no equity (loan balance exceeds value) and heirs do not want the property, walking away is a valid option. Because HECM loans are non-recourse, heirs have no personal liability for the remaining balance. However, if there is equity in the home, letting it go to foreclosure means losing that equity — which could be substantial.
How Do I Get More Time From the Servicer?
Six months is not much time, especially when you are grieving. HUD guidelines allow servicers to grant extensions:
- First extension: Up to 90 additional days if you can demonstrate that you are actively working to resolve the situation (selling the home, arranging financing, or preparing a deed in lieu).
- Second extension: An additional 90 days for a potential total of 12 months from the due and payable date.
To request an extension:
- Put your request in writing. Send a letter to the servicer explaining what you are doing to resolve the loan (listing the home, applying for financing, etc.).
- Provide documentation. If you have listed the home, provide the listing agreement. If you are seeking financing, provide the loan application or pre-approval letter.
- Send by certified mail with return receipt. This creates proof that you made the request and when it was received.
- Follow up by phone and document every call. Note the date, time, representative name, and what was discussed.
What Are Non-Borrowing Spouse Protections?
Before 2015, if a reverse mortgage borrower died and their spouse was not on the loan, the surviving spouse could face immediate foreclosure — even though the home was their primary residence. HUD changed the rules to protect eligible non-borrowing spouses (NBS).
Under current HUD guidelines, an eligible NBS may remain in the home after the borrower spouse dies if:
- They were married to the borrower at the time the reverse mortgage was taken out
- They were identified as a non-borrowing spouse in the loan documents
- They have lived in the home as their primary residence continuously
- They continue to pay property taxes, insurance, and maintain the property
Important: the NBS does not receive any additional loan proceeds — the loan is effectively frozen. And these protections apply to HECM loans originated after August 4, 2014 (with some retroactive protections for earlier loans under certain conditions). If you are a non-borrowing spouse, consult a foreclosure defense attorney to understand your specific rights.
Can a Reverse Mortgage Be Foreclosed for Tax or Insurance Default?
Yes — and this catches many borrowers off guard. Even though a reverse mortgage requires no monthly mortgage payments, the borrower must continue paying:
- Property taxes
- Homeowners insurance
- HOA or condo association fees (if applicable)
- Property maintenance and repairs
Failure to pay property taxes or insurance is a default on the reverse mortgage. The servicer will typically advance funds to pay these obligations and add the amount to the loan balance. But if the arrearage becomes significant, the servicer can declare the loan due and payable and begin foreclosure.
If you or a loved one is struggling to pay property taxes or insurance on a reverse mortgage, contact the servicer immediately. Some servicers will establish set-aside accounts for these expenses. Also explore Florida property tax exemptions that could reduce your tax burden.
What Should Heirs Do First?
If you have just learned that a family member's home has a reverse mortgage, take these steps immediately:
- Contact the servicer. Identify yourself as an heir and request information about the loan balance, payoff amount, and any deadlines.
- Get the home appraised. Knowing the current market value is essential for deciding whether to keep the home, sell it, or walk away.
- Consult a HUD-approved housing counselor. Free counseling is available specifically for reverse mortgage situations. Find one at hud.gov or call 1-800-569-4287.
- Consult an attorney. Especially if there are multiple heirs, estate complications, or if the servicer is not cooperating.
- Do not ignore correspondence from the servicer. Missing deadlines can eliminate your options.
Dealing with a reverse mortgage situation in Florida? Contact us for a free consultation. We help families understand their options and connect them with the right professionals to protect their interests.