Wendy's mother passed away in late summer, leaving behind a modest Daytona Beach home and a Home Equity Conversion Mortgage (HECM) balance that sat uncomfortably close to what the house was worth. Wendy was the sole heir, she had never dealt with a reverse mortgage before, and the envelope from the loan servicer arrived before she had even finished arranging the memorial service. The question she called with was straightforward: does she have any time, and is there any money left for her?
The answer to both questions was yes, but only if she moved deliberately and understood the rules. Wendy's situation, a composite example rather than a specific client, illustrates exactly what heirs across Volusia County face every year when a parent's reverse mortgage comes due at death. For the broader picture of selling an inherited home in Florida, including probate timelines and tax treatment, see the complete guide to selling an inherited house in Florida. This article stays focused on the reverse mortgage itself: the notice, the clock, the options, and the decision.
What Happens the Moment the Borrower Dies
A HECM does not transfer to heirs as an ongoing loan. The moment the last surviving borrower dies, the loan becomes due and payable. The servicer is required to send a written notice to the estate or heirs, and that notice starts the clock. What it does not do is transfer ownership of the home to the lender. That misconception is probably the single most damaging piece of misinformation in this area of law. The lender has a lien, not a deed. Heirs still own the property, and they retain every right to sell it, refinance it, or deed it back on their own terms, within the prescribed windows.
Shortly after the borrower's death, the servicer will send an appraiser to establish the home's current fair market value. That appraisal matters for every option on the table, so heirs should make the property accessible and treat the appraisal as seriously as they would any listing appraisal.
The Clock: Deadlines Heirs Cannot Afford to Miss
Federal rules governing HECMs set a firm initial response window. After receiving the due-and-payable notice, heirs generally have thirty days to communicate their intentions to the servicer. Ignoring that notice does not pause the timeline; it accelerates the risk of foreclosure.
Once heirs have declared their intentions, the standard window to complete a sale or repay the loan is six months from the date the loan was called due. That window is not a suggestion. However, heirs who are actively working toward a resolution can request extensions, and HUD guidelines generally permit two additional ninety-day extensions, bringing the total possible period to approximately one year. Each extension request must be submitted in writing and must demonstrate that the heir is making genuine progress, whether by listing the property, pursuing a contract, or arranging financing to pay off the balance.
For Florida heirs, there is a complication worth naming plainly. If the deceased did not use a revocable trust, a lady bird deed, joint ownership with survivorship, or tenancy by the entireties, the home titled in the decedent's sole name will pass through the Florida probate process. Probate takes time, and the HECM timeline does not pause to wait for it. Heirs should contact the servicer immediately, before letters of administration are issued, to communicate their intentions and preserve the extension options. Waiting for the estate to be fully organized before picking up the phone is one of the most common and most costly mistakes families make.
Wendy's mother had not used a lady bird deed or a trust, so the home was headed for probate. Because the estate was relatively modest, Wendy's attorney evaluated whether Florida summary administration, available when the value of estate assets subject to administration does not exceed $150,000 (for deaths on or after July 1, 2026), could shorten the timeline. Understanding that probate track ran in parallel with the HECM deadline, not after it, changed how Wendy prioritized her next calls.
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Once heirs understand the timeline, they can evaluate the four main paths forward.
- Sell the home. This is the most common resolution and, when equity exists, the most financially rewarding. The proceeds from the sale pay off the HECM balance. Whatever remains after that payoff and closing costs belongs to the heirs or the estate. Even in Wendy's situation, where the balance was close to the appraised value, a strong list price strategy mattered enormously.
- Repay the loan and keep the home. An heir who wants to retain the property can refinance into a conventional mortgage or pay the balance in cash. The payoff amount is the lesser of the loan balance or the appraised fair market value, plus closing costs. This is sometimes called the 95 percent rule: heirs can pay off the HECM at 95 percent of the current appraised value, even if the outstanding loan balance is higher. For a home where the balance has grown beyond what the market will bear, this rule is the difference between a workable payoff and an impossible one.
- Deed in lieu of foreclosure. If the home is worth less than the loan balance and the heir has no interest in keeping or selling the property, the heir can deed the home back to the lender. Because HECMs are non-recourse loans, the lender's only remedy is the property itself. No deficiency judgment can be entered against the heir personally, and no deficiency can be collected from the estate beyond the value of the home. The heir walks away owing nothing further.
- Allow foreclosure. If an heir truly cannot act and does not communicate with the servicer, the lender will eventually foreclose. Even then, the non-recourse protection holds. But foreclosure eliminates any equity, generates costs, and is almost always avoidable with even minimal engagement. Florida Statute 45.033 provides a process for heirs to claim surplus foreclosure proceeds if the sale generates more than what is owed, but reaching that outcome through foreclosure rather than a voluntary sale is a last resort, not a strategy.
Selling With a Reverse Mortgage Balance: What Heirs Need to Know
Listing a home that carries a HECM balance is not meaningfully different from listing any other home with a lien, but a few details deserve attention. The payoff figure from the servicer will include accrued interest and any servicing fees, and that figure increases daily. An heir who waits three months to list loses three months of accruing interest, which can shift the net proceeds meaningfully in a market like Daytona Beach, Port Orange, or Palm Coast where price points are often tight relative to original loan amounts.
Pricing strategy is critical. Because the servicer appraisal establishes a baseline, listing at or above that figure is usually the right starting point. Underpricing leaves equity on the table; overpricing risks the contract collapsing when the buyer's lender runs its own appraisal. In markets like Ormond Beach and New Smyrna Beach, where condition and neighborhood specifics drive significant price variation, working with an agent who understands both the local comps and the HECM payoff mechanics is worth the attention.
Florida seller disclosure obligations apply fully. An heir selling an inherited home in DeLand or Deltona is still required to disclose known material defects under Johnson v. Davis, even if the heir never lived in the property. The reverse mortgage itself is not a defect, but it does appear in title work, and buyers and their agents will ask questions. Transparency from the start keeps the transaction clean.
Heirs who need to understand the capital gains implications of any sale should review how the stepped-up basis works for inherited property in Florida, as the tax treatment of an inherited home sale differs substantially from selling a home the heir originally purchased. Florida imposes no state income, estate, or inheritance tax, which simplifies the calculation considerably.
What This Meant for Wendy
Wendy called the servicer within two weeks of receiving the due-and-payable notice, declared her intention to sell, and requested the six-month window. That single phone call preserved her options. She simultaneously retained counsel to open a probate proceeding in Volusia County, targeting summary administration given the estate's size. Because the home was her mother's primary residence and qualified as Florida homestead, title to it was cleared through an Order Determining Homestead rather than through the general probate estate, which separated the homestead track from the creditor claims track and simplified the title issue for the eventual buyer.
The home appraised at a figure that left a meaningful, if modest, gap above the HECM payoff. With proper pricing and preparation, the home sold within the six-month window. After the loan balance, accrued interest, and closing costs were satisfied, Wendy received the remaining equity. It was not a large sum, but it was real money that existed only because she understood the deadline, communicated early, and did not panic into a deed in lieu when the balance looked close.
Had she waited, the accruing interest would have narrowed the gap further. Had she ignored the servicer entirely, foreclosure would have erased what little equity remained. The clock mattered, and knowing how to read it made the difference.
One More Thing Worth Knowing
When siblings share an inherited property and one wants to sell while another does not, the dynamic becomes more complicated. For situations like that, the article on inherited houses with siblings in Florida covers the partition process and co-heir options in detail. In Wendy's case, she was the sole heir, which meant every decision was hers alone, and that simplicity was one of the few advantages she had.
If you have inherited a home in Daytona Beach, Ormond Beach, Port Orange, New Smyrna Beach, Palm Coast, DeLand, or anywhere in Volusia or Flagler County, and the house carries a reverse mortgage, the time to act is now, not after probate is resolved. The six-month window begins at the lender's notice, not at the close of the estate.
Arthur Simpson, Esq., CIPS, is an Attorney and REALTOR® with Realty Pros Assured in Ormond Beach. Through Truestead Law, LLC, he handles probate and estate matters, and through his real estate practice he helps Florida families list and sell inherited properties, meaning the legal and the sale sides can be coordinated in one conversation. To talk through where you stand, visit arthursimpson.com or call directly. The clock is already running; the right information costs you nothing and can protect everything your parent left behind.