If you’re an heir and the house has a reverse mortgage, the first thing you’ll likely see is a notice from the servicer. That letter usually says the borrower has died and asks the estate or heirs to respond. Don’t ignore it. Read it carefully and keep it with the rest of the paperwork. The servicer is not your enemy, but it is protecting the lender’s interest, so everything you tell them should be accurate. If you’re not sure who is authorized to speak for the estate, that’s a question for a lawyer or the person named as executor or administrator.

In general terms, a reverse mortgage becomes due and payable when the last borrower dies, moves out permanently, or sells. The servicer will start a process to confirm the situation and give the estate a chance to respond. There are usually options laid out in the paperwork, and the exact steps depend on the loan terms, who is on title, and whether a non-borrowing spouse or other eligible person still lives there. This is where a HUD-approved housing counselor can be genuinely useful, and often free. They can explain the options in plain language before you make any commitments.

As an heir, you generally have a few paths. You can buy the house by paying off the loan, often at a discounted amount, if you qualify and can arrange financing. You can sell the house and use the proceeds to pay what’s owed, keeping any difference if there is one. Or you can hand the house back to the lender by signing it over, which is sometimes called a deed in lieu. Each path has tax and legal consequences, so talk to a CPA and a lawyer before choosing. If the house is worth less than the loan balance, that changes the math, and the rules about what the estate owes depend on the situation.

Timing matters, but don’t let fear rush you into signing something you don’t understand. Ask the servicer for the payoff figure in writing. Ask what the deadline is for each option. If you want to keep the house, start the conversation early, because buying it usually takes time and paperwork. If you plan to sell, keep the utilities on, maintain the property, and keep insurance in place, because a neglected house creates problems fast. In Sacramento County, local rules and property tax issues can come into play, so check with the county assessor or recorder when title changes.

Above all, get the estate organized. The executor or administrator should be the one coordinating with the servicer, and everyone should agree on a plan. If the estate is small or the family is divided, a lawyer can help prevent costly mistakes. A housing counselor can walk you through the reverse mortgage side, and a CPA can explain the tax picture. Take it one step at a time, keep good records, and put agreements in writing.

More notes on this topic are at an inherited house with a reverse mortgage.