Selling a House With a Reverse Mortgage in Texas — What Heirs Need to Know

Reverse mortgages are common among older Dallas homeowners who used their home equity to supplement retirement income. When the owner passes, the reverse mortgage does not go away. It becomes due, and the heirs are on a clock they often did not know existed.

Here is how the timeline works and what heirs can do.

When a Reverse Mortgage Becomes Due

The vast majority of reverse mortgages in the US are HECMs — Home Equity Conversion Mortgages — insured by HUD. When the last surviving borrower dies, the loan becomes 'due and payable.' The servicer notifies the estate and any known heirs. From that point, per the Consumer Financial Protection Bureau, heirs have 30 days to notify the lender of their intention and up to 6 months total to resolve the debt. Two three-month extensions can often be granted with lender and FHA approval, extending the window to 12 months if heirs are actively working toward a sale or refinance.

The Five Options Heirs Have

1. Sell the Home

The most common path. Sell the property, use the proceeds to pay off the reverse mortgage balance, and keep whatever remains. If the home has appreciated since the reverse mortgage was taken out, there may be meaningful equity for the heirs after payoff.

2. Pay Off the Loan and Keep the Home

An heir who wants to keep the property can pay off the reverse mortgage balance in full — typically through cash or by taking out a new mortgage in their own name. The payoff statement will include the principal drawn, accumulated interest, and mortgage insurance premiums.

3. Pay 95% of Appraised Value

If the reverse mortgage balance has grown larger than the home's current market value — which happens over time as interest accumulates — heirs can pay off the loan for 95% of the property's appraised value and keep the home. The HECM non-recourse clause means heirs never owe more than the home's market value — the federal mortgage insurance covers the lender's shortfall.

4. Walk Away

If the reverse mortgage balance exceeds the home's value and the heirs have no interest in keeping the property, they can deed it to the lender. No heir is personally liable for any deficiency beyond the home's value under the non-recourse protection.

5. Refinance

An heir who wants to keep the property but cannot pay off the full balance in cash may be able to obtain a conventional mortgage, FHA loan, or other financing to pay off the reverse mortgage and retain ownership.

Why 6 Months Passes Faster Than Heirs Expect

Opening probate, obtaining Letters Testamentary, getting an appraisal, listing the property, finding a buyer, going through financing, and closing — all of this must happen within the HUD timeline. In Texas, even an uncontested independent administration takes 4-8 weeks just to get the executor legal authority to sell.

A cash sale dramatically compresses the transaction timeline. Once the executor has authority, a Ninebird Properties cash sale can close in 7-21 days — fitting inside the HECM window with room to spare.

If you are an heir or executor managing a Texas property with a reverse mortgage, call 972-996-1839 or visit ninebp.com. We work directly with executors and their probate attorneys and understand the HECM timeline.

Frequently Asked Questions

What is the HECM non-recourse clause?

The non-recourse clause means the lender can only collect what the home is worth at the time of sale. If the reverse mortgage balance has grown to $420,000 but the home appraises at $380,000, the heirs can sell for $380,000 (or pay 95% of that value to keep the home) and the federal mortgage insurance covers the lender's $40,000 shortfall. No heir owes the difference personally.

Does the reverse mortgage have to go through probate?

The loan itself does not go through probate. However, if the home title is solely in the deceased's name and passes to heirs through the estate, the probate process establishes the legal authority of the executor to sell the property and receive the proceeds. Properties held in a living trust can often bypass probate entirely.

Can I get an extension on the HECM 6-month timeline?

Yes. HUD typically grants two three-month extensions if the heirs are actively working toward a resolution — listing the property, pursuing financing, or in active probate proceedings. Request the extension from the servicer before the current deadline, not after.

What if there are multiple heirs and they cannot agree?

All heirs must cooperate on the sale since they have joint ownership. A cash buyer can make a single offer that all heirs evaluate simultaneously, which can help break deadlocks. If one heir refuses to cooperate and the HECM deadline is approaching, legal intervention may be necessary.

More about how we handle estate and inherited property sales: sell my house fast Dallas page.

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