Selling a House That Has a Reverse Mortgage (HECM) On It

Yes. A house with a reverse mortgage on it can be sold, and nobody owes the shortfall personally — the borrower "shall have no personal liability for payment of the outstanding loan balance" and the lender may "enforce the debt only through sale of the property" (24 CFR 206.27(b)(8)). Once the loan is due and payable the lender must give the borrower, an eligible non-borrowing spouse, the estate or the heirs 30 days to pay, sell, deed the property over, or cure (24 CFR 206.125(a)(2)). A house worth less than the balance can still be sold, because the required price is tied to the appraised value rather than the debt (24 CFR 206.125(a)(2)(ii), (c)).

Sources verified: September 27, 2026

This is general information, not legal advice.

When the loan becomes "due and payable"

A HECM is not like a normal mortgage with a monthly bill and a payoff date. It comes due when a specific event happens, and those events are listed in 24 CFR 206.27(c).

Under 24 CFR 206.27(c)(1), the balance becomes due and payable in full if a borrower dies and the property is not the principal residence of at least one surviving borrower, or if a borrower transfers away all of their title and no other borrower keeps title.

Under 24 CFR 206.27(c)(2), it becomes due and payable with HUD's approval if the property stops being a borrower's principal residence for a reason other than death; if a borrower fails to live there for longer than 12 consecutive months because of physical or mental illness; if the property charges go unpaid; or if some other obligation under the mortgage is not performed.

There is an important exception. If a surviving spouse was not a borrower but qualifies as an "Eligible Non-Borrowing Spouse," due and payable status can be deferred. That deferral, the Deferral Period, is described in 24 CFR 206.27(c)(3) and 24 CFR 206.55, and 24 CFR 206.57 covers curing a problem so it can be reinstated. If that might apply to your family, ask the servicer directly — it changes the timetable completely.

You are not personally on the hook for the shortfall

This frightens families most, and the regulation is clearest about it. 24 CFR 206.27(b)(8) says the borrower "shall have no personal liability for payment of the outstanding loan balance," that the lender "shall enforce the debt only through sale of the property," and that the lender "shall not be permitted to obtain a deficiency judgment against the borrower if the mortgage is foreclosed."

So if the balance has grown larger than the house is worth, that gap is not a bill passed to the borrower or the heirs. The house is the collateral, and the house is the limit.

Selling it: the numbers the regulation sets

How much the house has to sell for depends on whether the loan is already due and payable.

If the loan is not yet due and payable, 24 CFR 206.125(c) says the borrower or an authorized representative may sell the property "for at least the lesser of the outstanding loan balance or the appraised value."

If the loan is due and payable when the sale contract is signed, the figure comes from 24 CFR 206.125(a)(2)(ii): the property may be sold "for an amount not to be less than the amount determined by the Commissioner through notice, which shall not exceed 95 percent of the appraised value." Read that carefully, because it is often described loosely. The regulation sets a ceiling of 95 percent on the figure HUD may require; the required figure itself is whatever HUD has set by notice. The same provision caps closing costs at "the greater of: 11 percent of the sales price; or a fixed dollar amount as determined by the Commissioner."

The practical effect is that a house worth less than the loan balance can still be sold and the debt cleared, because the required sale price is tied to the appraised value, not to the balance owed.

On the appraisal, 24 CFR 206.125(b) requires the lender to have the property appraised no later than 30 days after a request from an applicable party in connection with a potential sale. If the loan is due and payable, that appraisal is at the lender's expense, reimbursable out of the sale proceeds.

The clock

Under 24 CFR 206.125(a)(2), after notifying HUD and getting approval where needed, the lender must notify the borrower, an Eligible Non-Borrowing Spouse, the estate and the heirs, as applicable, within 30 days, and must then give that party 30 days from the date of the notice to pay the balance in full, sell the property, give a deed in lieu of foreclosure, or correct whatever caused the loan to come due.

Under 24 CFR 206.125(d)(1), the lender must start foreclosure within six months of the due date, or within whatever additional time HUD approves. Under 24 CFR 206.125(f)(1)(i), a deed in lieu of foreclosure has to be filed for recording within nine months of the due date. Extensions are possible — the regulation repeatedly allows "such additional time as may be approved by the Commissioner" — but they are not automatic, and they are requested through the servicer.

If the borrower has died and probate has not finished

Heirs often want to sell but do not yet have the legal authority to sign a deed. In Florida that authority comes from the probate court. Florida Statute 733.613 governs a personal representative's power to sell real property: where the will confers a power of sale, the sale can proceed without court authorization; where it does not, "no title shall pass until the court authorizes or confirms the sale." Florida Statute 735.201 and Florida Statute 735.203 cover summary administration, a shorter route for smaller estates or where the decedent has been dead more than two years.

The federal HECM clock and the Florida probate clock run at the same time and do not wait for each other. That mismatch is the most common reason a reverse-mortgage house reaches a foreclosure sale the family did not want.

Where we fit

Investor Trustee Services is an approved bidder in HUD's reverse-mortgage (HECM) loan sales and an active buyer of houses left behind by reverse mortgages.

Those HUD sales are a matter of public record. HUD sells pools of defaulted HECM loans under 24 CFR Part 291, Subpart G, and announces each sale in the Federal Register. The two series are HVLS, for loans secured by vacant properties, and HNVLS, for loans secured by occupied properties — both are sales of reverse mortgages, described in the notices as "home equity conversion mortgages (HECM, or reverse mortgage loans)." See 91 FR 60387 and 91 FR 2555.

Because we work on that side of the market, we tend to already understand the servicer's due-and-payable notice, the appraisal requirement, and the deadline driving your timetable. If you would rather sell than let that deadline run out, that is the conversation to have.

Everything cited here is free to read: 24 CFR Parts 206 and 291 on ecfr.gov, and the Florida statutes at flsenate.gov and leg.state.fl.us.

Selling a Florida house in this situation? Get a written cash offer — no fees, no repairs, and no obligation.