Key Takeaways
- A HECM reverse mortgage becomes due when certain FHA rules are no longer met, like the borrower moves out or stops maintaining the property.
- Many of these triggers are preventable with proper planning and by communicating with your lender.
- Understanding potential triggers helps borrowers avoid surprises and protect their home equity.
A Home Equity Conversion Mortgage (HECM) allows homeowners age 62 and older to convert home equity into cash without making monthly mortgage payments. While the loan doesn’t require regular repayment, it isn’t designed to last forever.
Under FHA rules, a HECM can become “due and payable” when specific conditions occur. This doesn’t mean borrowers lose their homes overnight, but it does start a process that eventually requires the loan to be repaid. Understanding these triggers and how to avoid them can help borrowers stay compliant and protect their equity for as long as possible.
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What does “due and payable” mean for a HECM?
When a reverse mortgage becomes due and payable, the full loan balance must be repaid. This typically happens through the sale of the home, a refinance, or repayment by heirs or other parties.
Once a triggering event occurs, the loan servicer notifies the borrower or their estate and outlines the next steps and deadlines. FHA rules provide time to resolve issues or sell the home, but ignoring notices can limit your options.
Common HECM “due and payable” triggers
Several events can cause a reverse mortgage to become due. Some are unavoidable, while others are preventable with proper planning.
1. The borrower no longer occupies the home as a primary residence
A HECM requires the home to remain the borrower’s primary residence. If the borrower permanently moves out, the loan becomes due. Temporary absences are allowed, but there are limits.
For example, staying out of the home for more than 12 consecutive months — even for medical reasons — can trigger repayment. Extended stays with family, long-term care facilities, or moving abroad can also violate occupancy rules.
How to avoid it: Borrowers should notify their servicer if they expect to be away for an extended period. In some cases, proper documentation can help maintain compliance, especially for short-term medical stays.
2. Failure to pay property taxes or homeowners insurance
Even though HECM borrowers don’t make monthly mortgage payments, they are still responsible for paying their property taxes, homeowners insurance, and HOA dues, if applicable. Falling behind on these obligations is one of the most common reasons reverse mortgages become due.
How to avoid it: Borrowers should budget for property charges and respond promptly to any notices from their servicer. Some HECM loans include a Life Expectancy Set Aside (LESA), which reserves funds to help cover taxes and insurance. While this reduces available proceeds, it can significantly lower the risk of default.
See if you qualify for a reverse mortgage. Start here3. Failure to maintain the property
The FHA’s property requirements state that the home must be kept in reasonable condition. Significant neglect, like unresolved safety hazards or deferred repairs, can trigger a repayment if the issue isn’t corrected.
How to avoid it: Routine maintenance and timely repairs are key. If financial constraints make home improvements difficult, borrowers should contact their servicer early to discuss possible solutions.
4. The borrower passes away
A HECM becomes due when the last remaining borrower dies. At that point, the loan must be repaid, but heirs are not personally responsible for any balance beyond the home’s value. Heirs generally have options, including selling the home, refinancing into a traditional mortgage, or paying off the balance with other funds.
How to avoid surprises: Borrowers should discuss the reverse mortgage with heirs ahead of time since knowing what to expect can help families act quickly and preserve their equity.
5. Title changes or transferring ownership
A HECM requires the borrower to retain legal ownership of the home. Transferring the title — even to a family member or trust — can trigger repayment if not structured correctly.
How to avoid it: Borrowers should never change title without consulting their lender or a qualified housing counselor. Certain trusts may be allowed, but they must meet FHA guidelines.
The bottom line on HECM due and payable triggers
A HECM doesn’t require monthly payments, but it does come with ongoing obligations. “Due and payable” triggers exist to protect both borrowers and the FHA, and many are avoidable with proactive planning.
By understanding what can cause a reverse mortgage to come due, and taking steps to stay compliant, homeowners can use their equity with greater confidence and fewer surprises later on.
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