What Happens to a Reverse Mortgage When the Borrower Passes Away in California?

With property values soaring across Los Angeles County, many older homeowners take out reverse mortgages to tap into their equity while staying in their homes. But when that homeowner passes away, families are often left wondering:

What now? Does the bank take the house? Can we sell it? Do we owe anything?

In this blog, we’ll break down exactly what happens to a reverse mortgage after the borrower dies especially when the property enters probate.

What Is a Reverse Mortgage?

A reverse mortgage is a type of loan available to homeowners aged 62 or older. It allows them to borrow against their home’s equity and receive cash, either as a lump sum, monthly payment, or line of credit — all without making monthly mortgage payments.

Instead, the loan is repaid when:

• The borrower sells the home

• Moves out permanently

• Or passes away

At that point, the loan becomes due and payable — and that’s when heirs are often faced with a tough decision.

What Happens to the House When the Borrower Dies?

When the borrower of a reverse mortgage dies, the lender will typically:

1. Order an appraisal of the home

2. Notify the estate that the loan is due

3. Give heirs 30 days to respond, with extensions up to 6 months or longer under certain conditions

At this point, there are usually three options:

✅ 1. Pay Off the Reverse Mortgage

Heirs can pay off the balance owed (usually by refinancing or using other estate funds) and keep the home.
If the home is worth more than what’s owed, this can make financial sense — especially in high-value areas of Los Angeles County like Pasadena, Burbank, or Santa Monica.

✅ 2. Sell the Home

This is the most common solution. The estate sells the home, pays off the reverse mortgage, and distributes the remaining equity to the heirs.

✅ 3. Let the Lender Foreclose

If there’s no equity or the heirs aren’t interested in keeping the home, they can simply allow the lender to take possession.
Thanks to non-recourse loan protection, heirs are not personally liable for any loan amount that exceeds the home’s value.

Does the Reverse Mortgage Go Through Probate?

Yes the home itself goes through probate if it was held in the deceased’s name and not in a living trust.
The reverse mortgage must be resolved during that probate process.

The court-appointed representative (executor or administrator) is responsible for:

• Contacting the lender

• Coordinating payment or sale

• Ensuring the estate’s best interests are protected

How Long Do You Have to Deal With It?

Legally, heirs have 30 days to respond after being notified that the loan is due.
However, if the estate is in probate or needs time to sell, the lender will often grant up to 6 months, with extensions up to 12 months in some cases — as long as:

• The property is actively being sold

• The estate is communicating clearly

• There is no abandonment or damage to the home

Proactivity and transparency go a long way here.

Tips for Heirs Dealing with a Reverse Mortgage in Probate

• Get a Copy of the Loan Statement: Know how much is owed and what the terms are.

• Get an Appraisal: Understand the current market value of the home.

• Talk to a Probate Attorney: Especially if there’s confusion or more than one heir involved.

• Sell Strategically: In markets like Los Angeles, timing and presentation can make a huge difference in net proceeds.

We Help Families Navigate Reverse Mortgages in Probate

At The Borges Real Estate Team, we specialize in helping families across Los Angeles County manage the real estate side of probate including complicated cases involving reverse mortgages.
Whether you want to keep the property, sell it, or just understand your legal responsibilities, we’re here to help.

We’ll guide you through timelines, help coordinate appraisals and cleanups, and support you in making the best decision for your family.