The call usually comes a few weeks after the funeral. Somebody has been working through a parent's mail at the house in Carmichael or Fair Oaks or Citrus Heights, and there is a letter from a mortgage servicer using the words due and payable. The house has a reverse mortgage on it. Either nobody knew, or somebody knew and nobody knew what it meant — and the letter has a deadline in it.
If that is where you are, start with the part nobody puts in the letter: you almost certainly owe nothing personally, and you have more room than the first page suggests. What you do not have is unlimited time. And the thing that actually costs Sacramento families the equity in these houses is rarely the reverse mortgage itself. It is the collision between a federal clock that starts on the date of death and a California probate calendar that runs on its own schedule.
This guide covers what happens in practice: what "due and payable" means, which deadlines are real and which are misremembered, the 95 percent rule that protects an estate when the balance has outgrown the house, and how to keep the property taxes and insurance from becoming a second problem while you are still solving the first.
Reverse mortgages are federally regulated, but the estate around one is governed by California probate law and by your parent's own documents. Use this as a map, then confirm the specifics with the loan servicer, a California probate attorney, and your CPA. Sources for everything cited below are linked at the end.
What "Due and Payable" Actually Means
A Home Equity Conversion Mortgage — a HECM, the FHA-insured product that makes up the overwhelming majority of reverse mortgages — is not a loan anyone repays monthly. Interest and mortgage insurance accrue onto the balance while the borrower lives in the house, and the whole thing settles at the end.
Under HUD's rules, the balance becomes due and payable in full when a borrower dies and the property is no longer the principal residence of at least one surviving borrower. The same regulation also makes the loan due and payable, with HUD's approval, if the property stops being the borrower's principal residence, if the borrower fails to provide for the payment of property charges, or if another obligation under the mortgage goes unperformed.
That last set matters more than families expect. A reverse mortgage can come due while the borrower is still alive — most often because property taxes or homeowners insurance stopped being paid, or because a parent moved into assisted living and the house was no longer their residence. If any of that happened before the death, the clock may already have been running when you opened the mail.
What "due and payable" does not mean is that the house is being taken. It means the balance is now owed and the estate has to choose how to settle it. Everything after this point is about choosing deliberately instead of by default.
The Clock: 30 Days, Then 90-Day Extensions
Here is the timeline, and here is where most of the bad advice lives.
The servicer notifies HUD, then notifies the borrower's estate and heirs that the mortgage is due and payable. That notice gives the estate 30 days to do one of a defined set of things: pay the outstanding balance in full, sell the property, provide a deed in lieu of foreclosure, or correct the condition that caused the loan to come due.
HUD's own factsheet for heirs states it directly: "The loan must be satisfied within 30 days of the date of the borrower's death. The lender may approve 90-day extensions with satisfactory documentation that the estate or heirs are actively trying to sell the property or repay the HECM loan."
Read the second sentence as carefully as the first. The extensions are real, and they are earned with paper. A servicer does not grant one because someone called and said the family is working on it. What justifies an extension is documentation — a signed listing agreement, an executed purchase contract, a filed probate petition, letters from the court, a written payoff request. Families who send documents get extensions. Families who send reassurances get referred to foreclosure.
The servicer has a deadline of its own, and it is the source of the widespread belief that heirs "have six months." HUD requires the servicer to commence foreclosure within six months of the due and payable date, or within such additional time as the Commissioner approves. That is when the servicer must start, not when you must finish, and the two are not the same thing. A deed in lieu has its own window: the servicer must accept one from a party with the legal right to convey, provided it is filed for recording within nine months of the due date.
The practical version of all of this: respond in writing inside the first 30 days even if you have not decided anything yet, and keep sending evidence of progress. Silence is the only response that reliably ends badly.
Got a Due and Payable Letter?
Send us the address, the servicer's name, and whatever the letter says. We buy Sacramento houses with reverse mortgages on them regularly, and we can tell you within a day whether there is equity worth protecting and what a realistic closing date looks like against your extension window.
The 95 Percent Rule, and Why It Matters Here
This is the provision that changes the arithmetic, and most heirs have never heard of it.
If the loan balance has grown larger than the house is worth, the estate is not trapped. HUD's guidance for heirs puts it this way: "If the loan balance is more than the home is worth, the estate or heirs may sell the home for at least 95-percent of the current appraised value and the lender will accept the net proceeds as satisfaction of the loan." The underlying regulation says the same thing from the servicer's side, capping the amount the estate can be required to sell for at 95 percent of the appraised value.
Two consequences are worth sitting with.
First, an underwater reverse mortgage does not have to end in foreclosure. The estate sells at 95 percent of appraised value, the net proceeds go to the servicer, and the loan is satisfied. FHA insurance absorbs the shortfall — that is precisely what the mortgage insurance premiums your parent paid for years were buying.
Second, appraised value is the number that governs, and it comes from an appraisal the servicer orders. When the mortgage is due and payable the appraisal is at the servicer's expense, and the servicer must have the property appraised no later than 30 days after receiving a request in connection with a potential sale. If that appraisal does not reflect the condition the house is actually in — and inherited Sacramento houses routinely carry two decades of deferred maintenance behind a tidy front yard — raise it early, in writing, with specifics.
In this market, though, the more common situation is the opposite one. A house bought in Arden-Arcade, Citrus Heights or Carmichael decades ago, with a reverse mortgage drawn against it in the 2010s, frequently still has real equity above the payoff. That equity belongs to the estate, not to the lender — which is exactly why letting the process run to a foreclosure sale is the worst of the available outcomes.
You Are Not Personally Liable
This is federal regulation, not a servicer's courtesy. The rules governing HECMs require the mortgage to state that "the borrower shall have no personal liability for payment of the outstanding loan balance," that "the mortgagee 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."
A HECM is non-recourse. If the balance exceeds what the house sells for, nobody comes after the heirs, the estate's other assets, or anyone's own home. You cannot inherit this debt.
What you can inherit is a mess: a property with taxes accruing, insurance lapsing, and a foreclosure moving toward a sale date. The non-recourse protection means no one can take your money. It does not mean the family keeps the equity if the clock is allowed to run out.
- Nobody opens the servicer's mail for two months and the 30-day window closes unanswered
- Extensions are requested by phone instead of with the documents that justify them
- A sale is negotiated before anyone is legally authorized to sign a deed
- Property taxes go delinquent while the heirs are still deciding what to do
- Homeowners insurance is cancelled for vacancy and the servicer force-places coverage at several times the cost
- Heirs assume an underwater loan means walking away, and never ask about the 95 percent rule
Your Four Options
Once the letter is in front of you, the decision narrows to four paths.
1. Pay the balance in full and keep the house
HUD is blunt about this one: "If you prefer to keep the home instead of selling it, the HECM loan balance must be paid off in full." That means cash, or a conventional refinance in an heir's own name — which means qualifying like any other borrower, on a property you do not yet hold title to. It is genuinely possible. It is also slower than the extension window usually allows, so start the conversation with a lender in week one, not week ten.
2. Sell the property
The most common outcome, and usually the right one. The loan is paid from proceeds at closing, the lien is released, and any surplus stays with the estate for distribution. If the balance exceeds value, the 95 percent rule applies. How you sell — listed on the open market or directly to a cash buyer — is a separate question, covered further down.
3. Deed in lieu of foreclosure
Convey the property to the servicer instead of forcing a foreclosure. This is a reasonable choice when the loan is well underwater and no one in the family wants the house: it is clean, it is quick, and it recovers no equity. HUD requires the servicer to accept a deed in lieu from a party with legal authority to convey, provided it is filed for recording within nine months of the due date.
4. Do nothing
The servicer forecloses. Any equity above the debt and costs is at risk, the family loses control of the timeline entirely, and the house that was supposed to be an inheritance becomes an expense. This is not really an option; it is what happens when the other three are not chosen in time.
Where California Probate Collides With the HUD Clock
This is the Sacramento-specific problem, and it explains far more bad outcomes than the loan terms ever do.
The servicer's clock starts on the date of death. A California probate does not. How wide that gap gets depends entirely on how the house was titled:
- Held in a living trust. The successor trustee can act almost immediately, with no court involvement. This is the easy version, and it is why the trust was set up.
- Held in joint tenancy with a surviving owner. An affidavit of death of joint tenant clears title, and the survivor is generally already a borrower or an occupant.
- Held in your parent's name alone. Someone has to be appointed by the Sacramento County Superior Court before anyone can legally sign a deed — and that takes months, not days. Our guide to selling an inherited house in Sacramento walks through which route applies and what each one costs, and our inherited and probate property page covers how we work alongside an executor during the process.
Two things meaningfully reduce the friction.
Ask about full authority under the IAEA
Under California's Independent Administration of Estates Act, a personal representative granted full authority can generally sell estate real property without a court confirmation hearing, after giving the statutory Notice of Proposed Action to the heirs. A representative with limited authority cannot. That single distinction is frequently the difference between closing inside a 90-day extension and missing it by six weeks. Ask the probate attorney to request full authority at the petition stage — it is far harder to add later.
Tell the servicer what stage you are at, in writing, every time
A filed petition, a scheduled hearing date, issued letters of administration — each of these is exactly the "satisfactory documentation" HUD's extension standard describes. Send them as they happen and keep copies. From the servicer's side of the file, a family working diligently through probate and a family that has abandoned the property look identical until someone sends paper.
Taxes, Insurance and the Vacant House
HUD is explicit about who carries the property while all of this is being sorted out: "Property taxes and insurance on the property remain the responsibility of the borrower's estate until title is transferred."
In Sacramento County that means the same two dates as every other homeowner. The first installment of secured property taxes is due November 1 and becomes delinquent at 5 p.m. on December 10; the second is due February 1 and becomes delinquent at 5 p.m. on April 10. A 10 percent penalty attaches to each late installment, and California law allows the county to add a cost of up to $55 for preparing the delinquency records after the second installment goes unpaid.
If the taxes are still unpaid at the end of the fiscal year, the property becomes tax-defaulted. Sacramento County then adds a one-time $15 redemption fee and redemption penalties that accrue at 1.5 percent per month beginning July 1 — 18 percent a year, compounding on top of a loan balance that is also growing. Unpaid property charges are themselves a condition that makes a HECM due and payable, so a tax problem and a loan problem tend to arrive together. If the estate is already behind, our page on selling a Sacramento house with delinquent property taxes covers how those liens get cleared from proceeds at closing rather than out of anyone's pocket.
Insurance is the quieter failure. Most homeowners policies restrict or exclude coverage once a house has been vacant for a set number of days, and an insurer that learns the named insured has died may cancel outright. If coverage lapses, the servicer force-places its own policy, charges the estate for it, and the cost bears no relationship to what your parent was paying. Call the carrier in the first week and ask two specific questions: what the vacancy provision says, and who the policy now insures.
Prop 19 Can Reset the Property Tax Bill
Worth knowing before anyone assumes the house is cheap to hold through a long probate.
Since February 16, 2021, California's Proposition 19 has narrowed the parent-child exclusion from property tax reassessment. The exclusion now applies only where the property becomes the child's family home: at least one eligible transferee must continually live in the property as their principal residence, and must file a homeowners' or disabled veterans' exemption claim with the county assessor within one year of the transfer. The exclusion is also capped, at the factored base year value plus $1 million, adjusted over time.
If no heir moves in, the property is reassessed at fair market value. On a house that has been sheltered by Proposition 13 since the 1980s — which describes a great many of the homes carrying reverse mortgages in this county — that is not a small adjustment. The annual tax bill can multiply, and it lands on an estate that is already paying to hold a vacant house.
The rules here are specific and the deadlines are real, so confirm your own situation with a CPA or the Sacramento County Assessor rather than planning around a general description.
If You Are the Non-Borrowing Spouse
Different rules apply to you, and they are better ones — but they are unforgiving about paperwork.
If your spouse was the HECM borrower and you were not on the loan, HUD's Deferral Period may allow you to remain in the home rather than repay the balance when your spouse dies. It is not automatic. HUD's guidance for heirs states that a non-borrowing spouse "must, however, provide your lender with a Non-Borrowing Spouse Certification within 30 days of the last surviving borrower's death among other requirements," and the deferral continues only while the qualifying conditions keep being met, including occupying the property and keeping the property charges paid.
If this is your situation, contact the servicer this week and get the certification requirements in writing. This is the one branch of a reverse mortgage where a missed 30-day deadline closes off an option that was genuinely available to you.
Listing It or Selling As-Is
Assuming the estate is selling, there are two realistic routes, and the extension calendar is what usually decides between them.
| Factor | List on the Open Market | Sell As-Is for Cash |
|---|---|---|
| Time to close | Prep and showings, then 60–90+ days once in contract | As little as 7 days |
| Fit with a 90-day extension | Tight, and a buyer's financing can blow the window | Comfortable, with a date you choose |
| Condition and clean-out | Repairs, staging, and clearing decades of belongings | None — we take it as it stands |
| Appraisal risk | A buyer's appraisal can come in short and reset the deal | No appraisal, no lender |
| Coordination with the servicer | You and your agent chase the payoff and the extensions | We work the payoff alongside you |
| Sale price | Higher gross, minus commissions, repairs and carrying costs | Below retail — the honest trade-off |
We will not pretend the trade-off does not exist: a cash offer comes in below full retail. What it buys, in this particular situation, is a closing date the estate controls and the removal of every variable in that left-hand column at a moment when the calendar is not on your side. Our breakdown of cash buyer vs. realtor in Sacramento runs the arithmetic on the listing route in full, and selling as-is in Sacramento explains how repair deductions are actually calculated if condition is part of the picture.
Taking on a property's problems after closing rather than asking a seller to solve them first is the whole model — our Rancho Cordova project is one example of what that looks like in practice. If you would rather see every exit route side by side first, our compare options page lays them out, and how it works walks through the direct-sale steps. And if there is also a mortgage default or a foreclosure sale date in the picture, how to stop foreclosure in Sacramento covers how those timelines interact.
Sacramento and HUD Resources
- HUD — Inheriting a Home Secured by an FHA-insured HECM: hud.gov — the two-page factsheet quoted throughout this guide
- FHA Resource Center: hud.gov/answers or (800) CALL FHA — for questions about a specific HECM
- 24 CFR 206.125 — Acquisition and sale of the property: ecfr.gov — the 30-day notice, the 95 percent cap, the six-month and nine-month windows
- 24 CFR 206.27 — Mortgage provisions: ecfr.gov — non-recourse, and when the loan becomes due and payable
- Sacramento County Tax Collector — prior year delinquent: finance.saccounty.gov — tax-default dates, the $15 redemption fee, and 1.5% monthly penalties
- Sacramento County — payment plans: finance.saccounty.gov — the installment plan of redemption for prior-year delinquencies
- California BOE — Proposition 19: boe.ca.gov — the parent-child exclusion rules and filing deadlines
Frequently Asked Questions
How long do heirs have to sell a Sacramento house with a reverse mortgage?
HUD's guidance for heirs states the loan must be satisfied within 30 days of the date of the borrower's death, and that the lender may approve 90-day extensions with satisfactory documentation that the estate or heirs are actively trying to sell the property or repay the loan. Separately, HUD requires the servicer to commence foreclosure within six months of the due and payable date, or within such additional time as the Commissioner approves. In practice the extensions are what buy you time, and they are granted on paperwork — a listing agreement, a purchase contract, letters from the court — not on phone calls.
What if the reverse mortgage balance is more than the house is worth?
You are not stuck and you are not personally liable. HUD's rule is that the estate or heirs may sell the home for at least 95 percent of the current appraised value and the lender will accept the net proceeds as satisfaction of the loan. A HECM is also non-recourse: federal regulation says the borrower has no personal liability for the outstanding loan balance and the lender cannot obtain a deficiency judgment. FHA mortgage insurance covers the shortfall, which is what the borrower's insurance premiums were paying for.
Can I sell the house before probate is finished in Sacramento County?
Often yes. If the home was held in a living trust the successor trustee can sell without court involvement, and joint tenancy is cleared with an affidavit of death. Where probate is required, a personal representative granted full authority under California's Independent Administration of Estates Act can generally sell estate real property without a court confirmation hearing, after giving the statutory Notice of Proposed Action. Ask the probate attorney for full authority at the petition stage — it is frequently the difference between closing inside an extension and missing it.
Will a cash buyer purchase a Sacramento house with a reverse mortgage on it?
Yes. A reverse mortgage is a lien like any other — it gets paid off from proceeds at closing and released, and whatever equity is left belongs to the estate. Because there is no lender and no appraiser on our side of the transaction, we can move at the speed the servicer's extension window requires and take the property in whatever condition it is in. Bring us the servicer's due and payable letter and whatever the court has issued so far. More questions? Our FAQ page covers timelines, fees, and property condition.
