Reverse Mortgage Foreclosure: What You Can Do to Protect Your Home & Equity

A reverse mortgage can be a valuable financial tool, allowing homeowners 62 and older to access their home’s equity without monthly mortgage payments. However, when unforeseen circumstances arise—like a borrower’s passing, unpaid taxes, or changes in residency—a reverse mortgage can lead to foreclosure.

I’ve worked with homeowners and heirs who felt blindsided by foreclosure notices, unsure of their next steps. If you or a loved one are facing this situation, you are not out of options. Acting quickly can help you retain control over the home, preserve equity, and make the best financial decision for your future.

Your Options: How to Avoid Reverse Mortgage Foreclosure

Many homeowners assume that foreclosure is inevitable, but that’s not always the case. Here are the four most effective ways to protect your home and equity before it’s too late:

1. Sell the Home Before Foreclosure

Selling the home allows you (or your heirs) to pay off the reverse mortgage balance while keeping any remaining equity.

• Good news: If the home’s value has appreciated, you may still walk away with cash after the sale.
• Even better news: Reverse mortgages are non-recourse loans, which means if the home is worth less than the loan balance, the lender cannot come after you or your heirs for the difference.

How I Can Help: As a REALTOR® with access to both on-market and off-market buyers, I can position the home to sell quickly—even in its current condition.

2. Refinance Into a Traditional Mortgage

If you or your heirs want to keep the home, refinancing the reverse mortgage into a traditional loan is an option.

• This is most viable when the homeowner or heir can afford monthly mortgage payments.
• Heirs typically have only 30 days to notify the lender of their intent to keep the home and start the refinance process, though some extensions may be available.

3. Request a Deed in Lieu of Foreclosure

If selling isn’t an option and keeping the home isn’t feasible, a deed in lieu of foreclosure allows the homeowner (or heirs) to voluntarily sign the property over to the lender.

• This option avoids the negative impact of foreclosure on the borrower’s or heirs’ credit.
• The lender may offer relocation assistance or other incentives.

4. Apply for an Extension

If heirs need additional time to sell or refinance, they can apply for a six-month extension (and sometimes longer) by showing proof of their efforts to secure financing or find a buyer.

• Not all lenders offer extensions, and approvals vary.
• The sooner you apply, the better your chances.

Act Now: The Importance of Proactive Planning

Even if you aren’t currently facing foreclosure, now is the time to create a plan. Many homeowners and families don’t realize they have options until it’s too late.

• If you are the homeowner: Know your obligations and discuss future plans with your family.
• If you are an heir: Have a strategy in place in case a reverse mortgage comes due.
• If you are already receiving notices: Time is critical—let’s talk today to determine your next steps.

FAQ: Quick Answers to Common Concerns

Q: Can the lender come after my family for money?

A: No. Reverse mortgages are non-recourse loans, meaning the lender can only collect from the home’s value—not your family’s personal finances.

Q: What if the loan balance is higher than the home’s value?

A: You (or your heirs) can sell the home at market value, and the lender will absorb the loss through federal mortgage insurance.

Q: How much time do heirs have to act?

A: Typically, heirs have 30 days to notify the lender of their intent to sell or refinance, with a possible extension of up to six months (or longer in certain cases).

Need Expert Guidance? Let’s Talk.

Navigating a reverse mortgage foreclosure can feel overwhelming, but you don’t have to do it alone. Whether you need to sell, refinance, or explore your options, I’m here to help.

📞 Call/Text: 510-692-2720
📩 Email: [email protected]
🌍 Visit: arielledixon.com

Let’s create a plan that puts you back in control.