Protect your home from reverse mortgage default

A reverse mortgage default happens when a borrower fails to meet a loan obligation: paying property taxes, maintaining homeowners insurance, keeping the property in reasonable condition, or living in the home as your primary residence. The rules are the same across HECM and proprietary reverse mortgage products. Missing an obligation doesn't foreclose your home by itself. It starts a process your servicer has to follow before foreclosure proceedings can even begin.

A reverse mortgage default notice means your servicer believes you haven't met a loan requirement: paying property taxes or homeowners insurance, maintaining the home, or living in it as your primary residence. Contact your servicer right away as the verified borrower of record, and speak with a HUD-approved housing counselor to find the options that keep you out of foreclosure.

Often, yes. Most reverse mortgage foreclosures over unpaid property taxes or insurance are avoidable, because HUD gives servicers loss-mitigation tools, like deferral and repayment plans, specifically so they don't have to foreclose. Your counselor helps you use those tools instead of letting the default sit until foreclosure is the only option left.

Have your reverse mortgage statement available, any default or delinquency notices from your lender, property tax bills, homeowners insurance documentation, and recent income or financial records. Your counselor will guide you on exactly what is needed.

Yes. Credit.org is an independent nonprofit with no lender affiliation and no sales pressure, so nothing you tell a counselor gets reported back to your servicer. Your session is private.

Most reverse mortgage default counseling services are provided at no cost through our nonprofit mission. If a fee applies to a specific service, fee waivers may be available for individuals who qualify. Our goal is to help homeowners find solutions, not create additional financial burdens.

If you're on the home's title but not on the reverse mortgage loan itself, you're a non-borrowing spouse, and the loan can become due when the borrower dies or permanently leaves the home. Loans originated after August 2014, HECM and proprietary reverse mortgage loans alike, include a Deferral Period that lets an eligible non-borrowing spouse stay in the home for life, as long as you keep paying property taxes and insurance, maintain the home, live there as your primary residence, and file an annual certification. The loan balance keeps growing during the deferral just as it would for any borrower, so the home equity left for your heirs still shrinks over time. Older loans use a similar process called the Mortgagee Optional Election. Ask your counselor whether you qualify.

Sometimes, before you ever close the loan. If a lender's financial assessment flags concerns about your ability to keep up with property taxes and insurance, HUD requires a Life Expectancy Set-Aside, money withheld from your own loan proceeds and used automatically to pay those bills for you. If your loan doesn't have one and you're worried about falling behind, ask your counselor whether a loan modification or new set-aside is possible.