When must a Due and Payable Notice be provided to a HECM borrower's estate, heirs or other party?

Where a Home Equity Conversion Mortgage (HECM) is due and payable as a result of death of the borrower or end of a Deferral Period due to death, the Mortgagee must provide the borrower’s estate, heirs, or other party with legal title to the property securing the HECM with a Due and Payable Notice within 30 days of the death or end of the Deferral Period stating that they may:

  • satisfy the HECM;
  • sell the property for at least 95% of the appraised value; or
  • provide the Mortgagee with a Deed-in-Lieu of foreclosure.  

Notwithstanding the foregoing, for mortgages with a Case Number assigned before August 4, 2014, where the last surviving borrower has died and there is a Surviving Non-Borrowing Spouse, Mortgagees must follow the notice requirements in Mortgagee Letter (ML) 15-15.  
For additional information see Mortgagee Letter (ML) 2014-17, 2015-10 and 2015-15 available at:   https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee

Any questions may be directed to the FHA Resource Center at Toll-Free (800) CALLFHA (225-5342) or by email to answers@hud.gov.  Persons with hearing or speech impairments may reach this number by calling the Federal Relay Service at (800) 877-8339.

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-02458