Serving as an executor for a loved one’s estate is a big responsibility. When that estate includes a home with a Home Equity Conversion Mortgage (HECM) or reverse mortgage, the process can seem overwhelming. This type of loan can feel a bit unique, but understanding its specific requirements and deadlines, and especially have an executor checklist, will make for a smooth and successful estate settlement.

What does an executor of an estate with a reverse mortgage need to do?

An executor of an estate with a reverse mortgage must notify the lender of the decedent’s death, gather legal documents, maintain the property, review repayment options, meet deadlines, and oversee the sale, refinance, or transfer of the home to settle the loan.

This guide provides a clear, three stage checklist designed for executors, family members, and their professional advisors. It breaks down the process into timebound, manageable steps, ensuring you can confidently navigate the related financial and legal landscape.

Executor Checklist for First 30 Days: Immediate Actions

The initial days following a homeowner’s passing are focused on communication and securing the property. Timely action is essential to meet the lender’s requirements and avoid unnecessary complications.

1. Notify the Lender or Loan Servicer.

This is your first and most critical step. Contact the reverse mortgage lender within 30 days of the decedent’s death to inform them of the homeowner’s death. This initiates the process and provides you with access to the information you will need.

If you step into the role of executor more than a month after the decedent’s death, contact the lender immediately. Explain the situation and work in good faith to get the ball rolling. Lenders prefer working with executors than having to foreclose.

2. Obtain and Submit a Certified Death Certificate.

At some point , the lender will require an official copy of the death certificate. This document serves as formal notification of the homeowner’s passing and is necessary to proceed with any next steps.

I’ve had executors ask me if they should wait to contact the lender until after they have the certified death certificate. I always say “no.” It might take far longer than a month to get the certificate. Connecting with the lender will provide you with their own “to do” list so you know what you’re facing. Call, email, or write the lender promptly, and don’t feel like you can’t proceed without having all your ducks in a row.

3. Identify Family Members, Heirs, and Estate Priorities.

As the executor, you must determine who the heirs are and what their wishes are regarding the property. Whether they intend to sell the home, keep it, or have it distributed as part of the estate will dictate your path forward.

Before contacting them, you will want to understand the initial reverse mortgage six month timeline for the estate plus two three-month extensions. Keep it basic when explaining: 1) you can keep the home if you pay off the full balance or refinance it into your own name, 2) you can sell the home and keep the proceeds, or 3) you can sign a Deed in Lieu of Foreclosure to essentially wash your hands of the property if the balance of the reverse mortgage exceeds the home value.

4. Secure and Maintain the Home.

The executor is responsible for the property until the estate is finalized. This includes ensuring the home is secure and that the grounds are maintained.

Check the property frequently. Adjust the thermostat to minimize utility expenses while also ensuring the pipes don’t freeze in the winter. Minimize electricity usage to keep the power bill low, but don’t necessarily turn off the air conditioner completely. Also, ensure doors and windows are secured. While uncommon, the last thing you want to deal with would be squatters.

5. Pay Property Bills.

While the HECM loan itself does not have a monthly payment, the executor must ensure that all property taxes, homeowner’s insurance premiums, and utilities remain current and paid when due. Failure to do so can result in the loan becoming due and payable.

Connect with the county assessor if you need a copy of the property tax bill. Reach out to the insurance company to find out whether the premium is typically paid monthly or every six months. And make sure there is enough money in the decedent’s accounts to pay the utility bills each month.

6. Gather Mortgage and Legal Documents.

Locate and organize all relevant documents, including the reverse mortgage loan agreement, will, legal papers, and financial statements. Having these readily accessible will save significant time and effort.

7. Contact a HUD-approved Housing Counselor for Guidance.

While the HECM certificate counseling session is for borrowers, a HECM-certified housing counselor can be a great resource to answer your important questions. As a family member or executor, you can contact a HUD-certified housing counselor for an unbiased consultation. This is a valuable resource that can provide clarity on your options without any pressure to act.

Executor Checklist for Months 2-6: Decisions and Preparations

With the initial tasks complete, the next few months are focused on making critical decisions and preparing the property. This is a time for due diligence, as the timeline for a reverse mortgage estate is often just six months.

1. Decide Whether to Keep the Home or Sell.

An heir has the right to pay off the loan and keep the home. The payoff amount will be either the loan balance or 95% of the home’s appraised value, whichever is less. This provides a clear path for heirs who wish to keep the property, often for a reduced price.

2. Discuss the Home Appraisal with the Lender.

If you decide to sell the home, the lender will require an appraisal to determine its market value. The loan servicer will help you understand this process and the timeline for completion.

3. Consult with a Real Estate Agent Experienced in HECM Sales.

Not all real estate agents are familiar with the HECM for Purchase process. Finding one who understands the unique nature of these transactions can ensure the sale goes smoothly.

4. Communicate Regularly with the Loan Servicer.

The initial six month deadline is a key milestone. It is crucial to stay in regular contact with the loan servicer to request any necessary extensions. You can receive up to two ninety day extensions, for a total of one year, provided you show good faith progress.

5. Ensure all Property Taxes and Insurance Remain Current.

Again, this is a top priority. Missing a single payment could trigger the loan’s due and payable status, which could put the entire process at risk.

6. Prepare the Home for Sale.

If you choose to sell the property, prepare the home for listing. This may involve minor repairs, decluttering, staging, or professional inspections to address any potential issues.

7. Obtain Legal and Financial Advice.

As an executor, you are responsible for the entire estate, not just the home. Consult with an attorney or financial professional to understand the full tax implications and legal requirements for finalization.

8. Notify all Relevant Parties.

Be sure to communicate with utilities, the county tax office, and the insurance provider to inform them of the change in ownership and ensure all accounts are properly handled.

Executor Checklist after 6 Months: Finalizing Transactions

Once the initial deadlines are navigated, the focus shifts to finalizing the estate and settling the loan.

1. Complete the Home Sale or Refinance Transaction. Whether an heir has chosen to refinance the home or you have found a buyer, the final sale or refinance transaction will be completed.

2. Pay Off the Reverse Mortgage Loan Balance. The proceeds from the home’s sale are used to pay off the reverse mortgage loan in full. If the sale price is less than the loan balance, the FHA insurance protects the heirs from having to pay the difference.

3. Distribute Remaining Estate Proceeds to Heirs. Any remaining funds from the home’s sale, after the loan is paid off, become part of the estate and are distributed to the heirs according to the will or state law.

4. Close out Estate Accounts and Resolve all Debts. Finalize all outstanding debts and close any accounts opened during the estate settlement process.

5. Retain Copies of all Documents. Keep detailed records of all correspondence, financial transactions, and legal documents for your records. This will be invaluable in case of any future questions or audits.

By following this checklist, you can confidently navigate the estate settlement process and honor the homeowner’s legacy by handling their affairs efficiently and with care.

That said, you will have questions. I invite you to connect with me or ask me your questions. I am at your service.