Hello Jerry,

A reverse mortgage is a non-recourse loan, meaning the lender’s only security is the home itself. Neither you nor your children will be personally responsible for any shortfall if the loan balance exceeds the home’s value. The lender cannot pursue other assets for repayment.

However, there are important steps to consider when leaving a home with a reverse mortgage to ensure the best outcome.

Steps to Take Before Leaving the Home

1. Consult a Real Estate Agent

• Contact a local real estate agent to determine if there is equity in the home.
• Selling the home may allow you to retain some funds instead of walking away with nothing.

2. Contact Your Loan Servicer

• If selling isn’t an option, inform your loan servicer that you need to move.
• Ask about a Deed in Lieu of Foreclosure, which allows you to return the home to the lender without going through foreclosure.

3. Consider HUD’s ‘Cash for Keys’ Option

• In some cases, HUD may authorize a cash-for-keys program, where you receive a small payment in exchange for handing over the property.
• While the amount may not be substantial, it can help cover moving costs and avoid legal complications.

Protecting Yourself from Future Liability

• If the property remains in your name after you move, you (or your estate) may still be responsible for property-related obligations, such as taxes, insurance, or maintenance issues.
• Transferring the home back to the lender eliminates this responsibility and ensures a smooth transition.

Bottom Line

• You or your children will never owe more than the home is worth.
• Selling the home may be the best option if there is equity.
• A Deed in Lieu or Cash for Keys program can help avoid foreclosure and additional liability.

If you’re considering moving, speak with your loan servicer and a real estate professional to explore the best path forward.