Hi Jerry,

No.  Neither you nor your children will ever be personally responsible for a shortfall.  A reverse mortgage is a non-recourse loan, which means the lender's only security is the home itself.  If the loan balance exceeds the home's sale price, FHA insurance covers the difference.  The lender cannot come after you, your estate, or your heirs for anything beyond the value of the home.

When you leave the home

Whether you move out permanently or pass away, the loan becomes due and payable.  At that point, there are a few paths to choose from, depending on the situation.

If there is equity in the home, selling it is almost always the best move.  Anything left after paying off the loan balance belongs to you or your heirs.  Even if the equity is modest, it is worth capturing rather than walking away from.

If the loan balance exceeds the home's value, your heirs can deed the property back to the lender.  They owe nothing beyond the home itself.  Alternatively, if they want to keep the property, they can purchase it for the lesser of the outstanding loan balance or 95% of the current appraised value - that is a specific HUD provision designed to protect heirs in exactly this situation.

If you are moving out while still alive, contact the servicer before you do anything else.  Once you permanently vacate the property, the loan is due and payable.  During that period, you are still technically responsible for keeping taxes and insurance current until the home is formally transferred or sold.  Letting those lapse before the transition is complete can create unnecessary complications.

A Deed in Lieu of Foreclosure is also an option - you hand the property back to the lender without going through the formal foreclosure process.  Some servicers will also offer a cash incentive for a smooth, cooperative transition, though that is at the servicer's discretion and not guaranteed.

The bottom line is that no matter what happens to the home's value, you and your children are protected.  The non-recourse feature is one of the most important protections in the HECM program.

Reference: HUD Handbook 4000.1, Section II.B.2.b - HECM General Insurance Eligibility, Non-Recourse provisions.