It’s important to know that when you lose a friend or family member and inherit a home with a reverse mortgage, that you have a limited amount of time in which to do one of three things to resolve the debt and retain the equity in the property.

1. Pay off the property
2. Refinance the property
3. Sell the property.

What you can’t do is assume the reverse mortgage, and keep it in place under your name, so some action is needed or a foreclosure action will commence.

Reverse mortgages need to be resolved within six months from the date of death. There may be 3

3-month extensions available.  If you were thinking that you just won’t report the death to the mortgage company until you have figured out what to do, please know that has already been reported.

By law, funeral homes must report a death to Social Security , and Social Security puts that into a database which is accessible by lienholders. That means that the clock is ticking.

While the clock is ticking, you are generally paying property taxes, insurance, utilities, and accruing interest which reduces equity.  Doing a quick calculation will help you in timing that decision on the disposition of the home.

Please call for any help that you may need in resolving a reverse mortgage, whether you are keeping the property or selling it along.

When an individual accepts Medicaid nursing facility services, whether those are home or community-based; and related hospital and prescription drug services, they may be obligated to repay some of those services. To further complicate the issue, after death, their estate may be obligated to re-payment. That repayment obligation is often referred to as the “Clawback”.

Although Medicaid is a federal program, individual states may also make their own requirements.

Please remember that if there is a letter received from the Texas Medicaid Estate Recovery Program (MERP), and the cause of death was related to COVID, you need to call 800–641–9356. They may be able to work with you and give you some help.

It only affects long-term care services and supports that you received AFTER you turned 55 and you must have first applied for the services AFTER March 1, 2005. Anyone who applied for the services before March 1, 2005 does not have to follow the Medicare Estate Recovery Program (MERP), rules.

Adverse Possession: When a person without a legal right Inhabits a property in an attempt to gain ownership.

Affidavit of Heirship: A declaration of the Intestate Heirs to an Estate. Requires two disinterested witnesses who have personal knowledge of the family over time.    

Bond: Insurance for performing Estate Duties.

Codicil: an Amendment to a Will.

Creditor: Company or individual to whom payment of a debt is owed from the Estate. 

Decedent: Person who has passed away. 

Executor: Person(s) selected to pay Creditors and distribute remaining assets to the Heirs in accordance with the will and Texas law.

Fiduciary Duty: Requirement to hold the interests of another above your own. 

Interstate: Did not leave a Will.

Letters of Administration or Letters Testamentary: A Court issues these and they allow the Administrator or Executor(s) to act. 

Small Estate Affidavit: Used to transfer assets of under$75,000, excluding any Homestead or exempt property.