The first thing an adult child usually thinks when they hear a parent is considering a reverse mortgage is: are we going to lose the house?

You are not. Unless you choose to let it go. The whole point of the HECM program's heir protections is that the decision stays with you. Here is what those protections actually are.

What you inherit when a parent passes

You inherit the home. You inherit any remaining equity after the HECM balance is paid off. You do not inherit the loan. You did not sign the note; the loan is not transferred to you personally.

The home is collateral. The HECM is a lien against the home. When your parent passes, you have time — generally up to 12 months — to decide what to do with the home.

The single most important concept: non-recourse

HECMs are federally insured by the FHA. That insurance buys you one very specific protection: you can never owe more than the home is worth.

If your parent drew heavily from the HECM, lived a long time, and the balance at maturity exceeds the home's value, you are not on the hook for the difference. FHA insurance absorbs the shortfall. Your parent's other assets are not at risk. Your assets are definitely not at risk.

This is the structural protection that makes a HECM different from a regular home equity loan. Write this sentence down: you cannot inherit negative equity from a HECM.

Your four options

Option A: Keep the home

You pay off the HECM and the home becomes yours free of the lien. You pay the lesser of:

• The full loan balance, or
• 95% of the home's current appraised value.

Most heirs who keep the home refinance the balance into a new mortgage in their own name. If you can qualify for the replacement mortgage, keeping the home is very doable.

Option B: Sell the home

You list the home, sell it, and the HECM balance is paid off at closing. Any equity above the balance is yours (or split among the heirs, per the will or estate). Any shortfall is covered by FHA insurance. You receive what the home yielded minus the balance — no less, no more.

Option C: Deed in lieu of foreclosure

If there is no equity and you do not want to deal with selling, you can sign the home over to the lender. There is no deficiency judgment. You walk away clean.

Option D: Do nothing

You are not required to act. You can simply not respond. The lender will foreclose on the home as the collateral. Because you never signed the note, there is no personal liability. For some estates this is the right answer, particularly if the home is underwater and there is no sentimental reason to keep it.

The timeline: you have time to think

After a parent passes, the servicer sends notification. From there:

• Six months initial window to choose an option.
• Two 90-day extensions typically available if you are actively working in good faith.
• Up to 12 months total in most cases.

Do not panic. Do not rush. Do communicate with the servicer — silence creates problems that a 10-minute phone call prevents.

Myths that cost families the home

Myth: "If there's any balance at all, we lose the house."

False. You can always pay off the HECM — either with cash or by refinancing — and keep the home. The question is whether you can qualify for the replacement mortgage, which is a standard credit-and-income conversation.

Myth: "We have to decide in 30 days."

False. The default window is six months, with extensions available. The 30-day figure you may have heard is the initial notification letter, not the deadline.

Myth: "The bank will come after us for the shortfall."

False. HECMs are non-recourse. The bank cannot come after you personally, and the bank cannot come after other assets of the estate. FHA insurance absorbs any shortfall.

Myth: "A reverse mortgage means my parents lost the house."

False. Your parents own the home. They have a mortgage. The lender has a lien, just as with any mortgage. Your parents can sell at any time. They can pay it off at any time. Nothing changed about ownership.

Myth: "We should just let it foreclose to save hassle."

Sometimes true. Often not. If there is equity, you lose that equity. Always run the numbers before choosing Option D. A 30-minute conversation with a HECM specialist is free and clarifying.

What to do right now, while your parent is still here

• Ask your parent where the HECM paperwork lives.
• Get the servicer's name and phone number. Write them down.
• Ask your parent what they would prefer you do with the home. Keep it? Sell it? Split the proceeds?
• Make sure your parent stays current on property taxes, insurance, and HOA. Lapsed obligations trigger maturity events.
• Download the Family Conversation Starter below and run the conversation formally once, so nobody is improvising later.