Servicing Corner How to Prepare Borrowers and Their Heirs for the Death of the Last Borrower
BEING PREPARED IN advance is key. The more borrow- ers and their heirs understand in advance, the smoother the resolution of the HECM loan and property will go when the last borrower passes away. Upon notification of the last borrower’s death, the servicer is required by U.S. Department of Housing and Urban Development (HUD) guidelines to send a demand letter to the property address and heirs if they are known at the time. The letter will contain HUD-required language.
While servicers want to work with heirs to give them as much time as possible to satisfy the loan, there are strict HUD timelines they must meet. Servicers have a limited amount of flexibility. Otherwise, they face stiff financial penalties. So, let’s break down the timelines. The borrower’s estate has 30 days—or 45 days in some states—from the date of the demand letter to satisfy the debt or provide a letter of intent outlining their intentions for the property
28 REVERSE MORTGAGE / SEPTEMBER-OCTOBER 2024
Made with FlippingBook - Online magazine maker