The 30-Day Clock That Can Start When You Inherit a Home

Older Americans have never had more wealth tied up in their homes—and for many, that equity could provide a vital financial cushion in retirement.

Homeowners 62 and older were sitting on a record $14.92 trillion in home equity in the first quarter of 2026, according to the latest NRMLA/RiskSpan Reverse Mortgage Market Index.

“The rebound in senior housing wealth is encouraging news for older homeowners and underscores the important role home equity continues to play in retirement security,” says Steve Irwin, president of the National Reverse Mortgage Lenders Association. “With senior home equity reaching another record level, many older Americans have greater financial flexibility to help address rising living expenses, healthcare costs, or other retirement needs.”

But using that wealth in retirement can change what eventually reaches the next generation.

Reverse mortgages allow older homeowners to tap into their home equity without selling the property, with the resulting debt generally becoming due when they sell, permanently move out, or die.

For heirs, that can leave an unexpected complication: The family home may still contain substantial wealth, but it can also arrive with a loan that must be resolved within a very short window.

New federal records illustrate what can happen when that process breaks down—and reveal a little-discussed complication in America's historic transfer of housing wealth.

Why older homeowners turn to reverse mortgages

When Congress authorized the federally insured Home Equity Conversion Mortgage program, or HECM—the most common type of reverse mortgage—it explicitly pointed to the “increasing costs of meeting health, housing, and subsistence needs at a time of reduced income.”

For retirees facing that squeeze, the appeal is liquidity. HECM borrowers generally don't make monthly principal-and-interest payments while they remain in the home, and they can use the proceeds to supplement income, pay off debt, or cover expenses that allow them to age in place.

Evan H. Farr, a certified elder law attorney and retirement planner in Virginia, Maryland, and Washington, DC, says reverse mortgages can offer another source of money to older homeowners with substantial home equity but limited cash.

“Reverse mortgages also offer an alternative source of capital for elderly homeowners who are ‘house rich’ but ‘cash poor,’ so they will be able to afford paying for in-home caregivers if they require assistance allowing them to age in place,” he says.

Nearly four decades after the first HECM was issued, those pressures are becoming all the more common. Among homeowners headed by someone 65 or older, 28% were spending more than 30% of their income on housing costs in 2024—the highest rate of any age group, according to the Joint Center for Housing Studies' 2026 State of the Nation's Housing report.

There’s also evidence that reverse mortgages have been disproportionately marketed to the older homeowners most likely to need another source of cash.

In 2021 and 2022, 74% of reverse-mortgage direct-mail advertising went to households earning less than $75,000, according to the Consumer Financial Protection Bureau. By comparison, 53% of older homeowner households had incomes below that level.

For many of those households, however, the home may also represent their largest store of wealth. Among homeowners 62 and older in 2019, median home equity was $160,000, compared with just $84,500 in median financial assets, including savings, retirement accounts, and investments.

“For high net worth families, real property is typically only one component of their total estate,” Farr says. “However, for middle-class families, the house could represent the entire estate.”

What happens after the borrower dies

Even so, that still doesn't make using the equity a bad financial decision for the homeowner.

“Elderly homeowners should focus on addressing their retirement funding concerns before focusing on creating an inheritance for their children,” Farr says. “If using part of the equity in the house will enable an elderly person to reside safely in his/her home, receive required medical treatment/care, and maintain a reasonable standard of living, then there is no reason why they cannot make that choice regarding how they will choose to utilize their accumulated wealth.”

But a reverse mortgage changes what is left behind because the amount owed generally grows as borrowers take money out and interest and fees accumulate.

“Interest charged on the loan, plus mortgage insurance premiums, and the costs associated with financed fees/charges will gradually diminish the value of the home,” he explains. “Once the borrower vacates the property permanently or dies, the aforementioned costs are subtracted from the remaining value of the home, thus potentially reducing the inheritance received by heirs.”

The loan also eventually has to be resolved.

While a borrower may not have to pay it back while living in the home, a reverse mortgage becomes due when they permanently move out, sell the property, or die. Some qualifying surviving spouses have additional protections that may allow them to remain in the home.

After the last borrower dies and the loan becomes due, the servicer sends the estate, heirs, or other person with legal title a formal notice that the loan is due. Once that notice arrives, CFPB says heirs generally have 30 days to buy, sell, or turn over the home.

If they sell, the reverse mortgage is paid from the proceeds and whatever equity remains goes to the estate. But keeping the house can be harder.

An heir who wants the property generally has to resolve the reverse mortgage balance. CFPB explicitly acknowledged the financial obstacle in August, stating that heirs “might not have the money” to do that and may need to obtain a mortgage of their own.

That can re-create the same liquidity problem in the next generation. The parent had wealth locked in the house but needed cash. The heir may receive substantial remaining equity in that same house without having the cash—or borrowing power—needed to keep it.

If the reverse mortgage is larger than the home's value, heirs generally don't have to make up the shortfall themselves. CFPB says an underwater HECM can generally be satisfied by selling the property for at least 95% of its appraised value, with mortgage insurance covering the rest.

Even when heirs have additional time, they may be trying to open probate, establish who can act for the estate, get an appraisal, and secure financing simultaneously.

The National Consumer Law Center warned the U.S. Department of Housing and Urban Development last year that “heirs need clear, prompt, and committal communication from servicers” to complete the probate steps needed to resolve the loan.

When the loan isn't resolved

New HUD records show what can happen when that process breaks down.

On Sept. 1, HUD put roughly 1,500 reverse mortgage loans with about $454 million in balances up for sale. The borrowers had died, the homes were still occupied by people who weren't borrowers, and HUD said heirs “have not come forward in the time elapsed.”

HUD isn't auctioning off the houses. It is selling the mortgage debts themselves to investors, who take over the loans and eventually have to resolve them.

The first such sale offers a glimpse of how long some difficult cases can remain unsettled. HUD later tracked 719 occupied, postdeath loans from that pool. By March 2026, 69.7% remained unresolved in delinquent servicing, while 20.4% were listed in HUD's “foreclosure” category.

Of course, those aren't the odds facing a typical family. HUD selected the loans because they were already troubled and unresolved, and the data doesn't show why individual heirs failed to resolve them or how much equity remained in those homes.

Still, the cases put a concrete endpoint on a trade-off that begins much earlier, when an older homeowner decides whether to use housing wealth during retirement or preserve more of it for later.

Reverse mortgages aren't suddenly booming. The Federal Housing Administration endorsed 27,995 HECMs in 2025, less than one-quarter of the 114,421 it endorsed in 2009. But hundreds of thousands of existing loans remain.