HECM Payoff at Time of Sale — REALTOR Checklist

This checklist is designed to help REALTORS understand how payoff of a reverse mortgage generally works at the time of sale. Each situation is document-driven, and early identification of the servicer and legal authority is key to avoiding delays.

First: Identify the Loan, the Servicer, and Who Has Authority

1) Confirm the mortgage and find the current servicer

• Review the most recent monthly statement (best source).
• If no statement is available, use the MERS ServicerID system through MERSCORP Holdings to identify the current servicer.

2) Confirm who is authorized to speak with the servicer

Servicers typically require documentation before discussing payoff details with anyone other than the borrower:

• Borrower (alive): borrower may authorize a third party.
• Power of Attorney: servicer will require POA documentation before releasing information.
• Estate/heirs: proof of authority (executor/administrator or similar) and documentation showing ownership/authority.

This “authorization first” step is what stops most payoff delays.

3) Review title

• Pull the deed (and trust documents, if applicable).
• Determine whether title is held:
• By individuals (and whether the owner is alive, deceased, or incapacitated)
• In a trust (identify the trustee(s) with authority to sign)

If the Borrower Is Alive and Voluntarily Selling

1) Request a payoff statement

• Request a good-through date payoff (closing date or estimated closing date).
• Confirm whether the servicer requires a specific request form or allows portal/email requests.

2) Confirm what must be paid at closing

• Payoff generally includes:
  principal balance + accrued interest + FHA mortgage insurance premium (MIP) + servicing fees and other allowable charges through the payoff date.
  (Amounts vary by loan and servicer.)

3) Update payoff if the closing date changes

• Payoffs are date-sensitive and must be re-ordered if closing is delayed.

4) Closing

• Settlement remits payoff funds per servicer instructions.
• Servicer issues a release/satisfaction after payoff clears (timing varies).

If a Power of Attorney Is Involved

1) Confirm the POA is acceptable

• Provide the servicer with the POA (often recorded or certified) and any required authorization forms.
• Confirm the POA explicitly authorizes real estate and loan transactions.

2) Confirm who signs listing and closing documents

• The title company determines signing format and acceptance requirements.

3) Follow standard payoff steps

• Request payoff
• Confirm good-through date
• Close, remit payoff funds, release issued

POA acceptance is both a servicer and title company issue and is highly document-driven.

If the Last Borrower Has Died (Heirs / Estate)

This is the most common scenario REALTORS encounter.

1) Expect a “Due and Payable” (Demand) letter

• After notification of death, the servicer typically issues a Due and Payable letter outlining options and response timelines, consistent with guidance referenced by National Reverse Mortgage Lenders Association.

2) Resolution paths generally available

HUD guidance describes three primary options for the estate or party with legal title:

• Satisfy the HECM (pay off the loan)
• Sell the property (often tied to the FHA 95% of appraised value concept)
• Deed-in-lieu of foreclosure

(Referenced in guidance from U.S. Department of Housing and Urban Development.)

3) Title and authority determine who can sell

• Property held in a trust: confirm trustee(s) and trust powers.
• Property held individually:
• Confirm whether an executor or administrator has been appointed.
• Probate court approval may be required before the property can be sold (state-law driven; attorney guidance is often necessary).

4) Communicate intent early

• Industry guidance stresses the importance of timely communication once the loan is due.

5) If the property is listed for sale

• Servicers and HUD commonly require proof of active marketing (listing agreement, MLS sheet) when extensions or timelines are involved.

Common Instructions Across Most Reverse Mortgage Servicers

This checklist applies in nearly all scenarios:

1. Identify the servicer

• Monthly statement first
• If unavailable, use MERS ServicerID

1. Establish authorization

• Borrower authorization, POA, or estate authority documentation is required before payoff discussions

1. Request payoff statement

• Include borrower name, property address, loan number (if known), good-through date, delivery instructions (title company), and contact information

1. Respond to Due and Payable notices (if applicable)

• State intent (sell, payoff, or deed-in-lieu)
• Provide listing documentation if selling
• Request extensions with proof of active marketing when applicable

1. Close and remit payoff

• Follow servicer payment instructions exactly
• Confirm receipt and release process

Finding the Right Servicer — Quick Reference

• MERS ServicerID: identifies the current servicer when statements are unavailable
  (via MERSCORP Holdings)
• HUD/FHA Resource Center:
  (800) CALL-FHA | (800) 225-5342
  U.S. Department of Housing and Urban Development
• CFPB (servicer issues or escalation):
  (855) 411-2372
  Consumer Financial Protection Bureau

For HUD-held (Secretary-held) HECMs, HUD provides separate payoff request instructions.

About Reverse Mortgage Servicing

There is no single public count of reverse mortgage servicers because:

• “Servicer” may refer to the named servicer or a subservicer.
• Servicing portfolios are frequently transferred.

In practice, while many lenders originate reverse mortgages, servicing is concentrated among a smaller group of specialized servicers and subservicers (a structure commonly described in industry guidance from NRMLA).

Optional closing line for the page (recommended)

If you’re unsure how a specific scenario fits into these steps, a short conversation can often clarify next steps quickly.