In a reverse mortgage, what is commonly true regarding heirs and debt liability?

• A. Heirs are not personally liable beyond the home's value; the loan is non-recourse
• B. Heirs must repay the full loan amount
• C. Heirs must continue monthly payments
• D. Heirs automatically lose ownership

Answer: (A)

In a reverse mortgage, the loan is non-recourse, so heirs aren’t personally liable beyond the value of the home. The loan is repaid from the sale of the home after the borrower dies or vacates. If the sale price covers the loan balance, any remaining proceeds go to the heirs. If the sale brings in less than what’s owed, the lender absorbs the shortfall; heirs aren’t responsible for the deficiency. Heirs can keep the home by paying off the loan balance or refinancing, or they can sell the home to settle the loan. Monthly payments aren’t required as part of the heirs’ obligations.