The loan payoff statement
The current balance including accrued interest and fees.
Donating a house with a reverse mortgage: what heirs need to know
Reverse mortgage property specialists: (888) 228-7320
Donating a House With a Reverse Mortgage
When the last borrower on a reverse mortgage dies or moves out, the loan comes due, and the family has a limited time to repay it, sell the house or hand it back. If the house is worth more than the loan balance, donating it to Real Estate with Causes is another option: the loan is paid from the property’s value at transfer and the remaining equity becomes the gift. If the loan is close to or above the value, we will talk through the alternatives with you.
Tell us about the property
Every property gets a look. Name, phone and email are the only required fields.
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When a donation can work
A reverse mortgage balance grows over time as interest accrues. What matters is how that balance compares with what the house can sell for today. When there is meaningful equity above the payoff, the loan is repaid at transfer and the rest is a charitable gift. Because debt is paid from the property, it is treated as a bargain sale.
Timing
Servicers give heirs a limited period to act after the loan comes due, with extensions in some cases. We work inside that window and coordinate the payoff directly with the servicer.
When the loan is larger than the house
Most reverse mortgages are non-recourse, which generally means the heirs do not owe more than the house is worth. If the balance is higher than the value, there is no equity to donate, and the usual routes are a sale to satisfy the loan or a deed in lieu to the lender.
In that situation we will tell you plainly that a donation is not the right route and explain who to talk to instead.
What to have ready when you call
The servicer can provide most of this in writing.
The servicer’s due and payable letter
It shows when the loan came due and the deadline to act.
Who has authority
The executor, trustee or heirs who now control the house.
Reverse mortgage donation questions, answered
Can we donate a house that still has a reverse mortgage? +
Yes, if the house is worth meaningfully more than the payoff. The loan is repaid from the property’s value at transfer, and the remaining equity is the gift. If there is little or no equity, we will talk through the other routes with you.
How long do we have after the loan comes due? +
Servicers typically allow a limited period and may grant extensions if the family is actively working to sell or settle. The servicer’s letter will state the deadline. Call early.
Will the estate owe money if the house is worth less than the loan? +
Most reverse mortgages are non-recourse, so the estate generally does not owe the difference. Confirm the terms of your loan with the servicer.
Who signs the donation? +
Whoever holds title after the borrower’s death: usually the executor of the estate, a trustee if the house was in a trust, or the heirs.
Is there a tax deduction? +
Possibly, on the equity above the loan, as a bargain sale. Who takes it depends on whether the estate or the heirs make the gift. Your advisor should confirm.
We do not provide tax or legal advice. See IRS Publication 526, Publication 561 and the Form 8283 instructions, and consult your own advisor.
Related guides
Tell us about the loan and we will review it
Send the payoff balance and the servicer’s deadline, and we will tell you plainly whether a donation can work.