Quick overview

If your father had a reverse mortgage, the loan generally becomes due when he dies. Heirs can typically either repay the loan (including interest and fees) and keep the house, sell the house and use the sale proceeds to repay the loan, or surrender the house to the lender. Lenders sometimes request “renunciation letters” from heirs before they will issue a payoff or cooperate with a sale. This article explains what that request usually means under Alaska practice, why lenders ask for it, practical steps to move a sale forward, and when to get legal help.

Detailed answer

What happens to a reverse mortgage after the borrower dies?

When the borrower on a Home Equity Conversion Mortgage (HECM or other reverse mortgage) dies, federal HECM rules and the loan documents generally require the loan to be repaid. The servicer should provide heirs with a payoff amount and options for repaying the loan. The most common options are:

• Sell the home, use the sale proceeds to repay the reverse mortgage, and keep any surplus;
• Keep the home by paying off the reverse mortgage balance (or arranging new financing); or
• Surrender the home to the lender (often via deed-in-lieu of foreclosure) if repayment or sale is not possible.

What are “renunciation letters” and why would a servicer request them?

There is no single universal form called a “renunciation letter;” different servicers use different terminology. Typically, when a lender or servicer asks for a renunciation, it means one of these things:

• They want potential heirs or beneficiaries who will not act as the estate representative to formally renounce any right to be appointed as personal representative (executor) so the lender can deal with one person who has authority to close a sale.
• They want a written, notarized statement from all persons who might claim an interest in the property confirming they will not oppose the sale or will not assert a claim that would block transfer of title.
• They may be trying to avoid dealing with a probate process and want written confirmation that there are no other claimants who will contest the transaction.

In short, servicers often request these documents to reduce legal risk before issuing a payoff or allowing a sale. That protects the servicer against later claims from someone who says the property was transferred without their consent.

How to sell the house when the servicer keeps asking for renunciation letters

1. Get the basics together: death certificate and loan account info. Order several certified copies of the death certificate. Identify the servicer (look at mortgage statements or contact the company named on the mortgage). Ask the servicer in writing for the payoff demand (payoff figure, effective date, and how long the payoff figure is valid).
2. Confirm current ownership and title status. Check the deed to see how the deceased held title: sole owner, joint tenants with right of survivorship, tenancy in common, or a transfer-on-death/beneficiary deed. If the property automatically passed (for example, joint tenancy or a valid beneficiary deed), heirs may be able to sign a deed and sell without full probate. If the property is only in the decedent’s name, probate or appointment of an estate representative will likely be needed to sell.
3. Ask the servicer exactly what they need — and why. Request the exact form or language they want for the renunciation, and ask whether alternate documents (for example, a signed consent from all heirs, a recorded affidavit of heirship, or appointment paperwork from the probate court) will suffice. Ask them to cite the legal authority or policy that requires the specific form. Get responses in writing.
4. If title is clear and all heirs agree to sell: Gather signed, notarized statements from all persons with an ownership interest agreeing to the sale. If the lender will accept these in lieu of formal renunciation, the servicer can provide a conditional payoff and the sale can proceed.
5. If probate is required or the lender insists on a formal renunciation: There are two common routes:
   • Appoint a personal representative (executor) through probate or small estate procedures and have that officer sign closing documents; or
   • Have all heirs sign a formal renunciation of appointment (if Alaska law and the court allow it), so one heir can be appointed or the sale can be completed by the agreed party.
6. If the sale price will not cover the loan balance: Discuss options with the servicer. With HECM loans, heirs are typically allowed to convey the property to the lender or allow foreclosure. A deed-in-lieu or short sale negotiation may be possible but will depend on the servicer’s policies and whether the property value is less than the loan balance.
7. When the servicer is uncooperative: If the servicer demands an unreasonable or unclear document or refuses to accept ordinary proof of ownership/consent, ask for escalation to a supervisor and request written reasons for denial. If that fails, consider contacting a probate or real estate attorney or contacting federal or state consumer protection agencies for guidance (see links at the end).

When will you need an estate representative (probate)?

If the home was solely in the decedent’s name and there is no beneficiary deed or survivorship arrangement, Alaska probate rules typically require someone with court-appointed authority to sell real property belonging to the estate. Alaska has probate procedures to appoint a personal representative. If the estate is small, Alaska’s simplified or small-estate procedures may allow transfer without a full probate administration — check the Alaska Court System probate self-help materials for thresholds and forms.

Practical tips for working with the servicer

• Put all correspondence in writing and keep copies.
• Ask the servicer to provide the exact form or language they will accept and whether they will accept an attorney-prepared document.
• If several potential heirs exist, get everyone’s documented consent or a notarized statement that they waive appointment or sale objections.
• Hire an experienced real estate agent who has handled reverse mortgage sales — they can help coordinate the closing and the payoff.

When to get a lawyer

You should consult a probate or real estate attorney in Alaska if the servicer requires unusual documents, heirs are in disagreement, the property title is unclear, or the sale will not produce enough funds to satisfy the reverse mortgage. An attorney can prepare or review renunciations, help open probate or use small-estate procedures, and negotiate with the servicer.

Useful Alaska and federal resources

• Alaska statutes and the state probate code (useful starting point for probate rules and processes): Alaska Statutes, Title 13 (Probate, Trusts)
• Alaska Court System — probate self-help and forms (for information about opening probate or using simplified procedures): Alaska Courts — Probate
• HUD HECM program information (reverse-mortgage program rules and servicer obligations): HUD — HECM (Reverse Mortgage)
• Consumer Financial Protection Bureau — reverse mortgage consumer guide: CFPB — What is a reverse mortgage?

Helpful Hints

• Start by getting at least three certified death certificates — servicers, title companies, and the recorder’s office will want them.
• Ask the servicer for a written payoff statement with an expiration date; you will need that to close a sale.
• Check the deed at the county recorder’s office (or online) to confirm how title was held before assuming probate is necessary.
• If all heirs agree to the sale, get their written, notarized consent. That often speeds things up.
• Before spending money on repairs, ask the lender whether they will accept a sale “as-is” or require certain conditions so you don’t over-improve the property for a limited market.
• Keep all communications with the servicer in writing and follow up calls with an email confirming what you were told.
• When in doubt about renunciations, consult a probate attorney — a short phone call can save time and money later.