Colorado: Selling a Home When a Reverse Mortgage Lender Demands Renunciation Letters

Short answer — the practical path to selling

If your father had a reverse mortgage and the lender keeps asking for “renunciation” letters, you generally have three practical options under Colorado procedures: (1) get the exact renunciation forms the lender wants signed by the people who hold legal or potential ownership rights; (2) open a probate or estate proceeding so a personal representative (executor) is appointed and can sign the documents and sell the home; or (3) persuade the lender to accept an alternative court order, short-sale approval, or deed signed by the appointed representative. Which route you should use depends on how title to the house is held (sole ownership, joint tenancy, trust, or with a beneficiary/TOD deed) and whether heirs will cooperate.

Detailed answer — step‑by‑step under Colorado practice

1. First, confirm ownership and loan type

• Check the deed: who is the legal owner? (Sole name, joint tenancy with right of survivorship, trust, or a transfer-on-death/beneficiary deed?)
• Verify the reverse mortgage type. Many reverse mortgages are federal HUD HECM loans. HUD/HECM loans follow FHA/HUD servicing rules that affect timelines and payoff options; see HUD’s HECM overview: https://www.hud.gov/program_offices/housing/sfh/hecm/hecmhome.

2. Understand why a lender wants renunciation letters

When the borrower dies, the reverse mortgage becomes due and payable. Lenders ask for documents that clear title and protect them from later claims. A “renunciation” is typically a signed statement by an heir or interested person declaring they renounce the right to be the personal representative or renounce claims that would interfere with a sale. The lender wants certainty that the person who signs documents has authority and that people who could later dispute will not interfere.

3. Get the lender’s exact requirements in writing

• Ask the lender’s estate/servicing department for a written checklist of the exact documents they need (payoff demand, certified death certificate, renunciation form template if they have one, short‑sale application, required notarization, etc.).
• Do not sign a renunciation form you don’t understand. Renunciations can affect rights to probate administration or claims against the estate. Consider getting a lawyer to review any document before signing.

4. If all heirs are willing to cooperate, get them to sign the lender’s form

If every person with a potential claim to the property signs the lender’s renunciation or consent form (properly notarized), the lender may permit the sale without probate. Make sure signatures expressly state what is being renounced and are witnessed/notarized as the lender requires.

5. If an owner or heir will not sign, use the court to create authority

If someone refuses, the practical route in Colorado is usually to open probate or other court proceeding to obtain an order appointing a personal representative or authorizing sale. The appointed representative then executes the sale documents and deals with the lender. A court order resolving any competing claims gives the lender the comfort it seeks.

6. Small estates, beneficiary deeds, and trusts — shortcuts that can avoid probate

• If property passed by a valid transfer-on-death (beneficiary deed) or if it was held in a living trust, the successor can usually transfer title without probate. Provide the lender with recorded beneficiary-documentation or trust paperwork and their required affidavits.
• Colorado has streamlined probate tools and affidavits for small estates and certain collections that may apply. Check Colorado Judicial Branch probate forms and guidance: https://www.courts.state.co.us/Forms/Index.cfm?Category=Probate

7. Repayment, sale proceeds, and HUD (HECM) specifics

Under federal HECM rules, heirs can typically keep the property by paying the loan in full or by paying the lesser of the loan balance or 95% of the home’s appraised value. If the home is sold, the sale proceeds first pay the reverse mortgage. If the balance exceeds the sale price, the lender absorbs the loss if it’s an FHA-insured HECM (subject to HUD insurance rules) and typically cannot go after heirs for the shortfall.

Confirm the lender’s payoff amount and any timeframe for sale or reinstatement. HUD information on HECM obligations and timelines is here: https://www.hud.gov/program_offices/housing/sfh/hecm/hecmhome

8. If you need to force a sale or clear title, hire a Colorado probate or real estate attorney

When heirs won’t cooperate or the lender’s demands are unclear or unreasonable, an attorney can file for appointment as personal representative or seek a specific court order instructing the county clerk to accept a deed and allow sale. The Colorado Bar Association has a lawyer finder for local counsel: https://www.cobar.org/For-the-Public/Find-a-Lawyer

Common sample pathways (hypothetical facts)

Scenario A — Title in father’s sole name; all heirs cooperate

Heirs gather death certificate, lender payoff, and sign lender’s renunciation/consent form. Lender accepts and issues payoff. House listed and sold. Sale proceeds pay off reverse mortgage; any remaining assets pass according to will or intestacy laws.

Scenario B — Title in father’s sole name; one heir refuses to sign

Open probate. Petition the court to appoint a personal representative. The court-appointed representative signs sale and payoff paperwork. If needed, seek a court order quieting title or authorizing sale despite the non-cooperating heir.

Scenario C — Home in trust or has beneficiary deed

Provide recorded trust documents or beneficiary deed to the lender. Successor trustee or beneficiary transfers or sells the property per the trust or deed. Lender’s renunciation requirement may be satisfied with trust certification or recorded transfer documents.

Helpful hints — make the process smoother

• Get the lender checklist in writing. Ask for a named contact and written list of documents they will accept.
• Collect the certified death certificate(s) early — lenders always require them.
• Do not sign a renunciation that looks like you are surrendering inheritance rights without lawyer review.
• If possible, obtain an official payoff quote and a timeline from the lender so you can list the house with accurate figures and timeline.
• If the home’s value is less than the mortgage balance, discuss a short sale with the lender and get approval in writing before closing anything.
• Consider hiring a Colorado probate or real estate attorney when heirs disagree, a deed or trust is complex, or the lender will not accept informal documents.
• Use Colorado Judicial Branch probate forms and local county court clerks for instructions on filing for appointment: https://www.courts.state.co.us/Forms/Index.cfm?Category=Probate
• Read HUD’s HECM resources to understand federal protections and heirs’ options: https://www.hud.gov/program_offices/housing/sfh/hecm/hecmhome