Suffolk County’s Reverse Mortgage Crisis: How Family Members Are Losing Their Inheritance to Foreclosure in 2025
A growing crisis is unfolding in Suffolk County as families discover that the homes they expected to inherit are instead being lost to foreclosure due to reverse mortgage complications. There were a total of 144 Suffolk County, NY properties with a foreclosure filing in April 2025. Lenders started the foreclosure process on 121 Suffolk County, NY properties and repossessed 11 Suffolk County, NY properties through completed foreclosures (REOs) in April 2025. While these statistics include all types of foreclosures, a significant portion involves reverse mortgage situations where heirs are unprepared for the complex process of settling these unique loans.
Understanding the Reverse Mortgage Inheritance Challenge
Reverse mortgages allow seniors to access their home equity without making monthly payments, but they create unique challenges for heirs upon the borrower’s death. If the last borrower on the loan passes away, the borrower’s heirs need to communicate with the servicer and decide how they will resolve the mortgage. If the borrower’s heirs are unable to pay off the loan, fail to respond within the appropriate timeline, or are unwilling to provide a deed-in-lieu of foreclosure, the lender can initiate foreclosure proceedings.
The timeline for action is surprisingly short. Within 30 days of the event, a “Due and Payable Letter” is sent via mail to the property address. This letter is sent to the borrower who defaults or to the heirs or spouse of the borrower who has passed away. They must respond to the letter within 30 days of receipt. Many families, already dealing with grief, find themselves overwhelmed by these tight deadlines and complex requirements.
The Six-Month Window That Changes Everything
Once heirs receive notification, they typically have six months to resolve the mortgage. Borrowers or heirs must pay off the loan. The borrower who is in default, the heirs, or the spouse of the last surviving borrower will have six months from the date of the notification letter to pay off the loan. However, Servicers may defer this up to 6 months – a year with approval from the Department of Housing and Urban Development, or HUD – so heirs can decide how to pay off the loan.
The challenge is that many families are unaware of their options or the urgency required. If a plan is in place ahead of time, heirs are not left to scramble at a time of grief when they have just lost loved ones. Unfortunately, most families lack this preparation, leading to missed deadlines and lost homes.
Options for Suffolk County Families
Heirs facing reverse mortgage foreclosure have several options, but timing is critical. Heirs have the choice of either paying off the loan and keeping the home or selling the home, satisfying the loan balance and collecting any surplus after the sale. For those with the available funds, repaying the reverse mortgage balance to satisfy the loan balance is always an option. You can sell the home and use the proceeds to satisfy the loan balance. If the heirs don’t want to take responsibility for paying off the loan balance, they can offer the deed to the lender instead of going through foreclosure.
Communication with the lender is essential throughout this process. The best way to avoid foreclosure on any type of reverse mortgage is to be responsive and stay in close contact with the loan servicer after a maturity event occurs. Borrowers or heirs who are communicative will have access to more assistance and options than those who aren’t reachable.
The Protection of Non-Recourse Loans
One positive aspect for heirs is that reverse mortgages are typically non-recourse loans. Reverse mortgages are nonrecourse loans. This means that borrowers and their heirs can’t be held responsible for paying the lender more than the property would be worth in a sale. Because of this, the borrower or their heirs have the option to give the property back to the lender, and there’s no further obligation or credit impact. In New York specifically, New York is a “non-recourse” state, which means that even if the proceeds from the sale of the home do not cover the loan balance, your lender cannot go after you or your estate for the remaining loan balance.
Legal Assistance is Crucial
Given the complexity of reverse mortgage foreclosures and the tight timelines involved, seeking legal assistance is often necessary. Families facing this situation need experienced guidance to navigate the process effectively. A qualified Foreclosure Attorney Suffolk County can help heirs understand their options, communicate with lenders, and potentially save the family home or ensure the best possible outcome.
The Frank Law Firm P.C., located in Old Brookville and serving Suffolk County, understands the unique challenges families face with reverse mortgage foreclosures. The Frank Law Firm is a full-service law firm located on Long Island, serving all of Nassau, Suffolk, Queens, Brooklyn, New York City and New Jersey. We specialize in real estate law and closings, foreclosure, bankruptcy, breach of contract, SBA lending, litigation and more. Our attorneys are professional and knowledgeable in their areas of practice and are here to help you with whatever legal needs you may have.
Prevention and Planning
The best approach to avoiding reverse mortgage foreclosure complications is advance planning. However, borrowers should talk to their heirs and have a plan in place to be able to begin the process as soon as all original borrower leave the home (whether as a result of passing or to move to assisted living, etc.). The sooner the loan is repaid, the sooner interest ceases to accrue and there is no worry. There should be a mechanism in place to let the lender know who has authorization to speak with them on behalf of the loan (this can be done in advance and it is easier to do it while all borrowers have full faculties and are able to direct their affairs). Estate planning is a huge help so that families know what the owners’ wishes are and can proceed immediately (wills, estates, trusts set up in advance can resolve issues and allow heirs to move forward without delays in many instances, you should consult with your family attorneys for direction).
Taking Action
Suffolk County families dealing with reverse mortgage inheritance issues should act quickly. The combination of tight deadlines, complex regulations, and emotional stress makes professional legal guidance invaluable. Whether the goal is to keep the family home, sell it for the best price, or simply understand all available options, experienced legal counsel can make the difference between losing a family asset and preserving it for future generations.
If you’re facing a reverse mortgage foreclosure situation in Suffolk County, don’t wait. The sooner you seek professional help, the more options you’ll have to protect your family’s interests and potentially save your inherited home from foreclosure.