Reverse Mortgage Foreclosure in Maryland: How to Sell Before It's Too Late

Reverse Mortgage Foreclosure in Maryland: How to Sell Before It's Too Late

By Dan McDevitt | RealVolution Homes Group at Cummings & Company Realtors

Getting a letter saying your reverse mortgage is in default, due and payable, or headed toward foreclosure can be frightening.

Maybe you've lived in your home for decades and never expected to face foreclosure.

Maybe your mother or father recently passed away, and you're trying to settle their estate while the reverse mortgage company keeps sending notices.

Or perhaps a parent moved into assisted living, and you've just learned the reverse mortgage may need to be repaid.

Whatever brought you here, there's one thing I want you to understand:

Receiving a reverse mortgage foreclosure notice does not necessarily mean you've already lost the opportunity to sell the property.

Depending on the loan, the reason for default, and where you are in the foreclosure process, you may still have options.

But timing matters.

Let's talk about what causes reverse mortgage foreclosure in Maryland, how the process works, and what you should do if you're considering selling the home.

Can a Reverse Mortgage Really Go Into Foreclosure?

Yes. And it's one of the biggest misunderstandings about reverse mortgages.

Many homeowners believe that because they aren't required to make traditional monthly mortgage payments, foreclosure isn't possible.

Unfortunately, that's not how these loans work.

Most reverse mortgages are FHA-insured Home Equity Conversion Mortgages, or HECMs.

Although HECM borrowers generally don't have to make monthly principal and interest payments while meeting the loan's requirements, they still have important responsibilities.

Foreclosure may become a possibility when those requirements aren't met or when the loan becomes due and payable and isn't resolved.

Common reasons include:

• The last borrower passes away. The loan generally becomes due and payable, subject to applicable surviving-spouse protections.

• The homeowner permanently moves out. Moving into assisted living or another residence can affect the loan's occupancy requirements.

• Property taxes aren't paid. Failure to meet property-charge obligations can lead to default.

• Homeowners insurance lapses. Maintaining required insurance is generally part of the loan agreement.

• The home is no longer maintained as required. Significant failures to meet applicable property-maintenance obligations can create problems.

• The loan becomes due and payable but isn't repaid. If the borrower, estate, or heirs cannot resolve the balance within applicable requirements, foreclosure may follow.

A reverse mortgage doesn't eliminate the possibility of foreclosure. It changes the circumstances under which foreclosure can happen.

What Does "Due and Payable" Mean on a Reverse Mortgage?

This is an important distinction.

A due-and-payable notice means the servicer is requiring repayment of the reverse mortgage because a triggering event has occurred.

That event might be the death of the last borrower, a qualifying occupancy change, or another loan default.

But a due-and-payable notice isn't necessarily the same thing as a scheduled foreclosure auction.

There may still be an opportunity to repay the loan, sell the property, address an eligible default, or pursue another available resolution.

The exact options depend on the reason the loan became due, the type of reverse mortgage, and the notices you've received.

Don't ignore a due-and-payable letter, even if you haven't received anything from a foreclosure attorney.

The earlier you understand your options, the more time you may have to act.

Can You Sell a House Before Reverse Mortgage Foreclosure in Maryland?

Yes, in many situations selling the property before foreclosure is possible.

The key is determining whether the sale can be completed in time and whether the transaction meets the reverse mortgage servicer's requirements.

There are two broad situations.

Situation 1: The Home Is Worth More Than the Reverse Mortgage Balance

Suppose your property is worth approximately $350,000, and the reverse mortgage payoff is $250,000.

You may be able to sell the home through a traditional real estate transaction, pay off the reverse mortgage at closing, cover applicable selling expenses, and retain the remaining equity.

In this situation, pricing the home correctly and marketing it effectively can be especially important.

You don't want to unnecessarily sacrifice equity simply because you're worried about the foreclosure process.

Situation 2: The Reverse Mortgage Is Higher Than the Home's Value

Now suppose the property is worth $275,000, but the reverse mortgage balance has grown to $340,000.

A traditional sale wouldn't generate enough money to pay off the full balance.

However, FHA-insured HECMs have special non-recourse protections and sale provisions that may allow the property to be sold for less than the outstanding debt.

For an eligible HECM that has become due and payable, applicable program rules generally permit a qualifying sale for at least 95% of the current appraised value when the balance exceeds the property's value.

That doesn't mean every offer will be accepted. The appraisal, transaction, and servicing requirements still matter.

If the loan is not yet due and payable, different valuation requirements can apply.

This is where experience with reverse mortgage short sales can be valuable.

For a more detailed explanation, see my article:

Reverse Mortgage Short Sale in Maryland: What If You Owe More Than Your Home Is Worth?

How Does the Maryland Foreclosure Process Work?

Maryland has a legal foreclosure process involving notices, court filings, and ultimately a foreclosure sale if the default isn't resolved.

Generally, residential foreclosure actions are subject to requirements that include a Notice of Intent to Foreclose and an Order to Docket or other appropriate court filing.

Maryland law generally requires a Notice of Intent to Foreclose at least 45 days before the foreclosure action is filed. A foreclosure action also generally cannot be filed until at least 90 days after a qualifying default, subject to applicable legal requirements and exceptions.

These are not guarantees that you have 45 or 90 days remaining after receiving a particular letter. The relevant dates, notices, loan type, and legal circumstances all matter.

Here's a simplified overview:

1. A loan default or due-and-payable event occurs. The servicer identifies an issue requiring repayment or another resolution.

2. The servicer sends notices. These may include loan-specific due-and-payable correspondence and, where applicable, a Maryland Notice of Intent to Foreclose.

3. A foreclosure action may be filed. The lender or its representative may file an Order to Docket or other appropriate foreclosure action in Maryland's Circuit Court.

4. The foreclosure process continues. Depending on the circumstances, additional notices, court procedures, and any applicable mediation or other rights may be involved.

5. A foreclosure sale may eventually be scheduled. If the situation isn't resolved, the property may be sold through the foreclosure process.

Maryland's foreclosure rules are complicated, and not every protection or procedure applies identically to every reverse mortgage situation.

If you've received court documents or a sale notice, consult a Maryland foreclosure attorney promptly.

What Happens When a Parent Dies and the Reverse Mortgage Company Starts Foreclosure?

This is a situation that can be especially difficult for families.

You're dealing with the loss of a loved one, funeral arrangements, estate responsibilities, and decisions about the family home.

Then you discover that the reverse mortgage company expects the loan to be repaid.

For an FHA-insured HECM, the loan generally becomes due after the death of the last borrower, unless an eligible surviving spouse or other applicable protection changes the timing.

The estate or heirs may have options to:

• Pay off the reverse mortgage and keep the home.

• Obtain new financing to satisfy the loan.

• Sell the property and repay the reverse mortgage.

• Discuss other available resolutions with the servicer.

The CFPB explains that heirs receiving a due-and-payable notice generally face an initial 30-day response period, with additional time potentially available for an eligible sale or financing arrangement.

Any extension needs to be confirmed with the servicer. Don't assume additional time has been approved simply because the property is listed for sale.

If you're dealing with an inherited home, I also recommend reading:

Can You Keep Your Parents' House With a Reverse Mortgage in Maryland?

What If Your Parent Moves Into Assisted Living?

Not every reverse mortgage foreclosure situation involves a death.

Sometimes the borrower is still alive but can no longer live independently.

Perhaps your mother moved into assisted living, or your father needs long-term medical care.

Reverse mortgages generally require the home to remain the borrower's principal residence, subject to applicable rules and protections.

An extended absence or permanent move can cause the loan to become due and payable.

For FHA-insured HECMs, occupancy rules can depend on the reason for the absence, its duration, and whether another eligible borrower or protected spouse remains in the home.

Families should contact the servicer promptly rather than assuming that maintaining the house or continuing to pay its expenses will prevent the loan from becoming due.

If selling is necessary, understanding the home's value and the timeline early can help avoid unnecessary delays.

Will Listing the House for Sale Stop Foreclosure?

Not automatically.

This is one of the most important points in this entire article.

Putting a property on the market does not, by itself, legally stop a foreclosure.

Neither does receiving an offer, signing a purchase agreement, or telling the servicer that you intend to sell.

The servicer may consider a sale plan or extension request under applicable rules, but the foreclosure process can continue unless the necessary relief or approval is obtained.

If a foreclosure sale has already been scheduled, a homeowner or estate should seek legal advice immediately about what steps, if any, may be available to delay or prevent the sale.

As a Realtor, I can help with the real estate side of the transaction.

But legal foreclosure relief and servicing decisions need to be addressed by the appropriate professionals.

What Should You Do if You've Received a Reverse Mortgage Foreclosure Notice?

If you're facing this situation, here are the steps I'd recommend taking promptly.

1. Find Out Exactly What Notice You Received

A due-and-payable notice, a Notice of Intent to Foreclose, an Order to Docket, and a foreclosure sale notice are not interchangeable.

Each may indicate a different stage of the process.

Look at the dates, deadlines, property address, servicer contact information, and any court case details.

2. Contact the Reverse Mortgage Servicer

Ask for the current loan status, payoff amount, reason for default, available options, and applicable deadlines.

If you're an heir or personal representative, ask what documentation is required for the servicer to communicate with you.

Keep a record of the conversations and request important information in writing.

3. Determine the Property's Realistic Market Value

Don't rely exclusively on an automated home-value estimate.

The home's condition, updates, location, and recent comparable sales can make a substantial difference.

A realistic market analysis can help you understand whether the property has equity or whether a short-sale approach may be necessary.

4. Speak With a Qualified Housing Counselor or Attorney

A HUD-approved housing counselor can help you understand reverse mortgage servicing options.

If foreclosure proceedings have started, a Maryland foreclosure attorney can evaluate your legal position, notices, and deadlines.

5. Decide Whether Selling Is a Practical Option

If selling makes sense, develop a plan based on the property's value, condition, loan requirements, and available time.

That may involve a traditional sale, an as-is sale, or a qualifying reverse mortgage short sale.

6. Coordinate the Sale With the Servicer

Don't assume that a listing agreement or signed contract stops foreclosure.

The servicer needs to know what's happening, and any necessary approval, extension, or other relief must be addressed through the appropriate channels.

Can You Sell a Reverse Mortgage House As-Is Before Foreclosure?

In some situations, yes.

And this can matter when time is limited.

Maybe the property needs repairs, still contains a lifetime of belongings, or has been vacant for several months.

Some families simply don't have the money, time, or energy to complete renovations before selling.

Depending on the property's condition, market demand, buyer financing, and servicer requirements, an as-is sale may be a practical option.

But the goal isn't simply to find the fastest buyer.

It's to find a transaction that makes sense financially and has a realistic chance of satisfying the loan requirements before the available time runs out.

Sometimes that means marketing to traditional buyers.

Other times, cash buyers or investors may be worth considering.

The best strategy depends on the property and the circumstances—not a one-size-fits-all approach.

Why Experience Matters in Reverse Mortgage Foreclosure Sales

I've been helping Maryland homeowners navigate complicated real estate situations for more than 20 years.

Since 2007, I've handled more than 150 short sales, including transactions involving financial hardship, inherited properties, estates, and challenging lender requirements.

One thing I've learned is that these situations require more than putting a sign in the yard.

You need to understand the property's value, the homeowner's or estate's goals, the loan status, and the practical timeline.

You also need to recognize when the situation requires legal advice, mortgage servicing assistance, or coordination with other professionals.

My approach is to understand the circumstances first and explain the real estate options.

Sometimes selling is the right decision.

Sometimes the family wants to keep the property.

And sometimes the first priority is getting clarity about the notices and deadlines before anyone makes a decision.

My goal is to help you make an informed real estate decision without unnecessary pressure.

Reverse Mortgage Foreclosure Help in Baltimore and Throughout Maryland

I'm Dan McDevitt, President of RealVolution Homes Group at Cummings & Company Realtors.

I work with homeowners and families throughout Baltimore City, Baltimore County, Harford County, Cecil County, Anne Arundel County, Howard County, and surrounding Maryland communities.

If you're facing reverse mortgage foreclosure, dealing with an inherited home, or trying to determine whether selling is possible, I'm happy to discuss the real estate side of your situation.

You can also visit my comprehensive resource page:

Reverse Mortgage Help in Maryland

Or schedule a convenient conversation:

Schedule a 15-Minute Conversation With Dan McDevitt

No pressure. No obligation. Just a conversation about the real estate options that may be available.

If you've already received a foreclosure sale notice or court documents, don't wait for a real estate appointment before seeking qualified legal or housing counseling assistance.

About Dan McDevitt

Dan McDevitt is a Baltimore-area Realtor with Cummings & Company Realtors and President of RealVolution Homes Group, licensed in Maryland and Delaware. With more than 20 years of real estate experience, Dan specializes in helping homeowners and families navigate complicated real estate situations brought on by major life events.

His experience includes probate and estate property sales, selling inherited homes, selling a parent's home using a power of attorney (POA), divorce-related property sales, foreclosure and pre-foreclosure situations, short sales, reverse mortgage properties, bankruptcy-related sales, and as-is home sales.

Dan serves Baltimore City, Baltimore County, Harford County, Anne Arundel County, Howard County, and Cecil County, while assisting clients throughout Maryland and Delaware.

Disclaimer: This article is for general educational purposes and does not constitute legal, financial, tax, lending, or mortgage servicing advice. Reverse mortgage requirements vary by loan type and individual circumstances. Consult your loan servicer, a HUD-approved housing counselor, and a qualified Maryland attorney for guidance about your specific situation.