How to sell a home subject to a reverse mortgage when the lender keeps requesting renunciation letters

Short answer: The lender is asking for written confirmation about who will (or will not) claim an interest in the property so it can process a sale or payoff. In Michigan you do not usually need to sign away your inheritance rights just to sell the house. Instead, provide the lender clear proof of the borrower’s death and legal authority for whoever will manage or sell the property (probate appointment, trustee certificate, small‑estate affidavit, or affidavit of heirship). If the lender insists on a “renunciation,” get legal advice first and consider offering alternatives that protect your rights while letting the sale proceed.

Detailed answer (how this works in Michigan)

1. The legal background: how reverse mortgages affect title after death

Most reverse mortgages in the U.S. are federally insured Home Equity Conversion Mortgages (HECMs). When the borrower dies the loan becomes due and payable. The lender has a claim against the property; heirs or the estate must either:

• pay off the loan (refinance or cash),
• sell the house and use sale proceeds to satisfy the loan, or
• do a deed‑in‑lieu or allow foreclosure if no other option exists.

HUD explains HECM basics and the options heirs have at death: HUD – HECM (reverse mortgage).

2. Why lenders ask for renunciation letters

“Renunciation” is a written statement where someone gives up rights or claims. Lenders request renunciations when they want to be sure no one else will assert title or rights that could delay sale, payoff, or clear title transfer. Examples:

• The lender wants heirs to renounce a claim so the person executing a deed or sale can sign alone.
• The lender wants confirmation that a putative heir is not claiming an interest.

But a blanket renunciation could unknowingly give up valuable inheritance rights. That is why you should not sign a renunciation without understanding consequences.

3. Typical Michigan documents that satisfy lenders (safer alternatives)

Instead of signing a renunciation, provide documents that set out who has legal authority to act and that identify heirs or beneficiaries. Depending on the situation, acceptable documents include:

• Certified death certificate for the reverse mortgage borrower.
• Recorded trust documents showing the borrower transferred the home to a revocable trust and naming the successor trustee.
• Letters of authority from probate court (often called letters of authority or letters testamentary) showing an executor or personal representative is authorized to market and sell estate property. See Michigan Courts resources on probate forms and procedures: Michigan Courts – Probate Forms.
• Small‑estate affidavit: Michigan allows simplified procedures in limited small‑estate situations; an affidavit may allow transfer of personal property, but real property often still needs probate or other court documentation. Contact the probate court to see if a small‑estate procedure applies.
• Affidavit of heirship (when appropriate): a sworn statement by people with direct knowledge about the decedent’s family and heirs. Many title companies accept a carefully drafted affidavit along with other supporting documents.
• Order from probate court authorizing sale of real estate (gives title insurers comfort and usually satisfies the lender).

4. What to do step‑by‑step

1. Get the death certificate. Provide a certified copy to the reverse mortgage servicer.
2. Identify title status. Check whether the home is titled in the deceased’s name alone, in joint tenancy, or held in a trust—this determines next steps.
3. Contact the lender in writing. Ask for a written payoff statement and a list of exactly which documents they will accept to clear title for the sale.
4. Provide legal authority documents. If there is a will, open probate and obtain letters of authority. If property is in a trust, produce the trust and trustee certification. If heirs are attempting a quick sale and the estate qualifies, ask whether a small‑estate process will work.
5. Avoid signing renunciations without counsel. A renunciation can permanently forfeit inheritance rights. If the lender insists, ask if a limited document saying only that you will not interfere with the sale will work instead.
6. Plan for payoff. Confirm how the lender will accept the sale proceeds, what fees are due (interest accrual, escrow, insurance, servicing fees), and how title will be released after payoff.
7. Consider alternatives if payoff exceeds value. If the loan balance exceeds market value, ask the servicer about a short sale or a deed‑in‑lieu. FHA/HECM lenders have specific procedures for short sales. See HUD HECM resources: HUD HECM.

5. Common scenarios and how lenders usually respond

Scenario A — Property in a trust: If the borrower placed the home in a properly executed revocable trust, the successor trustee generally can sell the house without probate. Provide the trust and trustee certification to the lender.

Scenario B — No trust, probate required: Open probate; once a personal representative has letters, the representative can sell real estate. Provide the letters of authority to the lender and title company.

Scenario C — Multiple heirs disagree: Lenders ask for renunciations to avoid competing claims; if heirs dispute, consider seeking temporary court directions (probate court can name a representative or authorize sale) rather than signing away rights.

6. Title companies and insurers

Title companies want assurance that any sale will produce clear title. They commonly accept a court order, letters of authority, trustee documents, or a properly drafted affidavit of heirship plus a title company affidavit. Coordinate lender demands with title company requirements so you provide the least‑risky documents that satisfy both.

7. When to get a lawyer

Get a Michigan attorney if:

• The lender keeps insisting on broad renunciations;
• Heirs disagree about selling or distribution;
• Loan balance exceeds market value and lender refuses a reasonable short sale;
• You’re asked to sign documents that look like you waive inheritance rights.

An attorney can draft a narrowly tailored agreement (e.g., a non‑interference or limited consent) that protects heirs while clearing the sale.

Helpful Hints

• Do not sign a renunciation without legal advice. A renunciation can permanently forfeit rights to the home.
• Ask the loan servicer to put all requests in writing and to list acceptable substitute documents.
• Provide a certified death certificate immediately; it starts the lender’s internal process.
• If the property is in a trust, give the servicer a certified copy of the trust or trustee certificate rather than opening probate.
• If probate is necessary, talk with the local probate court clerk about expedited procedures and required forms. Michigan Courts probate resources: Michigan Courts – Probate Forms.
• Get a payoff figure in writing and a reasonable timeline for how long the loan can remain outstanding while you market the house.
• If the loan balance exceeds market value, ask about an FHA/HECM short sale or deed‑in‑lieu; these options require lender approval but are common for HECMs.
• Keep careful records and copies of everything you send to the lender and title company.
• Consider hiring a real estate agent and title company experienced with reverse mortgage estates—they can help coordinate lender requirements and title insurance issues.