Detailed Answer
When a borrower with a reverse mortgage dies, the loan generally becomes due and payable. The lender (or loan servicer) must receive notice of the death, a payoff or repayment plan, and clear authority from whoever will handle the deceased borrower’s affairs before they will authorize a sale of the house. In Kentucky, selling the home often requires either a valid transfer of title (for example, by a surviving joint tenant or a trustee if the home was in a trust) or formal authority from the personal representative (PR) appointed in probate. Lenders sometimes request “renunciation” letters from heirs when the estate has no appointed PR or when there are multiple potential representatives. These letters tell the lender which family members refuse appointment so one person can act alone, or they confirm that an heir gives up the right to serve so another appointed person can proceed.
Why the lender is asking for renunciations
- To be sure the person signing payoff figures, sale documents, and lien releases has authority to bind the estate.
- To avoid multiple competing claims to the property or the loan account during a sale or payoff.
- To comply with internal underwriting and federal program requirements if the loan is an FHA Home Equity Conversion Mortgage (HECM).
Typical legal pathways to sell the property in Kentucky
- Transfer outside probate: If the house passed automatically (joint tenancy with right of survivorship, beneficiary deed, or a living trust), the successor takes title and can request the lender’s payoff statement and proceed to sell. Provide the lender a certified death certificate and a recorded deed or trustee certification to prove transfer.
- Probate with an appointed personal representative: If the property is part of the probate estate, the court-appointed PR (executor/administrator) has authority to sign sale documents. The lender will accept letters testamentary or letters of administration from the probate court that identify the PR.
- Summary or small-estate procedures: For small estates or where Kentucky summary procedures apply, heirs may be able to use an affidavit procedure or expedited process to transfer title without full administration. Check Kentucky probate resources for eligibility.
Practical steps to take now
- Get the official documents the lender asks for in writing. Call the servicer and request a written list of exactly which documents they require to process a sale or payoff (payoff statement, death certificate, letters of administration, renunciations, heirship affidavits, recorded deed or trust documents). Ask for the name and email of the person handling the account.
- Provide a certified death certificate. The servicer will need this to note the account. Send a certified copy by the method they require (often fax and mail are both requested).
- Determine how title passes. Check the deed and title history. If the house was in a trust or held in joint tenancy or by a beneficiary deed, present recorded trust pages or deed showing the transfer. If title did not automatically transfer, you will likely need letters from the probate court.
- Decide who will act for the estate. If someone is willing to serve as the personal representative, they can file for appointment in the local Kentucky probate court. If multiple heirs exist and only one wants to be PR, other heirs may be asked to sign renunciations so the court can appoint the willing person alone.
- If the lender requests renunciations: Ask the lender to explain whether they need a court-issued appointment OR signed renunciations from other heirs. If the lender accepts signed renunciations, make sure those letters meet the lender’s format requirements (signed, notarized, identify the estate and the person being renounced, and reference Kentucky probate file if one exists). Keep all originals and get certified copies for the title company and lender.
- Consider a quick appointment or small estate process. If heirs prefer not to do full probate, Kentucky has streamlined probate and small-estate options that may allow transfer with less court time. Check Kentucky Court of Justice resources or consult counsel to determine eligibility.
- Obtain a payoff and lien release plan. Before listing the property, get a written payoff statement with an expiration date and instructions to the closing agent on how to satisfy the reverse mortgage at closing.
- Work with a real estate closing attorney or title company. They will review the lender’s requirements, confirm the chain of title, and make sure closing documents and lien releases satisfy both the lender and Kentucky law.
What a renunciation letter usually includes
While formats vary by lender, a renunciation letter typically contains:
- Full name and address of the person signing.
- Statement identifying the decedent, date of death, and the property address.
- Clear statement that the signer renounces the right to be appointed personal representative or executor for the decedent’s estate and/or renounces any claim to act on behalf of the estate for the purpose of the lender’s account.
- Name of the person the signer consents to be appointed (if applicable).
- Signature, date, and notary acknowledgment.
How federal rules affect reverse mortgages
If the loan is an FHA-insured HECM, HUD rules apply to loan payoff and foreclosure timelines. Lenders servicing HECM loans often follow HUD guidance on processing payoffs and approving short sales or extensions. You can read HUD’s HECM program details here: HUD – HECM (Reverse Mortgages).
Kentucky-specific legal sources
Kentucky probate and estate rules govern appointment of personal representatives, intestate succession, and procedures that affect who may sign for a sale. For text of the Kentucky Revised Statutes and to search probate- and decedent-related provisions, see the Kentucky Legislature statutes portal: Kentucky Revised Statutes. For practical court information on probate, see the Kentucky Court of Justice resources: Kentucky Court of Justice.
When to get legal help
If the lender’s requirements are unclear, heirs disagree about who should act, or the estate value and title situation is complex, you should consult a Kentucky probate or real estate attorney. An attorney can:
- File for appointment of a personal representative in the correct county probate court.
- Prepare and file heirship affidavits, renunciations, or small-estate forms that meet Kentucky law and the lender’s needs.
- Negotiate with the servicer to obtain a clear payoff statement and streamline closing.
Bottom line: The lender is asking for renunciation letters to ensure whoever handles the sale has clear, uncontested authority. You can often satisfy the lender by (1) producing recorded transfer documents (trust or beneficiary deed), (2) obtaining court-issued letters appointing a personal representative, (3) securing notarized renunciation letters from other heirs if the lender accepts them, or (4) using Kentucky’s small-estate procedures when eligible. Always ask the servicer for a written list of required documents and consider getting local probate counsel to avoid delays.
Not legal advice: This article explains common procedures and options under Kentucky law but is not legal advice. For advice specific to your situation, consult a Kentucky attorney licensed to practice probate and real estate law.
Helpful Hints
- Ask the servicer for a written checklist of required documents and the name of the account specialist.
- Send a certified copy of the death certificate promptly and keep proof of delivery.
- Search the deed and chain of title early to see if the property transferred outside probate (joint tenancy, beneficiary deed, or trust).
- If heirs agree who will serve as PR, have the others sign renunciations only after confirming the lender accepts them; get them notarized.
- Before closing, obtain a written payoff with an expiration date so the sale won’t fail due to a changed payoff amount.
- Use a title company or closing attorney experienced with reverse mortgages and Kentucky probate to avoid last-minute issues at closing.
- If the loan is a HECM, review HUD materials for program-specific timelines and servicer obligations: https://www.hud.gov/program_offices/housing/sfh/hecm
- Refer to Kentucky statutes and court resources for probate procedures: https://apps.legislature.ky.gov/statutes/ and https://kycourts.gov