FastCounsel

What the lender probably means by “renunciation” letters

When a borrower on a reverse mortgage dies, the loan typically becomes due and payable. Lenders often request signed statements from people who might have a claim to the property—called “renunciation” or “affidavit of no interest” letters—so the lender and a buyer’s title company can be confident no one will later assert ownership rights that would cloud the title.

Common reasons a lender requests these letters:

• To confirm all potential heirs know the loan is due and that they will not oppose a sale or conveyance;
• To obtain something the lender or purchaser’s title insurer can rely on when issuing clear title;
• To speed a sale when a probate estate or formal transfer of title is not yet completed.

High-level options under New York law

Heirs generally have three basic options once a reverse mortgage holder dies: pay off the loan, sell the property and use sale proceeds to pay the loan, or allow the lender to take the property (for example, via a deed-in-lieu or foreclosure). The U.S. Department of Housing and Urban Development (HUD) administers the Home Equity Conversion Mortgage (HECM) program; HUD guidance and the federal regulations that govern HECMs explain borrower/heir rights and the loan becoming due and payable. See HUD’s HECM overview: https://www.hud.gov/program_offices/housing/sfh/hecm/hecmhome and the federal regulations at 24 C.F.R. Part 206.

Under New York estate and surrogate court procedures, a person who will sell property that belonged solely to the decedent typically must be appointed executor or administrator (or have a valid affidavit or transfer device) before transferring clear title. See general New York estate and surrogate law references: N.Y. Estates, Powers & Trusts Law (EPTL) and Surrogate’s Court Procedure Act (SCPA).

Step-by-step practical approach

1. Gather basic documents now.
   • Death certificate.
   • Mortgage note and servicing contact details (ask lender for a payoff statement).
   • Deed/title paperwork to confirm how the property is owned (sole name, joint tenancy, transfer-on-death deed, trust).
   • Will or trust documents, if any.
2. Ask the lender exactly what they want and why.

   Request the precise wording of the renunciation letters the lender seeks and what legal effect they expect. Some lenders will accept a certified copy of letters testamentary/letters of administration issued by Surrogate’s Court (which prove who can act for the estate) instead of individual renunciations.

3. Determine whether probate or another transfer mechanism is needed.

   If the property was solely in your father’s name and there is no valid joint owner, survivorship deed, or living trust that already transfers title, New York usually requires estate proceedings or a court order to transfer title. The Surrogate’s Court issues letters testamentary or letters of administration that allow an executor/administrator to sign to sell the property. See the SCPA for procedures: SCPA (Surrogate’s Court Procedure Act).

4. If an executor exists, use the executor’s authority.

   An executor named in a will (or an administrator appointed if there is no will) signs closing documents and can often satisfy a lender or title company without separate “renunciation” letters from each heir. If a named executor refuses or cannot act, heirs can ask the court to appoint an administrator or use small-estate procedures when eligible.

5. Negotiate alternatives with the lender and title company.

   If you cannot obtain signed renunciations from every possible claimant, suggest alternatives—letters testamentary or letters of administration, an executor’s affidavit, a deed-in-lieu of foreclosure from the estate, a title-company escrow holdback, or a buyer willing to accept a short delay pending probate clearance. Some lenders accept a deed-in-lieu once the estate can legally convey the property.

6. Consider a short sale, refinance, or deed-in-lieu.

   Heirs who can’t or don’t want to pay off the loan in cash may: sell the house and pay the reverse mortgage from proceeds; arrange a refinance if credit and equity allow; or negotiate a deed-in-lieu or deed to the lender (the lender may accept the property as settlement). Each option has pros and cons; discuss them with counsel and the lender.

7. Work with a title company experienced with reverse mortgages.

   A title company often knows the documentation it needs for clear title. Provide them with probate documents, the payoff statement, and whatever renunciations the lender requests. The title insurer may accept alternative proof in place of individual renunciations when there is valid letters testamentary or an administrator’s appointment.

8. When in doubt, get counsel in New York.

   If the lender’s requests are blocking a sale, a New York probate/real estate attorney can communicate with the lender and the title company and can petition Surrogate’s Court if necessary for instructions or appointment.

Why a lender may still insist on renunciations even with probate documents

Some lenders are conservative because reverse mortgages often involve older borrowers and complicated ownership histories (joint tenants, prior divorces, trust issues). Lenders and title insurers want to avoid a future claim that can require repurchase or indemnity. If you encounter unreasonable or inconsistent lender demands, document communications and consider asking for written justification of what legal risk they believe the renunciation addresses.

Useful New York legal references

• New York Estates, Powers & Trusts Law (general reference): https://www.nysenate.gov/legislation/laws/EPTL
• Surrogate’s Court Procedure Act (procedures for probate and administration): https://www.nysenate.gov/legislation/laws/SCPA
• HUD Home Equity Conversion Mortgage (HECM) program: https://www.hud.gov/program_offices/housing/sfh/hecm/hecmhome
• Federal regulations for HECM loans: 24 C.F.R. Part 206

Helpful hints — quick checklist to move forward

• Get multiple death certificates (title company and lender will want originals/certified copies).
• Ask the lender in writing for the exact payoff statement and the precise wording of the renunciation they want.
• Locate a will or trust and confirm whether the property passes automatically (joint tenancy, trust, transfer-on-death).
• If there is no automatic transfer, file for probate or ask an attorney how to use small-estate procedures if eligible.
• Talk to the title company early—title underwriters often know what documentation they will accept instead of individual renunciations.
• Document all communications with the lender. If the lender is unreasonable, an attorney can often resolve the impasse faster than repeated back-and-forths.
• Consider contacting a HUD-approved HECM counselor for program-specific guidance: see HUD’s HECM page above.