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Trusts, life estates and title with a reverse mortgage

Tom Jarboe, NMLS #210600
Checked November 3, 2026

Written for real estate agents, planners, CPAs and attorneys. Homeowner or family member? Start with the family guide: Titles, trusts, wills, probate and power of attorney.

I'm a loan officer, not an attorney: here's HUD's rule and the source, for your own legal judgment. Private loans such as HomeSafe set their own trust rules. The consumer version is Can a reverse mortgage be in a trust?

Living trusts: what HUD requires

HUD's Handbook (Part II.B.2) lets the lender originate a HECM on a home held by a living trust, "either revocable or irrevocable," when:

• Primary beneficiaries are 62 or older at closing, eligible borrowers, complete counseling, and live there as their principal residence.
• New beneficiaries must not be added.
• The lender finds the trust valid and enforceable, giving each beneficiary a legal right to live there for life, and requiring notice to the lender of changes in occupancy or beneficial interest.
• The trustee and primary beneficiaries sign the note. Everyone needed for a valid first and second mortgage signs, which may include the trustee and contingent beneficiaries.

The trust's name must appear on the deed of trust. Contingent beneficiaries and the trustee don't attend counseling unless they're also a primary beneficiary, non-borrowing spouse or non-borrowing owner.

Irrevocable trusts. The Handbook text names irrevocable living trusts as eligible. The same conditions apply.

Trust certification. California Probate Code 18100.5 lets a trustee give a certification of trust instead of the trust instrument. HUD's Handbook separately says the lender "must obtain a copy of the trust agreement or the Declaration of Trust." Expect the lender to ask for the trust document itself.

After closing, a borrower can move the home into a qualifying living trust without making the loan due. Ask the servicer in writing before recording anything.

Life estates and remainder interests

Under the Handbook, a borrower who holds only a life estate is eligible "only if all holders of any reversionary or remainder interest" also sign the mortgage and attend HECM counseling. The lender needs a copy of the document creating it.

My advice: count the remainder holders early. When the life tenant dies and no other borrower lives there, the loan comes due. See life estates and survivorship.

Co-owners and changing title before closing

• Every borrower must be on title (own name or a living trust), and all owners together must hold the whole property (24 CFR 206.35).
• A non-borrowing owner must attend counseling, sign the mortgage and sign a consent (206.35(c)-(d); 206.41).
• Community property. A spouse needn't be a borrower, but everyone needed for a valid lien under state law signs the mortgage (Handbook II.B.2).
• After closing, 24 CFR 206.27(c)(1) makes the loan due if a borrower conveys all of their title and no other borrower keeps title.

The loan comes due when the last borrower dies, even if a co-owner who isn't a borrower still owns part of the home and lives there.

The non-borrowing spouse

For HECMs with FHA case numbers on or after Aug. 4, 2014 (ML 2014-07), an eligible non-borrowing spouse can stay after the borrower dies during a deferral period.

Under the Handbook, the spouse must have been married to the borrower at closing and stayed married, been "specifically named as an NBS in the HECM documents," and keep living there. A spouse not named at closing can't become eligible later.

ML 2021-11 removed the old requirement that the spouse establish title or a legal right to stay within 90 days, even though eCFR 206.55 still prints it. No more loan money is paid out during the deferral, and taxes, insurance and upkeep must stay current.

See the non-borrowing spouse guide. For loans before Aug. 4, 2014, ML 2015-15 created an optional lender election; ask the servicer in writing.

Powers of attorney and conservators

• At application, the lender may accept papers signed under a durable power of attorney "specifically designed to survive incapacity and avoid the need for court proceedings," if the agent has specific authority to obligate the borrower and has completed HECM counseling (Handbook II.B.2).
• At closing, a borrower, non-borrowing spouse or non-borrowing owner may sign through an agent (II.B.6.a.xxii). Unless they're family, people connected to the deal (lender, loan originator, title or closing agent, real estate agent) can't sign as agent, with one narrow exception requiring a recorded online confirmation.
• Conservators may sign for someone lacking legal competency; the lender needs the court order (II.B.6.a.xxiii). In California, a conservator borrowing against the conservatee's real property needs court authorization: an order for that loan (Probate Code 2551) or court-granted independent powers to borrow and give security (2590, 2591(e)-(f)). See power of attorney and conservatorship.
• California basics: a power is durable when it says so in words like those in Probate Code 4124; it must be dated, signed and notarized or witnessed (4121); and a power used to sign a mortgage must be acknowledged and recorded like one for real estate grants (Civil Code 2933).

At death: the successor trustee's job

When the last borrower dies and no eligible non-borrowing spouse is in a deferral, the loan comes due (24 CFR 206.27(c)). If the home is in the trust, the successor trustee usually deals with the servicer.

The estate has 30 days from the servicer's notice to say whether it will pay off, sell or give a deed in lieu (24 CFR 206.125), HUD can approve up to two 90-day extensions with proof of progress, and a sale for at least 95% of the current appraised value satisfies the loan when the balance is higher.

Because a HECM is non-recourse, the estate and heirs never owe more than the home is worth; the debt is repaid from the home. Full timeline: the inherited home with a reverse mortgage.

Your checklist before the client applies

• Pull the vesting deed and confirm every owner of record
• Living trust: primary beneficiaries 62+, living there, lifetime occupancy right, no new beneficiaries added, change-notice clause
• Trust agreement ready for the lender; contingent beneficiaries who may need to sign identified
• Life estate: identify every remainder holder and confirm each will sign and be counseled
• Non-borrowing owners: confirm each will attend counseling and sign the consent
• Married client: confirm the spouse will be named as a non-borrowing spouse, with proof of marriage
• Power of attorney: durable language, specific authority to borrow and encumber, notarized (acknowledged) so it can be recorded (Civil Code 2933); agent attends counseling
• Conservatorship: a copy of the court order for the lender, plus court authorization to borrow (Probate Code 2551, or independent powers under 2590-2591)
• No deed changes before closing without telling the lender

When it's not a fit, or what goes wrong

• A trust that adds new beneficiaries, or gives no lifetime right to live there.
• A remainder holder or co-owner who won't sign or attend counseling.
• A spouse who is left off the loan papers. That can't be fixed later.
• A client who can't sign and has no durable power of attorney.
• A client who can't keep up the bills. There's no required monthly mortgage payment, but property taxes, homeowners insurance, HOA dues and upkeep stay the borrower's, and not paying them can make the loan come due. And the balance grows over time, leaving less equity for heirs.

On having a living trust or durable power of attorney:

From Tom: "I think everybody should have that. Even those that aren't considering a reverse mortgage, it's a good idea to have."

Working with me

Call me at (909) 869-6588 or email [email protected] with a title or trust question, and your client is welcome to call me directly. I'll say plainly when a reverse mortgage isn't a fit.

Before applying for a HECM, every borrower, spouse and non-borrowing owner meets with an independent HUD-approved counselor, and California adds a 7-day wait after counseling before a final application or any fees.

This page is education only. I don't pay or accept referral fees or anything of value for referrals, and your clients are always free to choose any lender.

Tom Jarboe, Regional Sales Manager, New American Funding, NMLS #210600, Diamond Bar.

Have a client weighing a reverse mortgage? Call or email me: (909) 869-6588. More for professionals.

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