Can a Reverse Mortgage Be Foreclosed for Unpaid Property Taxes?
The short answer
Yes. A reverse mortgage has no monthly payment, but the owner must keep paying property taxes, homeowner's insurance and any association dues. Falling behind on those is the most common reason reverse mortgages are foreclosed. Federal rules for HECM loans allow repayment plans, and Washington State's senior property tax programs can lower or defer the bill.
Why it happens
A reverse mortgage is repaid when the borrower moves out, sells or passes away, but the loan terms also require the borrower to keep the property taxes, insurance and association dues paid. If they go unpaid and aren't caught up, the servicer can call the loan due and foreclose.
Federal protections for HECM loans
Most reverse mortgages are HECMs, insured by the federal government. Under the HECM rules, the servicer can set up a repayment plan for unpaid taxes and insurance, and can work with a borrower who is less than $5,000 behind without calling the loan due.
A borrower over 80 with a critical health condition in the household may qualify for an At-Risk Extension, which can last as long as they live in the home. Ask the servicer directly.
Keep the yearly occupancy certificate up to date, too: a missed certificate is another reason servicers call loans due.
Lowering the tax bill in Washington State
Washington State has a property tax exemption and a deferral program for older homeowners and people with disabilities who meet income limits. Income limits rise for tax year 2027, so more households qualify. Apply through the county assessor; the Department of Revenue's property tax line is 360-534-1400.
If the house will be sold
For a HECM, federal rules allow cash for keys, up to $7,500, when the borrower or heirs complete a short sale or deed in lieu, plus up to $5,000 toward probate costs when heirs are handling it.
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Real Property Planning is an educational and connection hub. It does not provide legal, tax, accounting, financial, brokerage, or appraisal services. Professionals referenced on this site are independently licensed and operate through their own separate businesses. Real estate brokerage services are provided by David Stein, a licensed Washington broker, through eXp Realty. Appraisal services are provided by David Stein through Stein Appraisal. Read the full disclaimer.