In most HOA-auction situations, the reverse mortgage does not get wiped out. You typically take title subject to that senior lien, and HUD (or HUD’s servicing contractor) can still foreclose if it is not resolved.
Is it “negotiable”?
Usually not in the normal sense. If this is an FHA-insured HECM, HUD’s rules drive the outcome more than “deal making.” The main built-in “discount” concept is the FHA non-recourse framework. When a reverse mortgage is due and payable after death, the debt can generally be satisfied through an approved sale process, and when the home is worth less than the balance, FHA guidance commonly references the 95% of current appraised value concept for satisfying the loan through sale proceeds. HUD’s own inheritance handout notes that if the balance exceeds value, the estate/heirs may sell for at least 95% of current appraised value and the lender will accept the net proceeds as satisfaction, and it also states that any post-death transfer is treated as a “sale” for these purposes.
Important timing reality: HUD guidance also makes clear the loan becomes due and payable at death, with short initial timelines and possible extensions, so you should assume foreclosure can start if nobody is actively working an approved resolution.
What I would do next (practical steps):
Confirm the lien and who is servicing it today. “Assigned to HUD” usually means it is in HUD’s Secretary-held portfolio and serviced by a HUD contractor.
Request an official payoff statement and the required appraisal pathway. HUD indicates payoffs for HUD-held liens can be requested by the mortgagee, borrower, or an authorized third party, and HUD’s standard contact channel is the FHA Resource Center / [email protected].
In practice, expect they will want: property address, FHA case number, borrower name, your contact info, and documentation showing you have legal authority to receive case-specific info (recorded deed from the HOA sale, plus whatever they require).
Decide fast whether you are paying it off or walking away. If you want to keep the property, you will likely need to satisfy the reverse mortgage under HUD’s process. If the numbers do not work, your “exit” may simply be letting HUD foreclose.
Get counsel involved if the servicer will not talk to you. With “no heirs/no probate,” a servicer sometimes refuses to discuss details without proper authority paperwork. A Florida real estate/foreclosure attorney can usually cut through that quickly.
One more point: the fact no lis pendens is filed yet does not mean you are safe. It may simply mean they have not started the court filing in your county yet.
Not legal advice, but from an investor-risk standpoint: treat this as a senior lien that survived your HOA purchase, then work directly with HUD/servicer to get the payoff and approved resolution path in writing.
