So from what I understand, Ray's already unstable mental health, his suicide attempt and his conviction that Nile came back for him led him to believe Owen is Nile. This is why we see Owen respond to the name "Nile" at the end, and why Owen says that Ray forgot him, not that Ray is gone. Ray's not dead, but he's permanently brain damaged, and Owen is living as his father so he can stay by Ray's side.
So from what I understand, Ray's already unstable mental health, his suicide attempt and his conviction that Nile came back for him led him to believe Owen is Nile. This is why we see Owen respond to the name "Nile" at the end, and why Owen says that Ray forgot him, not that Ray is gone. Ray's not dead, but he's permanently brain damaged, and Owen is living as his father so he can stay by Ray's side.