The National Reverse Mortgage Lenders Association last week weighed in on a reverse mortgage lawsuit filed by AARP in 2011 in the form of an amicus brief submitted to the court.
The association was granted amicus status by the U.S. District Court in the District of Columbia, NRMLA told members in an email. The amicus status allows NRMLA to participate as a “friend of the court,” in offering input on the case.
The lawsuit, filed in 2011, urges that non-borrowing spouses of reverse mortgage borrowers should be granted the same protections as those named on the home title.
“Such an interpretation could have significant implications for FHA if a spouse who is significantly younger is allowed to continue occupying the property,” NRMLA wrote in its email to members.
NRMLA provided legitimate examples in the brief of situations where one spouse may be removed from the home title, such as an instance where a couple may be able to avoid foreclosure by doing so in order to qualify for the loan.
“NRMLA is hoping the case will result in a definitive decision upholding HUD’s resolution of the non-borrowing spouse issue in a manner that both will help preserve the fiscal integrity of the program and is respectful of the rights of such spouses under the program,” NRMLA says.
The issue was first raised by AARP on behalf of three plaintiffs in March 2011, which alleged HUD had abandoned a rule in place since 1989 that states the borrowers would never owe more than the home was worth at the time of repayment.
HUD revised its guidance through a mortgagee letter in 2011, following the allegations to clarify that a surviving heir of a reverse mortgage borrower is entitled to repay the loan for the appraised value of the home at the time of sale.
The lawsuit was dismissed by a lower court following the HUD’s rescinded guidance, a court of appeals later decided the appellants’ case has standing.
Written by Elizabeth EckerPrint Article