The Chicago Tribune reported Thursday on the lawsuit against the Department of Housing and Urban Development by AARP regarding several reverse mortgage foreclosures, and the recently rescinded guidance from HUD that does away with a rule “that was causing grief for some homeowners and heirs.”
The rule reversal came about in response to litigation by the AARP Foundation, the Tribune article states, which sued HUD on behalf of three surviving spouses of deceased reverse mortgage borrowers, who were put in danger of foreclosure because of the rule.
HUD’s most recent guidance rescinded Mortgagee Letter 2008-38, in essence reversing on of its former reverse mortgage policies. “HUD, perhaps realizing that the increased attention garnered by reports of widespread foreclosures on seniors was bad public relations,” the Tribune writes, “proactively rescinded the 2008 letter, heading off foreclosure proceedings against the plaintiffs, and by extension, thousands of others.” AARP has said it is moving forward with the lawsuit.
“The reversal of the 2008 rule only addresses part of the original lawsuit,” the article states, “but the AARP Foundation’s legal team has reason for optimism. The other half of the equation is a Home Equity Conversion Mortgage program statute that specifies that if the borrower (or estate) does not pay the balance when due, the mortgagee’s remedy is limited to foreclosure.”
The Tribune sought a comment from AARP legal counsel Jean Constantine-Davis, who said she believes the recent action from HUD is a good sign. “I don’t know what steps HUD is going to take from here,” she told the Tribune. “They have filed a motion to dismiss the case. HUD may issue a new rule altogether. We would then have to look at that rule to see if it offers enough protection for people. This could be good news for heirs.”
Read the Chicago Tribune article.
Written by Elizabeth Ecker