Urban Updates Policy For Reverse Mortgage Non-Borrowing Spouses

Urban Financial Group spelled changes last week to its policy regarding the non-borrowing spouses of reverse mortgage borrowers, the company said in a notice to broker partners. 

The lender said it will allow non-borrowing spouses only under specific circumstances and with certain documentation. 

Borrowers with non-borrowing spouses can still qualify under Urban’s guidelines if the non-borrowing spouse has never been on the title to the home, and does not have any community property rights to the residence; or if the non-borrowing spouse does not reside in the property and does not have any community property rights to the property.

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If the non-borrowing spouse does not meet those exceptions, Urban will accept certain documentation to qualify those situations including a letter of explanation; non-borrowing spouse certification accessible through software provider ReverseVision; and an attorney letter documenting that the borrowers understand ramifications of the loan for the borrower and non-borrowing spouse, outlined by Urban Financial Group. 

The non-borrowing spouse topic has come under discussion by Department of Housing and Urban Development officials as as point of change for reverse mortgage policy, currently being worked on by the Federal Housing Administration. HUD has not stated what the changes regarding non-borrowing spouses will entail, but has stated it is one of several points under attention for upcoming program changes.

Written by Elizabeth Ecker

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  • The position of Urban seems relatively fair and reasonable based on current FHA policy positions but not the law. The noose on FHA for getting the law changed back in 1988. FHA does not argue about the law other than the economic structure of the law on the program. Its stubborn legal interpretation is hardly commendable.

    What FHA states is not wrong but the law requires otherwise; yet FHA refuses to seek any change to the law. So it is the position of FHA which is wrong.

    Let us hope either Congress changes the law or gives FHA the authority to interpret the law as it currently does.

  • A uniform policy from FHA is better. The issue is alive and well. Only yesterday, I received an email from a non-borrowing spouse whose husband passed away. She’s now 65. She was 60 when the HECM was made. She’s worried. She wants to stay in the house. She has made what seems like a reasonable offer to purchase the property based on the current appraised value. But she says the lender is asking for more. FHA needs to act.

  • I think this is an interesting tactic, however I also think that it violates some state’s anti-discrimination laws. Essentially what it comes down to is that Urban is preventing someone from taking a loan due to their family status. Here in Massachusetts that will violate our anti-discrimination laws. Don’t get me wrong, I understand why Urban is doing it, however, understanding why and the economic reasons behind it will not prevent Urban from being on the wrong end of a discrimination law suit.
    Frank J. Kautz, II
    Staff Attorney
    Community Service Network, Inc.
    52 Broadway
    Stoneham, MA 02180
    (781) 438-1977
    (781) 438-6037 fax
    FrankKautz@csninc.org –work
    Frank@Kautzlaw.com –private

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