The Department of Housing and Urban Development is reminding reverse mortgage counselors of rules regarding non-borrowing spouses, who must also be counseled before taking out a reverse mortgage loan.
Citing guidance provided in a 2011 mortgagee letter that specifies non-borrowing spouses should also receive counseling and should be named on the counseling certificate, HUD sent a reminder earlier this month that was distributed by NRMLA this week.
The notice also specifies how counselors should proceed in cases where a couple requests that one spouse be removed from the home title before getting the reverse mortgage.
“In situations where there is the potential that one of the spouses will be taken off title or for any other reason will not sign the HECM note, counselors are strongly encouraged to thoroughly explain the implications of removing, or not including, the non-borrower spouse on the HECM mortgage note and deed,” the notice states.
Further, counselors should ask whether the borrowers have been encouraged to remove a borrower from the home title, HUD continues.
“Counselors should not hesitate to inquire whether or not the clients have been encouraged by anyone regarding the removal of a spouse from the deed in order to receive a higher loan amount,” the notice states. “HUD is concerned that this practice may be encouraged inappropriately.”
In instances where a counselor believes a borrower has been steered or directed toward removing a spouse from the title, the counselor should report the instance to HUD.
HUD is currently working on a disclosure specific to non-borrowing spouse situations, but is encouraging counseling agencies to develop their own in the meantime, and to record in writing with a borrower’s signature where possible instances where borrowers are opting to remove a spouse from title.
View the notice from HUD on NRMLA’s website.
Written by Elizabeth Ecker