Local NBC News Profiles Reverse Mortgage Non-Borrowing Spouse Case

A local Baltimore NBC News outlet this week looked into the potential implications faced by non-borrowing reverse mortgage spouses when they are removed from the title of their homes.

The coverage from local WBAL TV-11 focuses on one couple, Mr. and Mrs. Breeden, who took out a reverse mortgage on their Baltimore County home in 2007 and are now fearing the loss of their home should the borrower named on the title and reverse mortgage need to move into full time care. 

“The Breedens went through U.S. Department of Housing and Urban Development-required counseling before taking the reverse mortgage, but they said the issue of taking Charlotte off the title didn’t come up, and they didn’t truly understand what could happen,” the WBAL TV-11 said.  

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HUD now requires all non borrowing spouses to attend reverse mortgage counseling, per a 2011 mortgagee letter.

The news segment borrows some insight from National Reverse Mortgage Lenders Association President and CEO Peter Bell, on why couples might consider removing one spouse from the home title when taking out a reverse mortgage. 

“It’s something that’s generally done when people have existing indebtedness on the property and other expenses that need to be paid, and they can’t get enough money if the loan is underwritten to the younger age,” Bell said. 

Also mentioned in the segment is the case of Robert Bennet who is represented by the AARP Foundation in a lawsuit against HUD that claims the agency violated federal law by making surviving spouses vulnerable to foreclosure. 

A Washington, D.C. court ruled against HUD in the October-September lawsuit in favor of two reverse mortgage non-borrowing spouses, however, HUD has since filed a notice of appeal regarding the lawsuit.  

View the local WBAL TV-11 coverage.

Written by Jason Oliva

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  • Why isn’t the law, the law? If a spouse is a homeowner per HECM law (whether on title or not), how can any surviving spouse who lives in the home be foreclosed upon? The law seems very straightforward.

  • Plausible ways to resolve the NBS problem are as follows: For existing loans, HUD should use its assignment powers under HECM law to help lenders unload these loans; and for prospective loans, HUD should actuarially and contractually graft the NBS into the loan. It should also refuse to endorse HECM applications with a quitclaim spouse. Experience has shown they are too risky.

    • Atare,

      Doesn’t forced assignment seemed a little draconian to investors who might own the loan? After all they have paid enormous premiums for the right to hold HECMs with the understanding that the HECM can be held until the later of the HECM going into the due and payable status or into assignment as described in the terms of the mortgage.

      Such action would have a long-term negative impact on the HECM program!

    • reverse_mortgage_madman,

      I am not an attorney but as to investors there is a much better way to address the issue.

      Why under federal law would any HECM become due and payable as long as the mortgage contains the language required under 12 USC 1715z-20(j)? Does any HECM mortgage specifically state that only surviving spouses who are borrowers are included in the provisions meeting the homeowner standard of the law? The issue seems to center on HUD not honoring its reimbursement policy if a lender does not call the mortgage due and payable when all borrowers pass away.

      Lenders comply with the requirement of HUD as to non-borrowing spouses so that they are not at risk on the reimbursement for loss on the note. Perhaps under state law, there is a problem with not calling a HECM due and payable on the death of the last surviving borrower but is that not strictly a state law issue impacting federal law?

      The 9/30/2013 DC for DC did not discuss assignment at all in its discussion regarding remedies. The C of A , DCC 1/4/2013 did discuss it in its decision regarding an earlier DC for DC decision.

      It would seem HUD could require lenders to extend the terms of the loan to a non-borrowing spouse when all borrowers have passed away in a manner meeting state law and 12 USC 1715z-20(j). This would leave the HECM in tact until such time as assignment is otherwise permitted. If the lender cannot extend the loan, then HUD could offer assignment.

      What are your thoughts? By the way could you please provide a link to the Donado document you reference?

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