Surviving Spouses File Reverse Mortgage Lawsuit Against HUD

Four surviving spouses of reverse mortgage borrowers filed a lawsuit this week against Department of Housing and Urban Development Secretary Shaun Donovan claiming they faced undue harm due to reverse mortgage statute.

The lawsuit comes several months following a previous suit filed by AARP on behalf of non-borrowing spouses of reverse mortgage borrowers, in which a court ruled against HUD and granted relief to the plaintiffs, to be determined by the agency. HUD appealed the ruling, but the appeal was later thrown out.

The new suit seeks relief for a class of borrowers who faced situations similar to those detailed in the earlier lawsuit; namely those who faced foreclosure of their homes because they had been removed from the home title or were not named on the title prior to the closing of the reverse mortgage and had survived their borrower-spouses.

Advertisement

Plaintiffs Charlie Plunkett of Miami, Florida; Winnie Barlock of Las Vegas; Clarisa Welte of Temecula, Calif.; and Roselaine Labonte of Haverhill, Mass., “challenge HUD’s failure to protect them and other surviving spouses of reverse mortgage borrowers from foreclosure and displacement, as required by the reverse mortgage statute,” according to the filing.

The plaintiffs are represented by the AARP Foundation Litigation, which also represented plaintiffs in the past related case, and are seeking relief for themselves as well as those who are similarly situated but who are not named in the case.

“The motion is filed under federal law to say whatever relief these folks [in the past case] are getting will be extended to those similarly situated,” says Craig Briskin, an attorney representing the plaintiffs.

HUD has not specified relief in the previous case.

The class is not yet certified or named, but the filing states there could be thousands of individuals who have faced similar situations.

Written by Elizabeth Ecker

Join the Conversation (10)

see all

This is a professional community. Please use discretion when posting a comment.

  • Isn’t the HECM loan amount is based on borrower age? If so, would having a spouse mean a reduction in the allowable cash equity a borrower can have?

    Forward mortgage loan agreements cannot be enforced onto a person that never signed the loan papers. I guess that will change for HECM borrowers. I hope a solution is found.

  • This is a difficult one. What were the circumstances of the non-borrowing spouse either not being on the deed or taken off. Age is one thing but we have seen in our industry a non- borrowing spouse taken off the deed to maximize the amount of money one was going to get.

    Unfortunately many seniors were sold on doing this by unscrupulous loan officers. I am not saying that this is the case here but in a case like that, who is at fault, HUD or the LO and company the LO worked for. I guess there is a fine line that say’s HUD’s guidelines do not protect the non-borrower spouse, regardless of unscrupulous companies or not?

    John A. Smaldone

  • I’ve been originating reverse mortgages for 10 years. I just worked with an attorney, and a surviving “non borrowing” spouse. We did a new reverse mortgage, and the lender kicked in the difference. It can be done. Monty Simons 818 825 1773

      • Raymond, I think all in all it took about 45 days. I was working directly with the attorney who was representing the old lender. It was tricky, but we satisfied everything that the new company’s underwriter’s wanted. I’ve done some tough deals in the past, but this is one I was glad for all that we got it done.

  • Elizabeth,

    Do you have any information about the plaintiffs?

    For example, were any of them not married to their respective borrowing spouse at the time the HECM closed? Were any of them never on title but married to the their respective spouse at the time the HECM closed? Were any of them not living in the collateral at the time the borrowing spouse passed away but live there now?

    The more the information the better.

    Thanks.

  • Addressing the NBS problem should be a priority at HUD.
    This new legal action,filed last week (02/27/14), is all about getting relief for NBSes who are facing foreclosure. People are hurting; HECM’s reputation is hurting; HUD’s reputation is hurting; and the industry’s reputation is hurting. Let’s solve it.

  • This is the Trend today it doesn’t matter what the rules are when they are enforced every one cries “Foul” and want to ignore the clearly stated rule. If the NBS is not on the Deed or the Loan how can they claim the right to remain in the Home when the the actual borrower Dies.

string(104) "https://reversemortgagedaily.com/2014/03/02/surviving-spouses-file-reverse-mortgage-lawsuit-against-hud/"

Share your opinion