HUD Moves in on Reverse Mortgage Non-Borrowing Spouse Solution

The Department of Housing and Urban Development is getting closer to issuing new guidance regarding non-borrowing spouses of reverse mortgage borrowers, a HUD attorney said in federal court last week.

According to a National Mortgage News report, a hearing in the U.S. District Court for the District of Columbia gained temporary ground on an issue that has long been the subject of a lawsuit filed by AARP against HUD regarding non-borrowing spouses. But the solution is still forthcoming. 

Federal Housing Administration Attorney Carol Federighi said during the hearing that FHA will cover the costs of a 60-day foreclosure suspension so that deceased borrowers’ spouses can remain in their homes, according to the NMN report of the hearing. 

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On a case-by-case basis, lenders can also seek FHA approval to stop foreclosures, the attorney said. 

The larger issue of policy around reverse mortgage situations where a non-borrowing spouse is living in the home, however, is still unresolved. Judge Ellen Huvelle last week denied AARP’s motion for a preliminary injunction in the case, noting there is insufficient showing of irreparable harm to the movants. 

However, AARP is still working to certify a class in a class action lawsuit around the issue. HUD is required to respond to the motion and a status report has been ordered by May 12.

HUD has also been ordered to offer relief to plaintiffs in a prior case involving non borrowing spouses in which the court ruled against HUD.  

The HUD attorney said she did not know what the policy action would be, according to the National Mortgage News account. 

“The U.S. District Court judge did not seem to be impressed with the temporary measures HUD is taking to avert foreclosures. She pressed Federighi on what policies HUD intends to adopt to deal with non-borrowing spouses who are facing foreclosure….’I don’t know where they are going to go,’ the HUD attorney admitted.” 

View the National Mortgage News report on the hearing. 

Written by Elizabeth Ecker

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  • This is the kind of good news that many anxious boomers have been craving. Although I don’t have a Reverse Mortgage on my own home, I see that amazing financial product as an incredible strategy for many of us to assure a “happily ever after” retirement. Pushing HUD to address the “weak link” in this often misunderstood financial tool is likely to make Reverse Mortgages even more awesome for many of us. My problem (which many other boomers share) is the “age gap” between my wife and myself. I’m 9 years older than my wife, leaving me in a sort of “limbo” until she turns 62 – 6 years from now.
    I imagine that they’ll find a solution that honors their original borrower age qualification at 62, but reduce the amount available to the qualifying borrower using an actuarial scale based on the ineligible younger borrower’s age… and including the younger borrower on the note – which would be totally fair.

  • The longer HUD allows the NBS problem to go on, the costlier it will be for all. Solve it now: forbid quitclaimed applications, use younger spouse’s age to determine principal limits, recognize loss on existing loans, and move on. Twenty-five years of foot-dragging on this issue is enough.

    • I hope I am wrong but I fear that HUD will not consent to the ruling of court in the matter of non borrowing spouses included in the class action. The SSA and IRS have sometimes refused to obey court rulings. It’s called non aquiesence and there is no recourse from it. Could current HUD officials really be that lawless and heartless? Hopefully they will fear the bad press they would get if they continue to unlawfully throw elderly widows out into the street within 30 days of their husbands funerals. ( Good grief! ) But they have been doing it for two decades so ….why stop now?

      Lawless? Heartless? We will find out soon enough.
      .

      • Mortgage Letter 2014-07 (released yesterday) is evidence that the current leadership at HUD/FHA is serious about solving the NBS problem.
        ML2014-07 is bold, comprehensive, and progressive. It will bring HECM into the 21st century.
        I have nothing but praise for Secretary Donovan, Commissioner Galante, and their team.

  • What exactly is 60 days supposed to do?
    If there is a non-borrowing spouse living in the home and a foreclosure process is underway (because the borrowing spouse passed away), are you not just delaying the inevitable by suspending the foreclosure for 60 days?
    The non-borrowing spouse would have received some time to try to pay the loan off (so that they could stay in the home) before the foreclosure was started, so is 60 days going to make any difference?
    Seems like a half-hearted attempt by HUD to address a critically important issue.

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