HUD Details 60-Day Foreclosure Extension For Reverse Mortgage Non-Borrowing Spouses

Following a hearing last week in which a Department of Housing and Urban Development attorney spelled plans to increase foreclosure timelines for reverse mortgage borrowers, the agency issued a notice Monday detailing the new extension.

Lenders may now request up to 60 additional days for non-borrowing spouses who are facing foreclosure due to the borrower passing away.

“Under existing regulatory authority for forward and reverse mortgages, the Secretary has the discretion to grant additional time for mortgagees to comply with reasonable diligence timeframes,” HUD writes in the update. “As part of its processes, FHA utilizes this discretion on a case by case basis.”

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The agency provides details on the cases that are eligible for the extension including those where the property securing the HECM is the primary residence of a surviving spouse who was married to the borrower at the time the mortgage was endorsed for insurance and was not listed as a borrower on the mortgage; the HECM has become due and payable solely because of the death of the HECM borrower; and the property securing the HECM has not been sold to a third party.

Extensions beyond the 60 days may be accepted for cases meeting certain guidelines outlined in the mortgagee letter.

Additionally, HUD provides instructions on filing for the extension in non-borrowing spouse cases that qualify. Lenders must submit the request on company letterhead, obtain a servicing manager’s signature on the request and upload the request into the HERMIT portal.

Over the course of several lawsuits regarding non-borrowing spouses of reverse mortgage borrowers, HUD has said it is working to develop policy that will address issues around non-borrowing spouses.

In 2011, AARP filed a lawsuit against HUD on behalf of several non-borrowing spouses who faced foreclosure due to the borrowers having passed away. Initially the case was dismissed, but AARP later brought the suit back in a court of appeals.

The case was later won by AARP in the appeals court in October 2013, resulting in an order for HUD to provide relief to the plaintiffs. HUD has said that guidance is forthcoming.

Written by Elizabeth Ecker

Editors Note: A previous version of this article said that foreclosure delays beyond 60 days are not allowed. The article has been corrected.

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  • Why only limit this to situations where a borrower has passed away (beyond the question of what will providing only 60 days really do for a non-borrowing spouse)? Does a non-borrowing spouse not deserve the same benefit in the case where the borrower had to leave the home involuntarily (to move into an assisted living facility, for example)? What additional risk does an occupancy default present over a death default in HUD’s eyes?

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