Following a 60-day foreclosure extension notice issued in April by the Department of Housing and Urban Development, the Federal Housing Administration has clarified its guidance regarding reverse mortgage foreclosure timelines.
Now, up to two 60-day extensions can be granted to non-borrowing spouses of reverse mortgage borrowers: one before initiating foreclosure and one during the process of the foreclosure. These updated HECM Reasonable Diligence Timeframe Extensions apply to non-borrowing spouses who are facing foreclosure due to the borrower passing away, and to those cases in which the lender has already initiated foreclosure.
“HUD has determined that the granting of requests for extensions from HECM mortgagees of up to 60 days to meet foreclosure timeframes for HECM transactions was reasonable,” given certain circumstances outlined in a memo distributed to lenders on Tuesday.
Borrowers may be eligible for 60-day extensions if 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; if the HECM has become due and payable solely because of the death of the HECM borrower; if the property securing the HECM has not been sold to a third party; and, most recently added, if the aforementioned cases involve a mortgagee that has already initiated foreclosure.
FHA changed its non-borrowing spouse guidelines in April to specify that non-borrowing spouses will be able to defer loan repayment under certain circumstances when the borrower himself or herself has passed away.
Written by Emily Study