The Department of Housing and Urban Development responded to a judge’s order to determine relief for two reverse mortgage non-borrowing spouse plaintiffs, stating the department would provide no such relief.
In a letter including a Determination on Remand document sent to legal counsel for the plaintiffs, including representation by the AARP Foundation Litigation, Federal Housing Commissioner Carol Galante stated the administration’s position on what type of relief should be granted, specifying that no further relief should be granted to the plaintiffs.
The two plaintiffs are non-borrowing spouses of now-deceased reverse mortgage borrowers who first filed their case in the U.S. District Court for Washington D.C. in 2011 claiming they had been unduly foreclosed upon and should be considered “homeowners” under the terms of the loans.
The court initially ruled in favor of HUD’s interpretation of the reverse mortgage statue, which resulted in foreclosure of the plaintiffs’ homes. The plaintiffs later appealed the decision and won, in a ruling delivered in October 2013.
“The Court determined that the Federal Housing Administration (“FHA”), a division of HUD, had erroneously endorsed the Bennett and Joseph reverse mortgages for insurance under the HECM program because the mortgages did not contain language deferring the due and payable status of the mortgages until the death of the mortgagors’ spouse, the sale of the home, or some other listed event as required by subsection 255(j),” Galante writes as background in her letter. “Instead, the Bennett and Joseph reverse mortgages provide for foreclosure upon the death of the last borrower, an event which has now occurred in both cases.”
While AARP Litigation Foundation attorneys said they were hopeful HUD would provide relief shortly after the late 2013 ruling, the letter from Galante indicates HUD does not see relief as warranted in the case.
“I have carefully considered the recommendations of my staff and the documents, facts, circumstances, potential forms of relief, and other information relevant to this case,” Galante writes. “I have carefully weighed the facts in light of the numerous options presented to me. Based on my review, I have determined that the appropriate, and in fact only, action legally available to the Department with respect to these two reverse mortgages and these Plaintiffs is for the Department to honor the two contracts of insurance as initially endorsed and provide no further relief to the Plaintiffs.”
The plaintiffs are expected to challenge the HUD determination in court in the coming weeks.
Written by Elizabeth Ecker