A group of 18 Congress members led by Rep. John Lewis (D-GA) is seeking additional protections for non-borrowing spouses of reverse mortgage borrowers, per a letter sent to Department of Housing and Urban Development Secretary Julian Castro on December 18.
In the letter, the Congressmen ask that HUD “take whatever steps are necessary to prevent lenders from foreclosing on surviving spouses,” noting the additional protections recently implemented that protect new non-borrowing spouses of reverse mortgage holders.
The authors discuss having learned from constituents that some past borrowers have been advised to remove a homeowner from title in order to qualify for a reverse mortgage or receive more in proceeds than would otherwise be possible. Yet though they are told they can later refinance to add the non-borrowing spouse back onto the home title, they are often unable to do so due to the expense of refinancing.
The letter cites recent mortgagee letter (2014-07) as having offered a remedy to only non-borrowing spouses whose spouses get reverse mortgages on or after August 4, 2014. Past borrowers should be offered a similar protection, they write.
“The same protections must be offered to every non-borrowing spouse regardless of when their reverse mortgage was created,” the letter states. It also requests information from HUD about the number of borrowers who have been foreclosed on, the investors in those properties, and the borrowers who could face foreclosure due to having been removed from title in the past.
The non-borrowing spouse topic is the subject of ongoing legal proceedings involving HUD and several plaintiffs who are represented by the AARP Litigation Foundation.
Written by Elizabeth Ecker