One day after a pair of non-profit groups released a report sounding an alarm about reverse mortgage-related foreclosures, the Department of Housing and Urban Development has responded — and a spokesman claims that the groups’ interpretation wasn’t necessarily correct.
“Based upon data we gave them, they put two and two together and get something other than four,” HUD public affairs specialist Brian Sullivan told RMD on Tuesday.
Sullivan was responding to a report from the California Reinvestment Coalition and Jacksonville (Fla.) Area Legal Aid, which claimed that nearly a quarter of non-borrowing spouses who sought help staying in their homes following the death of a reverse mortgage borrower don’t receive assistance. The groups based their conclusions on HUD data received through a Freedom of Information Act (FOIA) request.
But Sullivan claims that the groups simply misinterpreted the data’s meaning. The HUD numbers apply solely to applications for loan assignments under the “mortgagee optional election” (MOE), a program in which HUD pays the insurance claim but qualified non-borrowing spouses are allowed to remain in the home.
HUD and the Federal Housing Administration introduced this option in a 2015 mortgagee letter, with the MOE available for all Home Equity Conversion Mortgages with case numbers assigned prior to August 4, 2014.
“The data is just to signify the number of the assignments or requests for these assignments, as opposed to the number of borrowers being kicked to the curb,” Sullivan said.
He also pushed back against the groups’ claims that HUD doesn’t offer sufficient guidelines on how servicers and lenders should handle non-borrowing spouse cases, pointing to the two mortgagee letters on the subject.
Sullivan emphasized that HUD must continue to balance the interest of protecting taxpayer money — by managing outlays from the Mutual Mortgage Insurance Fund — and protecting seniors, which informs its policy on non-borrowing spouses. He also noted that there remains the potential for non-borrowing spouses to potentially face eviction under the new rules — for instance, if they were delinquent in their taxes or married the borrower after he or she had already taken out the reverse mortgage.
As a result, it’s up to counselors to make sure they fully explain all the potential scenarios to prospective borrowers.
“That is why counseling is so critical in the origination of these mortgages,” he said. “People have got to understand what a reverse mortgage is.”
Written by Alex SpankoPrint Article