In the past, some couples facing financial difficulty and the possibility of losing their homes, elected to have the younger spouse removed from title so they could get a reverse mortgage. Often this was because a spouse was under 62, stopping them from getting a reverse mortgage. Other times it may have been because qualifying at the younger age meant they did not have enough to pay off their current mortgage. Either way, it left the removed spouse in a precarious situation; if the older spouse died, they would no longer be protected under a reverse mortgage.
For those in this difficult situation this will be welcome news. In an effort to continue to make the reverse mortgage a safer product, HUD recently announced that non-borrowing spouses (those that came off title so spouse could get a reverse mortgage) can now receive reverse mortgage protections for LIFE. This new policy by HUD also removes the previous requirement of satisfying the Factor Test or the Principal Limit Test which was prohibitive to many surviving spouses. “Because of this new policy, seniors will no longer face foreclosure soon after they lose their spouses, adding misery to heartbreak. We stand ready to work with HUD and reverse mortgage lenders to ensure that all surviving spouses can stay in their homes, just as federal law requires.” Craig Briskin, a partner with Mehri & Skalet, PLLC that filed lawsuits starting in 2011 on behalf of non-borrowing spouses.
Here are the requirements:
- Need to have been legally married to HECM borrower at closing or in a marriage type relationship
- Lives in property and lived in property when HECM reverse mortgage was obtained
- Able to show right to title of property within 90 days of HECM borrowers death
- Agrees to certify annually for 10 years that she/he continues to meet eligibility
- Current HECM not in default or called due for another reason
- No legal claims that would invalidate the HECM
- HECM remains a legally enforceable lien
- Indemnifies HUD secretary against loss
- Obtains information/paperwork required
- Meet these requirements within 120 days of opting for MOE assignment
This is a welcome protection for the thousands of non-borrowing spouses on reverse mortgage loans. Please pass this information along so we can spread the word and ease the mind of anyone in this situation. They will be happy to know they are now protected, along with their spouse under this HUD sponsored program.