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HUD to Make Allowances for Co-Borrowers Under 62
In recent years it has been a black eye for both HUD and the Reverse Mortgage industry. Non-Borrowing spouses. More specifically non-borrowing spouses who are displaced or evicted from the home when their older mate and sole reverse mortgage borrower passes away. This ugly scenario reflects the need to consider the risks posed to younger spouses under 62 who are not named on the HECM loan and the reputational risk to both lenders and the industry at large.
During a January 16th meeting of the National Reverse Mortgage Lenders Association’s Executive Committee, Deputy Assistant Secretary Charles Coulter said to expect a mortgagee letter in the coming weeks regarding non-borrowing spouses. Coulter said “The first ML will essentially require that in the case of a non-borrower spouse, the age of the younger member of the couple will be utilized to determine the appropriate PLF [principal limit factor]. HUD will be modifying the PLF tables to cover ages below 62 for this purpose.”