Two Senators concerned about Non-Borrowing Spouse Risks - HECMWorld.com Skip to content
Advertisement

Two Senators concerned about Non-Borrowing Spouse Risks

Advertisement

ePath 100K RM leads

Bipartisan letter from senators cites concerns of new language endangering NBS protections

reverse mortgage news
Joint letter to HUD and OMB from Senators Rubio & Masto

Despite the increasingly toxic and adversarial political climate in Washington, D.C., two United States Senators have joined together to push the Department of Housing and Urban Development for clarification of language in the Trump administration’s new budget which could strip away key protections for reverse mortgage non-borrowing spouses. Bad language can lead to bad policy.

U.S. Senators Marco Rubio (Republican of Florida), and Catherine Cortez Masto (a Nevada Democrat) sent a joint letter to HUD Secretary Ben Carson and OMB (Office of Management and Budget) director asking the agencies to clarify the proposed language found in the federal government’s budget request. To date, no response has been received. New York Times columnist Matthew Goldstein rightly point the significance of the Home Equity Conversion Mortgage program writing, “reverse mortgages are viewed as crucial pieces in helping an aging population plan for retirement, and new lenders are coming into the market. The language that concerns the senators and advocates for the elderly is a proposed change in the National Housing Act that says, in regard to reverse mortgages, that a mortgagor “shall not include the successors and assigns of the original borrower under a mortgage.” Simply put, such language could leave spouses not named on the loan at risk of displacement or foreclosure.

Download the video transcript here.

Share:

Leave a Comment

3 Comments

  1. Current policy is already a problem for some HECM borrowers. I have a prospective citizen borrower married to a non-citizen spouse. Non-citizen spouse does not have a social security number. HUD will not allow the US citizen to get a HECM because he is married to a non-citizen without a social security number. HUD policy requires disclosure of the spouse, but will not allow a person to be part of the transaction as either a borrowing or non-borrowing spouse without a social security number. If the citizen borrower will divorce his spouse, the loan could proceed. So much for not discriminating on marital status.

    • Mr. Opeka,

      Why any foreign person would not be allowed even an indirect benefit under the HECM program seems obvious. The foreign person you write about should simply apply for a Social Security Number. What is the matter with that? If I was writing policy, a green card would be required.

  2. First, I want to thank Shannon for adding the letter since it clarifies the exact provision in the law being attacked by HUD.

    The letter clarifies that 30 years after the protection for spouses against displacement [now codified as 12 USC 1715z-20(j)]) was first introduced to the Senate as part of the HECM program, just now HUD is attempting to amend its language.

    Until AARP attacked HUD for ignoring its responsibilities under the spousal protection provision, HUD required lenders and their servicers to ignore any non-borrowing spouse in the picture and treat the protection provision as if it was an unnecessary duplication of rights for borrowing spouses. HUD knew the provision was there since on several occasions they acknowledged that if they protected non-borrowing spouses as indicated in the law, the HECM program would be so deep in deficits that there would be no way to justify the program to Congress.

    So HUD got the Reverse Mortgage Stabilization Act of 2013 (RMSA) put into law so that they could safely bypass the protection against displacement provision and offer a change in policy in three Mortgagee Letters as an offer in compromise to what the courts might otherwise order them to do.

    So if HUD gets the change in the law that it is seeking, will it undo those same three Mortgagee Letters? Remember the RMSA seemed to create a system of policy making that can undo laws as long as the Secretary believes that such policy will improve the fiscal health of the HECM program. The RMSA was a landmark disaster and should be amended to include other stipulations so that new policy under its authority cannot undo HECM law without Congressional and Presidential approval. The RMSA should be able to undo regulations with no additional approval but this same standard should not apply to HECM law.


Add a Comment

Your email address will not be published. Required fields are marked *

Advertisement
Advertisement

Recent Stories

Topics

Subscribe to join our World

Get the latest reverse mortgage news delivered straight to your inbox.Â