Is the Battle Over?

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HUD’s recent update to Non-Borrowing-Spouse policy lauded by consumer advocates


reverse mortgage newsIs the battle over? HUD’s recent change to non borrowing spouse policy for Home Equity Conversion Mortgages is lauded by consumer advocates. June 12th may mark the end of the long fought battle between the Department of Housing and Urban Development, displaced borrowers and consumer advocacy groups.

The dispute largely centered on the definition of who a homeowner is and whether that included the non-borrowing spouse of a reverse mortgage borrower. Much of the debate centers on conflicting definitions within the text of the statute which created the Home Equity Conversion Mortgage program. For example under section (b)definitions reads: The terms “elderly homeowner” and “homeowner” mean any homeowner who is, or whose spouse is, at least 62 years of age or such higher age as the Secretary may prescribe”…

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3 comments

Atare Agbamu June 22, 2015 at 8:05 am

As usual, your news summary is authoritative, clear, and concise . ML 2015-15 solves the NBS displacement crisis.

After more than 6 years of combat, I can tell you the battle is over. Some NBSes are already feeling the positive impact of the new policy, according reports reaching us.

Keep up your great work at Reverse Focus!

Reply
Shannon Hicks June 22, 2015 at 8:07 am

Thank you Atare and most importantly “Thank You” for your tireless efforts over the years to bring fairness and protection to non-borrowing spouses! Your work has benefited our industry.

Reply
The_Cynic June 22, 2015 at 8:31 am

Here Atare and I disagree. 12 USC 1715z-20(j) is not limited to surviving spouses. If the borrower and the non-borrowing spouse are legally separated and the homeowner fails to maintain the condition of the home, nothing in the law states that displacement protection would not apply to the non-borrowing spouse. The same is true with a default for failure to pay taxes and insurance; however, if the non-borrowing spouse fails to fix the default, nothing in the law prevents HUD from displacing the spouse at that point.

Also the Mortgagee Letter fails to compensate non-borrowing spouses and their heirs for incorrect displacement in the past. Further nothing in the law states that the spouse had to be married to the borrower at the time of closing.

Finally, the protection is automatic under the law. There is no lender right to assignment or right to foreclosure.

Reply

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