Hello Agents!
Just a quick update and good news for our vulnerable senior citizens, who may have been forced from their home upon the death of their spouse.
Following a hearing last week in which a Department of Housing and Urban Development attorney spelled plans to increase foreclosure timelines for reverse mortgage borrowers, the agency issued a notice Monday detailing the new extension.
Lenders may now request up to 60 additional days for non-borrowing spouses who are facing foreclosure due to the borrower passing away.
The agency provides details on the cases that are eligible for the extension including those where the property securing the reverse mortgaged is the:
1) primary residence of a surviving spouse who was married to the borrower at the time the mortgage was endorsed for insurance and
2) was not listed as a borrower on the mortgage;
3) the reverse mortgage has become due and payable solely because of the death of the HECM borrower;
4) and the property securing the reverse mortgage HECM has not been sold to a third party.
Extensions beyond the 60 days outlined will not be accepted for the cases meeting those criteria, HUD specifies.
Additionally, HUD provides instructions on filing for the extension in non-borrowing spouse cases that qualify.
Lenders must submit the request on company letterhead, obtain a servicing manager’s signature on the request and upload the request into the HERMIT portal.
Over the course of several lawsuits regarding non-borrowing spouses of reverse mortgage borrowers, HUD has said it is working to develop policy that will address issues around non-borrowing spouses.
In 2011, AARP filed a lawsuit against HUD on behalf of several non-borrowing spouses who faced foreclosure due to the borrowers having passed away.
The case was later won by AARP in the appeals court in October 2013, resulting in an order for HUD to provide relief to the plaintiffs. HUD has said that guidance is forthcoming.
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