Housing advocates join industry applauding reverse mortgage change
Clarification benefits all involved
In rare moment of congruence, affordable housing advocates and housing industry players are applauding the recent decision by the U.S. Department of Housing and Urban Development and the Federal Housing Administration to changes its reverse mortgage program designed to keep non-borrowing spouses in their homes after the last surviving borrower dies.
Earlier this year, the FHA released new guidance that allows FHA-approved lenders to delay foreclosure proceedings against non-borrowing spouses in the event of the death of the last surviving borrower.
On Friday the FHA said it is expanding on those changes to its Home Equity Conversion Mortgage program, with a new policy that allows lenders to proceed with submitting claims on HECMs with eligible surviving non-borrowing spouses and case numbers assigned before August 4, 2014 in accordance with the terms of the mortgagee letter.
Attorneys and consumer advocates applauded HUD’s new policy that will benefit thousands of older homeowners across the nation who could otherwise be at risk of foreclosure.
A group of organizations and attorneys who had previously advocated on behalf of these homeowners released a joint statement. Those signed on include the National Consumer Law Center; California Reinvestment Coalition; Elder Abuse Program, Institute on Aging; National Housing Law Project; Sandy Jolley; and Housing and Economic Rights Advocates.
“HUD’s new policy is welcome news for surviving non-borrower spouses, many of whom would otherwise be facing foreclosure. This news will be a huge relief for homeowners who are facing sale dates. We look forward to hearing from each of the reverse mortgage servicing companies as to whether or not they will use this new option to keep surviving spouses in their homes. It’s a common sense solution and we urge the reverse mortgage servicers to immediately adopt this policy for any at-risk homeowners,” the statement says.
Craig Briskin, a partner with Mehri & Skalet in Washington, DC, who has represented plaintiffs in reverse mortgage cases said, “We are thrilled that the lawsuits we filed beginning in 2011 on behalf of surviving spouses have helped to produce this excellent result. We have already heard from our clients, and other reverse mortgage borrowers and surviving spouses, about what a profound difference HUD’s new policy will make in their lives. 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.”
Odette Williamson, staff attorney at the National Consumer Law Center, likewise lauded the move.
"By updating its policy, HUD has taken a giant step to make a difference for vulnerable homeowners who are already grappling with the traumatic loss of a loved one. I hope servicers move quickly to take advantage of this policy to keep thousands of newly widowed spouses of reverse mortgage borrowers in their homes” Williamson said.
On Friday, one key mortgage industry group weighed in with similar support for the measure.
“As the national voice of the reverse mortgage industry, (the National Reverse Mortgage Lenders Association) appreciates today’s guidance from HUD that resolves longstanding concerns about the responsible treatment of non-borrowing spouses,” said Peter Bell, President of the National Reverse Mortgage Lenders Association. “This issue has perplexed homeowners, lenders, and housing counselors for years and it is a relief to have clarity.”