Reverse

Originating: My Experience as a Non-Borrowing Spouse

Written by Theresa Harris, as originally published in The Reverse Review.

Reverse mortgages have been a part of my career since 2002, when I started working in escrow. I was given an escrow file for a HECM loan, and being unaware of that term, I thought it was a standard HELOC. Boy, was I wrong! Thankfully, I had a wonderful loan processor who took my hand and walked me through the process.

Nearly 13 years later, I consider myself one of the best HECM-specializing escrow officers. I stay up-to-date on all policy changes and attend NRMLA meetings so that I can serve my lenders and mortgage brokers better. I have always believed it is a great program that can help many seniors, and I also thought that someday I would have a reverse mortgage. But the one thing that I knew could potentially stop me was the non-borrowing spouse rule. I did not want to lose the rights to my home if my husband, who is 12 years older than me, passed away and I didn’t have the funds to repay the loan.

Fast-forward to the year 2015 and the implementation of Mortgagee Letter 2014-07, and we now have new rules that ensure that non-borrowing spouses like myself will be protected. To say I was super-excited would be an understatement. I called a wonderful loan officer with whom I have been doing business for 10 years and said, “I’m ready! Let’s get this done.”

I ran some numbers in a HECM calculator online to see what we would have to bring in to make this happen. (Remember, I am an escrow officer, not a mortgage broker.) Our house was upside-down and we owed more than it was worth, so funds to close were a factor. The calculator spit out a pretty big number, but after a family discussion we agreed it would be better than paying a mortgage for 40 years. Plus, with the new NBS ruling, I would be protected if anything happened.

So began my reverse mortgage process. We completed the required counseling session and I listened to our kind counselor telling me about a program I know like the back of my hand. I even had to restrain myself from correcting a few small errors she made. (Afterward, my husband complimented my listening skills.) We then waited the required seven days in California.

Knowing that we would soon be relieved of a significant financial burden, those seven days where some of the happiest of my life (and, bonus, we closed just before the implementation of Financial Assessment).

Then we got the call from my reverse mortgage broker, asking if we were prepared to bring in money. He told us we needed a much larger sum to close the loan than we had budgeted for. I thought, “Wait, did I hear him correctly?” He told me we needed to bring more money to the table than I had previously thought based on my online calculations. He gently broke it to me that the new rules require lenders to calculate costs based on the age of the youngest person (me!), even if they are considered a non-borrowing spouse. Reality sank in.

You’d think I would be mad at the system for letting me down, but I’m not. Change is always going to happen in this industry. As a seasoned escrow officer, I have seen it all—the good times and, now, the not so good times. Despite it all, reverse mortgages have stayed fast and true. The ways that they can help people have changed, but they can still help hundreds of thousands of Americans find financial security. It may not offer as much help as before to people like my husband and me, but we went for it anyways. In the end, it was still a smart choice for us that brought us great peace of mind. For that, I am grateful.

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