HUD Moves in on Reverse Mortgage Non-Borrowing Spouse Solution

The Department of Housing and Urban Development is getting closer to issuing new guidance regarding non-borrowing spouses of reverse mortgage borrowers, a HUD attorney said in federal court last week.

According to a National Mortgage News report, a hearing in the U.S. District Court for the District of Columbia gained temporary ground on an issue that has long been the subject of a lawsuit filed by AARP against HUD regarding non-borrowing spouses. But the solution is still forthcoming. 

Federal Housing Administration Attorney Carol Federighi said during the hearing that FHA will cover the costs of a 60-day foreclosure suspension so that deceased borrowers’ spouses can remain in their homes, according to the NMN report of the hearing. 

On a case-by-case basis, lenders can also seek FHA approval to stop foreclosures, the attorney said. 

The larger issue of policy around reverse mortgage situations where a non-borrowing spouse is living in the home, however, is still unresolved. Judge Ellen Huvelle last week denied AARP’s motion for a preliminary injunction in the case, noting there is insufficient showing of irreparable harm to the movants. 

However, AARP is still working to certify a class in a class action lawsuit around the issue. HUD is required to respond to the motion and a status report has been ordered by May 12.

HUD has also been ordered to offer relief to plaintiffs in a prior case involving non borrowing spouses in which the court ruled against HUD.  

The HUD attorney said she did not know what the policy action would be, according to the National Mortgage News account. 

“The U.S. District Court judge did not seem to be impressed with the temporary measures HUD is taking to avert foreclosures. She pressed Federighi on what policies HUD intends to adopt to deal with non-borrowing spouses who are facing foreclosure….’I don’t know where they are going to go,’ the HUD attorney admitted.” 

View the National Mortgage News report on the hearing. 

Written by Elizabeth Ecker

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