A slight change to the wording in a proposed HUD budget request could lessen the protections of reverse mortgages and increase the risk of foreclosure for some elderly homeowners. The wording change affects 2-year-old provisions in federal housing rules that award certain rights and protections to the spouse of a borrower who takes out a reverse mortgage and later dies.
This wording change could increase the chances that the surviving spouse who did not sign the documents could lose their home in foreclosure.
Senators Marco Rubio (R.-Fla.) and Catherine Cortez Masto (D.-Nev.) sent a joint letter to Ben Carson, the secretary of the Department of Housing and Urban Development, and Mick Mulvaney, director of the Office of Management and the Budget, seeking clarity on the proposed wording in the budget request and asking whether the agency was seeking to reverse the earlier policy change.
The fact that there has been no response from HUD raises concern. Before this change in policy two years ago, a surviving spouse who had not signed the mortgage document often had to pay what was left on the loan in full or was at risk of being evicted, due to the home going into foreclosure.
In the letter to the Department of Housing and Urban Development, the senators referred to the old policy as a “loophole” that had “compounded the stress faced by widows and widowers at a time when they were already grieving the loss of their spouse.”
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