Reverse mortgage loans handled by the Department of Housing and Urban Development (HUD) are the most common type available, representing more than 90% of reverse mortgage loans in the United States. However, HUD’s rules and regulations regarding these loans have sparked much criticism and even lawsuits. The issue concerns spouses whose names are not included on reverse mortgage documents.
A reverse mortgage allows those who are 62 and older to withdraw funds against their home’s equity. The debt is not paid back until the borrower dies, moves, or sells the property. Many senior citizens have obtained a reverse mortgage only to discover that they could possibly lose their home upon the passing of their spouse.
This is exactly what happened to a Louisiana woman, when her husband passed away in January. The 65-year-old widow was told by her mortgage company that she owed $107,000 for the principal, accrued interest and fees from the couple’s reverse mortgage on their home of 16 years. The woman was a “surviving spouse,” whose name did not appear on the reverse-mortgage note. Loan officers and representatives had assured the couple that she could remain in the home, if her husband passed away. Unfortunately, she was not protected as she had been led to believe. Instead, she was told to pay the money or her home would be foreclosed.
An estimated 12,000 other widows and widowers face similar circumstances because their name does not appear on the reverse mortgage note. Research has shown that in some cases, the loan broker offered a higher maximum mortgage to those who only had the older spouse on the note. In other cases, one spouse might not have reached the required borrower threshold age, therefore only one of the spouse’s names was placed on the note.
Fortunately, a recent federal policy shift may help surviving spouses in this situation. Up until last month, all non-borrower surviving spouses whose loans were issued before Aug. 4, 2014, were subject to payment demands, similar to the Louisiana woman’s case. On June 12, HUD changed its policy and advised loan servicers of an updated option. Instead of foreclosing on non-borrower surviving spouses, the loan would be assigned back to HUD, which would make a claim for monies owed against the agency’s FHA insurance fund.
Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Source: Kenneth Harney – The Washington Post