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Ask Attyadvisor Your Own Question
Attyadvisor, Attorney
Category: Real Estate Law
Satisfied Customers: 7192
Experience:  29 years of experience in General Practice, Real Estate Law and Estate Law.
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We have a reverse mortgage, taken out in 2006, on which I am a non signing spouse. Per th

Customer Question

We have a reverse mortgage, taken out in 2006, on which I am a non signing spouse. Per the HUD Mortgagee Letter 2015-15, should my husband pass away before I do, I should be able to remain in the property until my death, or sale of the property
All requirements for the MOE have been met, but we would like to know what is the best legal document to comply with this statement: "They have, or are able to obtain, within 90 days following the last surviving borrower's death, good,marketable title to the property or a legal right to remain in the property for life".
We are residents of Pinellas County, FL.
Truly appreciate your help in this matter.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Attyadvisor replied 1 year ago.
Welcome and thank you for your question. Do you have a copy of your reverse mortgage closing documents? Do you have a copy of the " Per the HUD Mortgagee Letter 2015-15, should my husband pass away before I do, I should be able to remain in the property until my death, or sale of the property"?
Expert:  Attyadvisor replied 1 year ago.
Let's start with an explanation of the law: "The Bennett RulingIn the case of Bennett et al. v. Donovan, 2013 WL(###) ###-####(D.D.C. Sept. 30, 2013), the court ruled that a Housing and Urban Development (HUD) regulation that allows lenders to demand that surviving spouses immediately repay reverse mortgage loans upon the death of their spouses violates federal law.Case BackgroundThe plaintiffs in this case were the surviving spouses of reverse mortgage borrowers. Only their spouses, not the plaintiffs themselves, were listed as borrowers under the mortgage contracts. The plaintiffs stated that their reverse mortgage brokers told them that they would be protected from displacement from the home after their spouses died. However, when their spouses passed away, the lenders demanded immediate repayment of the loans.Rights of the Surviving Spouse After the Borrower DiesThe plaintiffs claimed that the HUD regulation violated federal law because it did not protect them as non-mortgagor spouses. In particular, the plaintiffs relied on a federal statute that states HUD may not insure a reverse mortgage unless the repayment obligation was deferred until the homeowner's death. The term “homeowner” was defined as including the spouse of a homeowner. Accordingly, the plaintiffs argued that they were not required to repay the loan and were protected from foreclosure.On the flip side, the regulations implementing the HECM statute state that the loan becomes due and payable upon the death of all "mortgagors." A “mortgagor” is the borrower listed on the mortgage. Furthermore, HUD’s form documents for reverse mortgages allow lenders to call the mortgage due upon the death of the mortgagor, even if there is a non-borrowing spouse still living in the home. As a result, lenders have historically called the loan due when the borrower named in the mortgage died, even if there was a surviving spouse.Court Rules That Lenders Cannot Demand Immediate Repayment from Surviving SpousesIn the end, the court determined that HUD violated the statute when it insured the reverse mortgages of the plaintiffs' spouses pursuant to agency regulation, which permitted the loan obligations to come due upon the borrower’s death, even if the plaintiffs' spouses were still alive. The court also found, however, that it did not have the authority to require HUD to take any particular action to remedy its error and sent the matter back to HUD to correct the problem.HUD Updates Loan RulesTo remedy this, HUD has amended its HECM program.HECMs Taken Out On or After August 4, 2014. HUD policy now states that for FHA-backed reverse mortgages issued on or after August 4, 2014, the non-borrowing spouse may remain in the home after the HECM borrower dies (and the loan repayment will be deferred) so long as:the non-borrowing spouse is married to the borrower at the time of the loan closing (and remains married to the borrower for the duration of the borrower's lifetime)their spousal status is disclosed at the time of the closingthe non-borrowing spouse is named in the loan documentsthe non-borrowing spouse has occupied, and continues to occupy, the property securing the HECM as his/her principal residencethe non-borrowing spouse establishes legal ownership (or another ongoing legal right to remain in the home) within 90 days of the death of the last surviving borrower, andthe non-borrowing spouse meets all of the obligations described in the loan documents. (See HUD Mortgagee Letter 2014-07.)If the non-borrowing spouse fails to meet any of the requirements, the loan becomes due and payable. HECMs Taken Out Before August 4, 2014. In early 2015, HUD announced that a non-borrowing spouse could remain in the home if the HECM was taken out before August 4, 2014, and certain criteria was met -- but only if the lender chose to assign the mortgage to HUD. However, HUD then changed its policies in May of 2015. Instead, lenders now have the option to delay foreclosure proceedings for up to 60 days in certain cases."
Expert:  Attyadvisor replied 1 year ago.
quot;HUD's new rule is aimed at better protecting younger spouses from being evicted from their homes. Effective August 4, 2014, a spouse over 62 who takes out a reverse mortgage may list a younger spouse as a "non-borrowing spouse." Should the borrower die first, the non-borrowing spouse will be entitled to remain in the home if two conditions are met: The non-borrowing spouse must provide proof within 90 days of the spouse's death that he/she is entitled to remain in the home. Documentation may include a lease, deed, etc. The non-borrowing spouse must continue to meet all other financial obligations associated with the reverse mortgage - pay property taxes, pay insurance premiums, etc. This is good news, but pay attention to these three important caveats:Unlike the borrower, the non-borrowing spouse may not access the loan balance.The new rule applies only to non-borrowing spouses who were married to the borrowing spouse at origination of the loan. Spouses who marry the borrower after the loan is taken out are not protected."
Expert:  Attyadvisor replied 1 year ago.
quot;Eligibility for MOE assignmentsThe program applies only to HECM reverse mortgages originated before Aug. 4, 2014. Reverse mortgages originated after that date were better designed to protect nonborrower surviving spouses."If your spouse has a HECM that was taken out after Aug. 4, 2014, your life is a little easier because you don't have to go through this program," Mancini says. "There should not be any problem when a spouse passes away." http:// Provided that you qualify. "Steps to take after a spouse diesContact the servicer if you want to request an MOE assignment or have questions about how to do so, says Amy Ford, director of home equity initiatives for the National Council on Aging, a seniors' services and advocacy organization in Arlington, Virginia."It does take some effort, and especially considering you've just lost a spouse, it's a very stressful time," Ford acknowledges. "But if you want to be able to stay in the home, contacting the loan servicer and being able to execute on these technical pieces -- the paperwork -- would be important."Read more:
Expert:  Attyadvisor replied 1 year ago.
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