FHA Reverse Mortgage Rules: Non-Borrowing Spouses
by Brad R. in Peru, IL and by Dorothy N. in Montgomery, AL
Ask Kate about new FHA reverse mortgage rules regarding policy changes for non-borrowing spouses: On June 12, 2015, Housing and Urban Development (HUD) announced a compassionate policy change for homes financed with a Home Equity Conversion Mortgage (HECM), the FHA income-producing program for senior citizens with major amounts of equity in their homes.
FHA Reverse Mortgage Rules: Non-Borrowing Spouses con't...
In the past, following the death of the borrowing spouse, reverse mortgages immediately became due and payable. Thus the surviving non-borrowing spouse could not remain in the home and was subject to foreclosure, piling grief upon grief.
But with this HUD announcement, eligible spouses are allowed to remain in their homes even though they were not named as borrowers on the original reverse mortgage loan documents. Victory!
Note that these changes affect homes with FHA case numbers dated prior to August 4, 2014. The home must also be in good repair and property taxes must be current. As with all mortgage programs, there is additional fine-print. So peruse written lender disclosures carefully and get all of your questions answered in writing by the lender.
Deceased Father Had a Reverse Mortgage for Senior Citizens By Brad R. from Peru, Illinois
When my deceased father did a reverse mortgage on their home, my mother (who is still alive) objected and signed a waiver to her rights (no idea why, other than stubbornness).
My father passed away. Now I am being told that my mother can go back to the reverse mortgage, but will have to pay $17,000 in order to do so.
I am getting this information from my sister who still lives there. I am told that this is not a down payment that would come off the total owed so is it a fee?
My mother is 72 and disabled. Does she have any recourse to not have to completely redo the mortgage and pay money that she doesn't have?
Ask Kate answers: Deceased Father Had a Reverse Mortgage for Senior Citizens
I'm so sorry to hear of your father's death.
I have a couple of ideas. Ask your mother's lender if she can apply for a new reverse mortgage with closing costs that are taken from the equity of her home. This would help her limit any out-of-pocket cost.
Or she could request the right to stay in the home, even though she was not a borrower on your father's reverse mortgage loan. See the HUD announcement as explained at the beginning of this page
I am not sure if waiving her rights (like you, I am asking why she would do this...) would have a negative affect on the request but I'd encourage her to try.
Reverse Mortgage News and Announcements
Go here to learn of HUD decisions prior to this one...
Reverse Mortgage By Dorothy N. from Montgomery, Alabama
Do you have live in the home to get a reverse mortgage loan?
My mother is staying with me because of health reasons but could really use the extra money. She only owns the one house.
I live in Alabama and her home is in Virginia.
Ask Kate answers: Reverse Mortgage
In order to be eligible for this special financing, a borrower with a reverse mortgage must live in the home as his or her primary residence at the time of application.
But the requirement is ongoing also. So this means your mother would not be able to return to live in your home in Alabama without losing the income from the home in Virginia. Furthermore, the reverse mortgage would be called due and payable.
Reverse Mortgage Program for Home Purchase
Have you thought of this? Why doesn't she sell her home in Virginia and buy another in Alabama using the home buyer's reverse mortgage program? Go here for the details: How to Use the Reverse Mortgage for a Home Purchase
You can learn even more about reverse mortgage at...
Reverse Mortgage Help for Senior Citizens
What Is a Reverse Mortgage? Specialty mortgages created to produce income without a monthly payment.
Will heirs become responsible for homes financed with a Reverse Home Mortgage?
Learn who can help homeowners evaluate Reverse Mortgage Income for Seniors before refinancing.
Meet the stable FHA Reverse Mortgage Refinance Program (HECM) and learn the payment options.
Introducing the FHA Reverse Mortgage Purchase Program (HECM) for Senior home buyers.
Seniors and family members Ask Kate for Reverse Mortgage Information.
Important: Senior homeowners should consult a financial planner, tax accountant, and/or attorney as applicable to evaluate their circumstances before financing with a reverse mortgage. Even if not a loan requirement, reverse mortgage counseling is highly recommended.
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