Featured Article: HECM Update – Non-Borrowing Spouse

Featured Article: HECM Program Update - Non-Borrowing Spouse 1

Mortgagee Letter 2014-07:

In April 2014, the U.S. Department of Housing and Urban Development (HUD) released Mortgagee Letter 2014-07 announcing new changes to the Home Equity Conversion Mortgage (HECM) loan, specifically for the non-borrowing spouses of reverse mortgage borrowers.

Prior to this change, and under HECM rules, the loan would be due after the departure or death of the last-named HECM borrower, or if the home is sold, or if the borrower fails to pay taxes and insurance or otherwise comply with the loan terms.  The non-borrowing spouse may then have had to refinance the loan or sell the home to pay back the loan. Many non-borrowing spouses wished to stay in the residences they once shared with their spouse, but were unable to due to this stipulation. With this letter comes a change to this past rule.

Effective for all new HECM loan FHA case numbers issued on or after August 4, 2014, the HUD letter states that non-borrowing spouses may remain in their homes for a certain “deferral period” even after the death of their spouses.

However, the non-borrowing spouse must:
– Establish legal ownership or right to remain in the home
– Take responsibility for the obligations of the loan signed for by the original borrowing spouse

For more information about these recent changes, talk to your American Advisors Group Reverse Mortgage Professional today at 1-888-998-3147. They can explain in detail how these changes will apply to you in your particular situation.

*Updated 9/3/14



“Mortgagee Letter 2014-07.” Portal.HUD.gov. U.S. Department of Housing and Urban Development. 25 Apr 2014. Web. 22 July 2014. http://portal.hud.gov/hudportal/documents/huddoc?id=14-07ml.pdf

Rosynek, Ralph. “Spotlight: HUD Addresses Non-Borrowing Spouses.” The Reverse Review. June 2014. Web. 22 July 2014.

“HUD Issues Non-Borrowing Spouse Guidelines for New HECM Loans.” NRMLAonline.org. 28 Apr 2014. Web. 22 Jul 2014. https://www.nrmlaonline.org/2014/04/28/hud-issues-non-borrowing-spouse-guidelines-for-new-hecm-loans

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