Senior woman lost in thought

Dear Liz,

I was not old enough to be on the reverse mortgage we got in 2009. I was only 61 then and my husband much older. Now I am faced with being removed from my home of 12 years because I am not on the deed. What is happening with the AARP case for non-borrowing spouses? Do you think we are going to get protection from foreclosure? My husband is 88 now and in poor health. I hold my breath every day that he will stay alive long enough to get me legally back on the mortgage. Anything new you can enlighten me with or give me hope that I won’t lose my home?

— Joyce

Dear Joyce,

AARP is still battling to protect spouses in your situation from losing their homes to foreclosure if the spouse named on the reverse mortgage dies, but victory is far from assured.

The AARP won a case known as Bennett v. Donovan where it alleged that the federal regulation that allows mortgages to be called due and payable on the borrower’s death was illegal if a surviving spouse lived in the home. The court also found that it didn’t have the authority to demand any particular action to fix the situation and ordered the U.S. Department of Housing and Urban Development, or HUD, to determine appropriate relief for affected spouses.

HUD changed the rules for the most popular reverse mortgage — Home Equity Conversion Mortgage, or HECM — taken out on or after Aug. 4, 2014. The rules now allow the surviving spouse to remain in the home as long as he or she meets all of the obligations required by the loan.

What the heck is a HECM?

A Home Equity Conversion Mortgage, or HECM, is FHA’s reverse mortgage program, enabling seniors to withdraw some of the equity in their home if they need money. These loans come with fees, including an origination fee that ranges from $2,500 to $6,000. The National Council on Aging’s booklet, called ” Use your home to stay at home,” offers more details.

For HECMs taken out before Aug. 4, 2014, lenders can elect to give the mortgage to HUD rather than foreclose, but aren’t required to do so.

The problem is that HUD did not make the mortgages and doesn’t own most of them. Under the terms of the mortgages, lenders that own the mortgages, including Fannie Mae, Ginnie Mae and others, are entitled to foreclose after the borrower spouse dies, says Jean Constantine-Davis, senior attorney with AARP Foundation.

“So, even after the court’s ruling that HUD’s regulations are illegal, lenders holding the mortgages are free to foreclose on surviving spouses,” Constantine-Davis says.

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