Reverse mortgage still a hassle for partners of deceased borrowers

by Anna Sobrevinas17 Jan 2017
Reverse mortgages were meant to aid older homeowners with their mortgage interest rates, but rules on surviving partners haven’t been very clear and helpful, according to the East Bay Times.

Pressure to the U.S. Department of Housing and Urban Development in 2015 from ‘lawmakers and lawsuits’ helped alter a flaw of reverse mortgages, which was if the mortgage wasn’t under an occupant’s name, he or she must pay back or leave the home.

Senior rights and housing supporters don’t think HUD is doing enough, however.

“Whether the breakdown is that there aren’t adequate rules, that they are not enforcing the rules or simply failing to do everything within their authority to help seniors stay in their homes, the hardship is real and needs to be fixed,” said Kevin Stein, deputy director of the California Reinvestment Coalition, told the East Bay Times. “These people have recently experienced the death of a loved one, only to have the unexpected loss of their housing. It’s the worst possible double whammy.”

The coalition found out that only 100 people in the state sought for a “Mortgage Optional Election Assignment” last year to help stay in their homes. What was more shocking was only a third of the applicants were approved.

“What this says to us is that either HUD and/or the servicers are not publicizing this policy, a policy they were essentially forced to do as a result of lawsuits,” said Stein.

Brian Sullivan, a spokesman for the HUD, said the department alerts all loan servicers otherwise. In the end, it is up to the lender if he or she will permit a non-borrowing spouse to stay in the home.

“It is an option for them,” he said. “It’s true that if the servicer doesn’t agree, the mortgage becomes due and payable; there is no enforcement mechanism.”


 

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