It’s been two months and the HUD headed by Dr. Ben Carson remains mum on a key change to its reverse mortgage program that could put surviving spouses at risk of losing their homes.
Senators Marco Rubio and Catherine Cortez Masto brought the matter up in their joint letter to the HUD on May 31 and the response is pending, the New York Times observed.Are you looking for a reverse mortgage lender?
A Going Concern for Surviving Spouses
In their letter, the Senators voiced concern over the proposed amendment to the “HECM spousal survival” provision espoused in Pres. Trump’s proposed budget for the fiscal year 2018.
Per the wording of the amendment, the President wishes to redefine the term mortgagor for HECM purposes to remove successors and assigns of the original mortgage borrower.
As Reverse Mortgage Daily added, the amendment excludes a statement that would have expanded the definition of a homeowner to include spouses.
The language if approved could put spouses in a tight spot because they could lose their entitlement to stay in the home when their husbands or wives who were obligated to the loan pass on.
The Senators thus sought to clarify this “loophole” that will only compound the stress and grief felt by surviving spouses over the loss of their loved ones. They urged the President to protect these spouses from eviction.Lenders are accessible here.
HECM Spousal Survival
There is an ongoing debate on how safe reverse mortgage products are. But, as is widely acknowledged, these loans help seniors during their retirement because they provide added income for living expenses and bills.
The borrower receives disbursements from the lender on a lump sum or periodic basis and defers repayment of the loan until he/she sells the home or dies.
This was a tricky situation to be in for a non-borrowing spouse. He/she would either have to pay off the HECM debt or face eviction.
Changes were then made to allow surviving spouses who were not originally obligated to the HECM to stay in the home. Now here comes this proposed change.
“Our sense is it is bad drafting, but when bad drafting goes through, it can lead to bad policy,” Alys Cohen, a staff lawyer with the National Consumer Law Center, was quoted as saying by the Times.
However the interpretation is on the language or wording in the proposed budget, the impact is clear and it’s not going to be good for surviving spouses.Click here to get matched with a lender.