More than 40 consumer advocacy organizations are urging the Department of Housing and Urban Development (HUD) to do more for reverse mortgage borrowers impacted by the national coronavirus crisis, following measures spelled out by the department last week.
Borrowers need more protections than currently available, say The National Consumer Law Center (NCLC) and fellow consumer groups in a letter sent Tuesday to HUD and current Federal Housing Administration (FHA) Commissioner Brian D. Montgomery, seeking stronger protections from the federal government for reverse mortgage borrowers who have been affected by the COVID-19 coronavirus pandemic.
The letter contends that the recently-announced 60-day moratorium on foreclosures and evictions on all FHA-insured mortgages is not enough when considering that many projections on the full impact of the virus stretch longer than the moratorium’s scheduled duration of 60 days.
“Further action is needed to ensure that this older population, which is most vulnerable to the virus, will maintain stable housing and not end up facing unnecessary foreclosures,” Sarah Bolling Mancini, attorney for the NCLC, tells RMD.
Notable signatories, requests from HUD
The groups, which in addition to NCLC also include organizations like the National Council on Aging (NCOA), the NAACP and Justice in Aging, are urging HUD to take several additional steps on top of the foreclosure moratorium.
These include clarifying that non-borrowing spouses have an additional 60 days for the submission of their loan through the Mortgagee Optional Election (MOE) to allow non-borrowing spouses (NBS) to avoid foreclosure; directing servicers not to pay property taxes on behalf of reverse mortgage borrowers if the taxing authority has provided an extension or tax foreclosure moratorium, while allowing an extra six months for borrowers to pay back the funds when servicers do advance property tax payments.
Additionally, the groups are seeking more access to loss mitigation for qualified homeowners by extending related deadlines and allowing for new repayment plans when borrowers default during the national emergency.
Extension of the foreclosure moratorium
The groups are also seeking an extension of the 60-day foreclosure and eviction moratorium announced by HUD on March 18, to a new duration of at least six months.
The letter also expands on the reasoning behind the request for an extension of the moratorium.
“Further delaying foreclosures for a period of time, and extending all related deadlines, makes sense for humanitarian, public health, and financial reasons,” the letter reads. “We know that the aftermath of this crisis will extend well beyond 60 days, especially the financial consequences. As a result, we urge HUD to extend the moratorium to six months and to consider extending further as needed. We hope this timeframe will give borrowers and mortgagors the time they need to address the payment issues that will arise.”
Motivation for requests
While the 60-day moratorium on foreclosures as announced by the president was seen as a step in the right direction in terms of protecting borrowers, the NCLC and its co-signers felt that more needed to be done during the crisis Mancini says.
“The signatories to this letter were concerned about the gaps in HUD’s policy announcement in Mortgagee Letter 2020-04, and the steps that have not yet been taken to protect reverse mortgage borrowers and their non-borrowing spouses from foreclosure during the COVID-19 public health emergency,” Mancini told RMD in an email.
While the consumer groups aren’t necessarily concerned about an absence of additional assistance for reverse mortgage borrowers beyond the foreclosure moratorium, they felt that now was the time to advocate for additional action beyond what was codified in the Mortgagee Letter, since the Department has demonstrated a commitment to older borrowers.
“We do not believe HUD will stop with a 60-day moratorium of FHA foreclosures,” Mancini said. “The agency has shown a commitment to helping older homeowners remain stable and safe. We believe that once these issues are brought to their attention, HUD will take the necessary steps to protect vulnerable homeowners.”
NCLC is also in active discussion with industry stakeholders on these issues, including the National Reverse Mortgage Lenders Association (NRMLA), Mancini said. It’s also important to keep in mind that there are many reverse mortgage borrowers who will be at particular risk during this health crisis, she added.
“Reverse mortgage foreclosures put some of the most vulnerable consumers at risk of homelessness,” Mancini said. “This is not a risk we can afford to take during the COVID-19 epidemic.”
Read the NCLC letter, which contains a full list of the 42 signatories.
