Americans who have a reverse mortgage solely in their name who are concerned about their spouse’s ability to remain in the home after their death have options, says San Francisco sister publication SFGate in a recent article.
“I have a reverse mortgage on my home in my name alone,” a reader tells SFGate. “The home is recorded in my living trust. My wife is the beneficiary of my living trust. Will she be able to remain in our home after my death and continue with the reverse mortgage benefits or will she have to sell the home within one year from my death?”
It depends, SFGate says, noting that most reverse mortgages are guaranteed by the Federal Housing Administration and known as Home Equity Conversion Mortgages (HECMs). Under the HECM program, mortgages are not due until the homeowner’s death, the sale of the home or certain other events.
However, until recent changes, lenders could interpret HUD regulations to force the sale of a home upon the death of the borrower, even if a non-borrowing spouse remained in the home.
In 2011, the AARP Foundation filed a lawsuit on behalf of two non-borrowing surviving spouses who were in danger of foreclosure, arguing that the law allowed them to remain in their homes.
While HUD decided it was not required to provide relief for the two plaintiffs, the department did issue rules to fix the problem for new mortgages.
HUD’s new rules allow a non-borrowing spouse to remain in the home after the death of the borrower, as long as the spouses certify that they are married when the loan closes, SFGate advises.
Read the SFGate article here.
Written by Cassandra Dowell
