For many years, non-borrowing spouses of reverse mortgage borrowers had few protections when the borrowing spouse passed away.
That’s because the reverse mortgage, and its terms, apply only to those people who are named on the home title. For some non-borrowing spouses, that has meant they are left to repay the loan, or leave the home, since the loan becomes due when the borrower passes away or moves from the home.
What is a non-borrowing spouse?
Up until August, 2014, you could get a Reverse Mortgage only if all title holders were 62 years or older. If you were on title, then you were a reverse mortgage borrower and entitled to all of the benefits of the loan. If your spouse died, the reverse mortgage continued and the spouse could continue to live in the home and get all of the financial benefits of the loan.
However, some borrowers opted to remove spouses who were younger than 62 from the title. In these cases, some spouses could not continue to live in the home after the death of their husband or wife unless they could repay the reverse mortgage loan. The reverse mortgage came due when the borrower died.
A non borrowing spouse is someone who is under 62 years of age and married to someone interested in or getting a reverse mortgage.
New non-borrowing spouse protections – rights for those under 62
Last year, the Department of Housing and Urban Development, or “HUD,” which administers the government-insured Home Equity Conversion Mortgage program, made some changes to help the situation for non-borrowing spouses.
HUD said that as of August 4, 2014, any new non-borrowing spouses of reverse mortgage borrowers were eligible to defer repayment of the loans, under a few provisions including proof of their marital terms, and continuing to uphold the agreements of the loan.
That means for many non-borrowing spouses for loans taken on or after August 4, there are some protections that apply and can allow those spouses to remain the the home. They still must pay property tax and insurance on the home, as any borrower would.
But the new rules didn’t apply to borrowers who had taken out reverse mortgage previously, or their non-borrowing spouses.
I’m a non borrowing spouse. What does this mean for me?
If you are a non-borrowing spouse on a loan that was closed on or after August 4, 2014, you may be eligible to receive certain protections under the terms of your loan.
If you are a non-borrowing spouse on a loan that closed before August 4, 2014, it is important for you to contact your lender to learn more if this is the case, since these loans are handled on a case-by-case basis.
There are also stringent rules about the timing under which lenders can exercise this new option. HUD specifies that the option must be taken within 30 days of the servicer receiving notice of the borrower’s passing.
If you have a specific question about your loan or your situation, speaking with your loan lender or your loan servicer is a place to start.