FHA Announces Increased Protection for Eligible Surviving Non-borrowing Spouses
Increased reverse mortgage protection for non-borrowing spouses
In early May 2021, the Federal Housing Administration (FHA) announced amendments to Home Equity Conversion Mortgage (HECM) , a type of reverse mortgage, protections, a type of reverse mortgage protection. These changes offer more protection for eligible surviving, non-borrowing spouses — in other words, those eligible spouses not listed as borrowers on the mortgage — to help them remain in the home longer should the borrower experience certain life-changing events that affects loan eligibility.
So what’s different?
In addition to pre-existing protections for eligible non-borrowing spouses upon borrower passing, HUD Mortgagee Letter (ML) 2021-11 outlines that when a borrowing spouse moves out for longer than 12 consecutive months into a long-term care facility, an eligible non-borrowing spouse may continue living in the home (deferral of due and payable status). With the passing of the HUD Mortgagee Letter 2021, an eligible non-borrowing spouse is no longer required to move out, take ownership, or demonstrate other legal right to remain in their home within a 90-day window.
Now, the HECM non-borrowing spouse may continue to reside in the home as their principal residence, as long as they meet certain eligibility requirements and keep the terms of the loan, such as paying property taxes and homeowners insurance and keeping up with basic maintenance and repairs. They don’t need to take title or legal right of the property to ensure this protection.
According to the new provision, “The FHA no longer requires, as a condition of a Deferral Period for Eligible Non-Borrowing Spouses, that the Non-Borrowing Spouse possess or demonstrate the ability to obtain good and marketable title to the property or a legal right to remain in the property for life.”
In addition, the definition of an “eligible non-borrowing spouse” has, at least in certain contexts, been expanded (as explained in HUD Mortgagee Letter (ML) 2021-11).
These amendments can be a source of comfort and provide further reverse mortgage protection for affected non-borrowing spouses. The death or illness of a loved one are less likely to be compounded by the possibility of having to relocate.
Considering a reverse mortgage? Start by educating yourself
While nobody can control the future, you can certainly plan for it. With reverse mortgages an increasingly popular retirement planning tool, you should first see if you — or your loved ones — are a good candidate.
To schedule an in-person appointment with a local loan specialist at your convenience, reach out to Reverse Mortgage Funding (RMF) at (888) 277-1567.
This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans retire more freely, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 4.7-star / Excellent score on Trustpilot; 4.8 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call 888-277-1567 to speak with a licensed reverse mortgage specialist to learn about our retirement financing products and solutions.
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If you have equity in your home and believe you meet the eligibility requirements, a HECM may be the option that could help you retire smart.