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New Court Case Challenges Court Decision Re: Reverse Mortgage Non-Borrowing Spouse Clause

The Department of Housing and Urban Development (HUD) has appealed a recent court decision regarding the position of non-borrowing spouses in a Reverse Mortgage. The case involved a Washington DC court ruling in a AARP lawsuit regarding a non-borrowing spouse who had his house repossessed after the man’s wife, the borrowing spouse, died.

a requirement that obligated prospective HECM loan applicants to attend a counseling session with a HUD approved counselor. At this counseling session the counselor was obligated to explain that, if only one spouse applied for a Reverse Mortgage on a jointly-owned home, the second spouse would be forced to leave the home if the borrowing spouse died or had to leave the home. HUD ruled that all signees on the house’s deed would have to attend the counseling session to ensure that the terms of the HECM loan were understood by all.

Prior to 2009 however, many couples were unaware of this rule. There were numerous instances in which only one partner had reached the minimum age at which an individual could apply for the Reverse Mortgage and the Reverse Mortgage was granted in that partner’s name, even though both partners were signees on the home’s deed. When the Reverse Mortgage borrower died or was unable to continue to live in the house, the lending institution took possession of the house and the non-borrowing partner was forced to leave the house.

The AARP instigated the campaign that instituted the counseling requirement but there were still many pre-2008 Reverse Mortgage borrowers who were facing the loss of their home when the borrowing partner could no longer live in the home.

In 2012 AARP pushed the issue by challenging the foreclosure on Reverse Mortgage homes which were acquired before the 2009 counseling requirement. The AARP argued that individuals who took out early HECM loans did not obtain the counseling that is given to today’s borrowers and did not fully understood the implications of the loan. AARP asked the court to examine the legality of HUD’s requirement that those individuals be obligated to leave the home if the borrowing spouse dies or leaves the home.

Fraud in 3-D - National Mortgage News

2007-11-14 07:13:54 by Apprsr

By Ann Fulmer
Forget the rose-colored glasses. To see what’s coming in the next year, you’re going to need those 3-D glasses they used to hand out at sci-fi movies.
As we all know, the real estate bubble has burst. Thousands of families have lost their homes and millions more may be at risk. And as bad as it is right now, most surveys predict that the worst is yet to come. A disaster is unfolding before our eyes.
As David Ignatius said in a recent Washington Post article, “Bubbles must be lived forward, even if they can be understood only in reverse

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  • Avatar Tony Can a house be to old for a Reverse mortgage?
    Oct 09, 2012 by Tony | Posted in Renting & Real Estate

    My grandmother is wanting to get a reverse mortgage and was told that her home was to old when she applied to I believe AAG. The House is located in tolland county Connecticut and was built 1850. So my questions are , is the house to old for a reverse mortgage? or does it vary lender to lender? and if it varies lender to lender what lender could you recommend?

    • I have never heard of a home being rejected simply because of age. However, it may have been rejected either because of property type (see below) or because it was not up to FHA building standards (and the cost to bring it up to standard is excessive - there is a calculation), or valued less than $40, (exceptions can be made). I did a reverse mortgage for a home that was built in 1895; not as old as your grandma s, but over a century old. Currently only FHA offers reverse mortgages. All the private lenders (who didn t have to follow the FHA restrictions) withdrew from the industry when the economy …