Home Equity Conversion Rule Change Impacts Surviving Spouses

Reverse mortgages offered through HUD’s Home Equity Conversion Mortgage (HECM) program are available to seniors over the age of 62. In the past, when only one spouse exceeded the age requirement, HECM required the reverse mortgage be soley in the name of the qualifying senior’s name. The younger spouse could not even be a titleholder. These situations exposed the younger spouse to the risk of having to refinance the HECM transaction, sell the house or possibly lose the house through foreclosure upon the death of the qualifying spouse.

As a result of a regulatory change for new HECMs and post, August 4, 2014 mortgages, eligible non-borrowing spouses will have available new protection. The repayment by the non-borrowing spouse is now delayed until he or she no longer resides in the house provided they meet the following criteria:

1. Reverse mortgage counseling with an approved counselor is attended;

2. The spouses were married at the time of the borrowing spouse’s death;

3. The HECM application identifies the eligible non-borrowing spouse; and

4. The property is the non-borrowing spouse’s principal residence at the time of the HECM, during the entire tenure of the HECM, and at the time of the borrowing spouse’s death.

Reverse mortgages can be a great planning opportunity for seniors but may also contain numerous pitfalls. You should consult with an experienced real estate attorney to determine if it is a viable option before executing the application.

For more than 30 years, Attorney Lee A. Drizin has practiced in the areas of estate planning, probate, trusts, guardianship and real estate matters representing clients throughout the state of Nevada.

Drizin Law is providing this information for educational purposes only. It should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. This information is based on general principles of Nevada law at the time it was created and you should be aware laws frequently change. Moreover, the laws affecting you may differ depending on the circumstances. You should consult with a qualified attorney in your own state or jurisdiction concerning your particular situation. Review of this information does not create an attorney-client relationship.