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Pensacola, FL – U.S. Senators Marco Rubio (R-FL) and Catherine Cortez Masto (D-NV), members of the Senate Special Committee on Aging, today urged U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson and Office of Management and Budget (OMB) Director Mick Mulvaney to protect seniors from potential eviction under reverse mortgage rules. The senators urged the Administration to keep existing safeguards in place to protect seniors from losing their homes and requested verification of the Administration’s plan to do so.
“While reverse mortgages can provide an important source of financial security for seniors by allowing them to tap the value of their home and age-in-place, they have also raised a number of concerns,” the senators said. “One such concern arising in recent years relates to what happens when a homeowner dies, and is survived by a spouse that was not an original borrower on the reverse mortgage. Under previous Home Equity Conversion Mortgage (HECM) rules, upon the death (or move-out) of the original borrower, the reverse mortgage loan became immediately due, meaning that surviving spouse had to either pay the loan in full, or face eviction.”
“Given the gravity of potential changes to this law, we therefore request a written response outlining the rationale underlying this proposed change. We also urge that you continue to ensure that widows do not face eviction in these circumstances,” the senators concluded.
The full text of the senators’ letter is below:
May 31, 2017
Dear Secretary Carson and Director Mulvaney:
We write to request additional information about a provision in the Appendix of the President’s fiscal year 2018 (FY) budget regarding existing policy to keep seniors in their homes after the death of their spouse.
The Federal Housing Administration (FHA) provides insurance under the Home Equity Conversion Mortgage (HECM) program, known to most Americans as “reverse mortgages.” While reverse mortgages can provide an important source of financial security for seniors by allowing them to tap the value of their home and age-in-place, they have also raised a number of concerns. One such concern arising in recent years relates to what happens when a homeowner dies, and is survived by a spouse that was not an original borrower on the reverse mortgage. Under previous HECM rules, upon the death (or move-out) of the original borrower, the reverse mortgage loan became immediately due, meaning that surviving spouse had to either pay the loan in full, or face eviction.
This loophole compounded the stress faced by widows and widowers at a time when they were already grieving the loss of their spouse. One news article from 2015, for example, documented the story of a Nevada widow surviving on a fixed income, who was faced with possible foreclosure after the death of her husband. Florida, home to the largest percentage of seniors in the country and countless retirement communities, has experienced similar cases. In light of harrowing stories like this, the Department of Housing and Urban Development (HUD) has, in the last few years, taken action to reform the HECM program, protect consumers, and shield taxpayers from the risk posed to the FHA’s insurance fund.
It appears that the President’s FY 2018 budget seeks to make a change to the reverse mortgage program. Namely, Section 223 in the “General Provisions” portion of the HUD budget seeks to amend language in the National Housing Act pertaining to safeguards which protect widows and widowers from displacement.
Given the gravity of potential changes to this law, we therefore request a written response outlining the rationale underlying this proposed change. We also urge that you continue to ensure that widows do not face eviction in these circumstances.
Sincerely,