On the eve of the partial shutdown of the US federal government, a unit of the government, the U.S. District Court for the District of Columbia handed down a decision in favor of non-borrowing spouses who sued HUD, challenging its interpretation of “homeowner” in HECM reverse mortgage transactions and claiming that federal law protects them from displacement upon the death of their “borrowing” spouses.
As I have argued elsewhere, HUD can and should solve the problem once and for all. The DC Circuit Court told HUD the same thing in January in a decision granting the non-borrowing “standing.” The September 30 U.S. District Court decision came with a separate order to HUD: Fix the non-borrowing spouse problem!
Some have suggested that HUD could appeal and delay fixing the problem, but I doubt HUD would take such a step for three reasons: 1) The DC Circuit Court did not buy HUD’s arguments in January when it granted the plaintiffs standing; 2) The appeals court, the same court that HUD would appeal to if it were poorly advised, made it clear that HUD can and should solve the problem; it even offered some ideas for resolution; 3) The District Court’s decision on September 30 essentially said the same thing: HUD should solve the problem.
One federal court suggested that HUD should solve the problem. Another has ordered it to do the same thing.
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