Big HECM NBS Questions



HUD needs to provide answers to some big HECM non-borrowing spouse (NBS) questions, and we will get to those questions soon.

Sue Jones* of California left a blog comment for me, expressing desperation for help with impending foreclosure proceedings after the death of her borrowing spouse who took HECM reverse mortgage a few years ago.

Jessica Levy* of Georgia sent an email and followed with a phone call, saying she is worried that if her husband dies, she will lose her home because she was left off the HECM loan.

The plight of these two existing non-borrowing spouses highlights the unfinished and thorniest parts of the 25-year-old HECM NBS problem, despite the publication of Mortgagee Letter 2014-07 on April 25, which signaled HUD’s desire to solve the problem for prospective loans, for which HUD should be commended.

But more needs to be done to solve the other parts of the NBS problem: existing spouses facing foreclosures and existing spouses expecting foreclosures when their borrowing spouses die. Here are four big questions begging for urgent answers from HUD:

1) How many existing HECM non-borrowing spouses are currently facing foreclosures?

2) How many existing HECM non-borrowing spouses could face foreclosures if their borrowing spouses die tomorrow?

3) What is the total dollar amount of the legacy NBS problem for current and prospective foreclosures?

4) How is HUD going to solve these problems?

The we-can-do-nothing-about-existing-NBS-loans approach indicated in ML 2014-07 is a non-starter as future posts on this blog will argue.


*Names altered for privacy




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