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New Rules for HECM
Non-Borrowing Spouses

HUD has made radical changes to it's HECM Non-Borrowing Spouse (NBS) policy. These changes are in response to AARP's lawsuit against HUD in regards to foreclosures on NBSs of HECM borrowers who no longer occupy the property.

HECM Tenure Protection

HUD guidelines now allow a NBS of any legal age (18 years +). The NBS will be tenure protected, meaning that they will have the right to live in the home for as long as they wish after the borrower has left. Under the old rules, the loan was automatically due and payable when all borrowers had vacated the residence.

There are several caveats:
  • NBS must be married to the borrower and identified at the time the HECM loan is closed. The NBS will not be on title. NBS must remain married to the borrower to preserve tenure protection.

  • A new set of PLFs (Principal Limit Factors - these determine HECM loan amounts) have been issued. Loan amounts with a NBS will be based on the age of the NBS, which will result in reduced loan amounts.

  • NBSs cannot draw any remaining funds on the HECM loan after the borrowing spouse has passed away.

  • Tenure protection requires the NBS to maintain tax and insurance coverage. Failure to keep these covenants can result in foreclosure.
Net Effect

The net effect of HUD's new NBS rules is that HECM reverse mortgages are now available to any married couple where one spouse is at least 62 years of age. The guidelines place restrictions on the NBS that should be considered prior to closing the loan.

 
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First Federal
Savings Bank
NMLS 402963
1880 S Eagle Rd
Meridian, ID 83642

dcook@bankfirstfed.com
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Home | HECM Basics | 12 Facts | Borrower Qualifications | Loan Process | Financial Assessment
Who Owns the Home? | Who Owns the Equity? | When is the Loan Due? | A Non-Recourse Loan | It's Your Money
| HECM for Purchase |
Copyright© 2019 Doug Cook FDIC & Equal Housing Lender Logo
HECM borrowers are responsible for the payment of property taxes, homeowners insurance, and the maintenance of their home. Rates and fees vary by lender. All credit products subject to approval. Information presented was not created or approved by HUD/FHA.
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First Federal Savings Bank | 1880 S Eagle Rd | Meridian, ID 83642
Institution NMLS: 402963

www.MortgageFirstFed.com/dcook
www.BankFirstFed.com

First Federal Savings Bank provides HECM Reverse Mortgage lending in the states of
Idaho, Oregon, Washington, Montana, Wyoming, Utah and Nevada.
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