The long awaited lending tables from HUD for spouses who are younger than 62 years of age go into effect on August 4, 2014 for all new reverse mortgages. Spouses aged 18-61 on new loans will be included in the loan when the other spouse is 62 years of age or older and seeking a reverse mortgage. The loan amounts are more conservative the younger the spouse under 62 years of age is, however there no longer will be allowed a “non-borrowing” spouse situation where the younger spouse has typically not been on title, not been a party to the loan, and therefore not able to remain in the home if the older spouse passes away first unless: they inherited the home and can pay off the existing reverse mortgage with a conventional loan or cash, or are over 62 and have enough equity to take out a reverse mortgage on their own.
There will be certain requirements of the remaining spouse under 62 years of age when they become the sole surviving homeowner, such as continuing to keep paid property taxes and property insurance, as well as verifying periodically that the surviving spouse is indeed living in the home as his/her principle residence. The exact requirements to remain in the home once the older spouse as passed will be clearly spelled out in any loan application that issues after August 4, 2014 and all information on this new policy will be fully incorporated in the required HUD certified counseling session discussion and material.
HUD did not announce any changes for “non-borrowing” spouses on existing reverse mortgage loans, but it is an issue the industry continues to wrestle with. Any changes on this front I will immediately write about.
A surprise announcement that also issued along with this news is that HUD will make the lending tables we use to calculate loan proceeds MORE generous for older borrowers in their 70’s, and a bit LESS generous for younger borrowers in their 60’s.
If you are curious how this could affect you please feel free to give me a call.
Shawna McDonald, Loan Officer has completed hundreds of reverse mortgages. She is approved with 8 of the largest reverse mortgage lenders in the nation allowing the consumer 1 stop fee shopping. Her local office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main Street Suite N, Grass Valley, (530) 497-3010. The website is www.SierraFoothillsReverse.com.
NMLS #271335 CA-BRE 00585530 Borba Investments, Auburn, CA NMLS #76801 HUD approved