On August 4th HUD is putting out new guidelines to protect non-borrowing spouses who cannot be on the loan due to their age. In the past and currently non-borrowing spouses have no rights to the property so when the borrowing spouse passes away the home must be sold or refinanced to pay the reverse mortgage lender in full. That means the non-borrowing spouse is most likely going to have to move and have their life upended especially if there was not proper planning. On August 4th of this year HUD is putting out new guidelines that will allow the non-borrowing spouse to continue to live out their days in the property even after the non-borrowing spouse vacates. This will help keep life going smoothly for the NBS. HUD will however create new principal limit tables (loan amount guidelines) that will base the loan on the age of the non-borrowing spouse. This will lower the amount of money received in the loan because the loan amount is based on age and the older you are the more you get.
There are also new rules for the non-borrowing spouse to keep in mind once the borrowing spouse passes away or needs to be moved to a care facility. I will list them here.
- Non-borrowing spouse must transfer the title of the property into their name within 90 days or the loan will come due.
- Non-borrowing spouse must maintain property, continue to pay homeowners insurance, any HOA dues and the property taxes for the home.
- After the borrowing spouse passes there will still be no payments due but there will no longer be access to funds (tenure, line of credit etc)
- Non-borrowing spouse must complete a certification within 30 days of the borrowing spouses passing and then must complete one once a year.
- Interest on the amount owed will keep accruing while the NBS occupies the home.
- If the borrower passes away and the NBS remarries their new spouse cannot be added to the title
- The reverse mortgage counselor will cover all of these topics as well
As always please speak to one of our loan officers about these rules if you need clarification or assistance with anything.