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FHA Revises Reverse Mortgage Rules for Surviving Spouses

Monday, June 15, 2015

The Federal Housing Administration (FHA) has revised its policy for so-called reverse mortgages, expanding options for surviving spouses to remain in their homes after the death of the loan's borrower.  The new policy echoes options extended to a limited number of such spouses last year.

Under old rules governing Home Equity Conversion Mortgages (HECMs) the death of a spouse who was the sole borrower on the mortgage triggered the due and payable status clause of the mortgage and could also set off the processes of foreclosure.  This often came as a surprise to the surviving spouse who may have assumed he or she could stay in the home during the remainder of his or her own life.  Individual cases of hardship also generated a lot of bad publicity for the program.

 

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