FHA will be accommodating younger spouses under the age of 62 this August. Situations where a couple would benefit from a reverse mortgage but one spouse does not happen to be 62 can now be accommodated and allow the non-borrowing spouse to stay in the home even if the borrower passes away or moves from the home. This is a significant change and will remove a big obstacle preventing some couples from considering a reverse mortgage. For new transactions after August 4th non-borrowing spouses will be able to remain in their homes, provided the following criteria has been met:
- Have been the spouse of a HECM mortgagor at the time of loan closing and have remained the spouse of such HECM mortgagor for the duration of the HECM mortgagor’s lifetime
- Have been properly disclosed to the mortgagee at origination and specifically named as a Non-Borrowing Spouse in the HECM documents
- Have occupied, and continue to occupy, the property securing the HECM as the Principal Residence of the Non-Borrowing Spouse
- Within ninety days from the death of the last surviving HECM mortgagor, establish legal ownership or other ongoing legal right to remain (e.g., executed lease, court order, etc.) in the property securing the HECM
- After the death of the last surviving mortgagor, ensure all other obligations of the HECM mortgagor(s) contained in the loan documents continue to be satisfied; After the death of the last surviving mortgagor, ensure that the HECM does not become eligible to be called due and payable for any other reason)
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