McCaskill Scores Win on Reverse Mortgages

HUD announces plan to help 12,000 seniors facing eviction after Senator calls for relief

WASHINGTON – June 16, 2015 – (RealEstateRama) — Soon after U.S. Senator Claire McCaskill called on the Department of Housing and Urban Development to halt evictions on 12,000 Americans at risk of being removed from their homes, the agency announced that it would do exactly that, giving lenders a new option that could allow for widows and widowers to remain in their homes.

“Thousands of Americans were at risk of eviction and homelessness, often because their now deceased spouse was encouraged to remove the name of a younger spouse from a reverse mortgage,” said McCaskill, the top-ranking Democrat on the Senate Special Committee on Aging. “This policy change will allow these seniors the opportunity to stay in their homes, which is a right thing to do for both the individual and lender.”

Reverse mortgages are a tool that seniors can use to tap into their home equity and increase their quality of life during their retirement years. However, some lenders advised couples to remove the younger spouse from the deed in order to receive a more favorable payment. Roughly 12,000 spouses, disproportionately women, now face foreclosure and eviction after the death of their loved one. In August of 2014, the Department of Housing and Urban Development had declared that, moving forward, non-borrowing spouses could remain in the house even after the death of their borrowing spouse, provided some requirements were met. However, loans made before that time were not covered by the Department’s actions.

Last week McCaskill wrote Secretary Julian Castro concerning this issue and asked that his Department use its authority to protect non-borrowing spouses facing eviction due to loans issued before 2014. On Friday, the agency complied with McCaskill’s request, stating that so long as the non-borrowing spouse was current with taxes and property insurance, the lender could assign the loan to HUD in lieu of evicting the surviving non-borrowing spouse

“…it is within your power to ensure that all surviving spouses are treated equitably, regardless of when their partners entered into a reverse mortgage. I therefore ask that your agency immediately act to temporarily prevent imminent forecloses on surviving spouses…” McCaskill wrote to Castro.

McCaskll has been a champion of strengthening consumer protections and program integrity of the reverse mortgage program since chairing a 2007 Special Committee on Aging hearing on the matter. McCaskill authored legislation that would increase criminal penalties for fraud, strengthen counseling, and improve program integrity and enforcement activities in an effort to protect taxpayers, seniors and this program for those who must rely on their home equity for retirement.

A copy of McCaskill’s letter is available online HERE.

Visit mccaskill.senate.gov/consumers to learn more about McCaskill’s fight to strengthen protections for American consumers.

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