The Department of Housing and Urban Development was sued this week by the American Association of Retired Persons (AARP) Foundation Litigation on behalf of three homeowners facing foreclosure on HUD guaranteed reverse mortgages issued to their late spouses. The Foundation claims that the surviving spouses are facing "imminent foreclosure and eviction from their homes" because HUD abandoned federal rules and violated protections assigned to those spouses.
The suit, which was filed in the filed in U.S. District Court for the District of Columbia, seeks an injunction against pending foreclosure and/or eviction actions and prohibits HUD from abandoning long-standing rules that would allow foreclosure on the surviving spouse of a deceased reverse mortgagor. That action it says does not just violate HUDs own rules but violates existing contracts between borrower and lender and negates a key purpose for which those borrowers had been paying an insurance premium to HUD.
The spousal inclusion information has appeared in HUD promotional materials since 1994 but despite the clear language, AARP's attorneys maintain HUD has never recognized the protection this non-displacement provision affords the spouse of a homeowner and abandoned it in 2008, stating that if spouses or heirs wished to retain the house after the death of the mortgagee they had to purchase or refinance the house at the full mortgage value. This, plaintiffs say, means that the effect of this change is that a stranger can purchase the property for its appraised value, but a surviving spouse cannot and in the current depressed market a family member who wishes to retain the property may not be able to obtain financing sufficient to pay off the HECM loan. It also means that the surviving spouse, if he or she cannot pay the full value of the mortgage, may be displaced from the home.
...(read more)
Source: http://www.mortgagenewsdaily.com/03092011_reverse_mortgages.asp
No comments:
Post a Comment