WASHINGTON (2/2/15)--A new policy from the Federal Housing Administration (FHA) allows it to postpone foreclosure that would normally be triggered by the death of the last surviving mortgage borrower.
The new policy falls under the FHA's Home Equity Conversion Mortgage (HECM) program, and gives FHA-approved lenders the option to delay calling HECMs with eligible "non-borrowing spouses" due and payable.
The new FHA new guidance will allow reverse mortgage lenders to assign eligible HECMs to the U.S. Department of Housing and Urban Development (HUD) upon the death of the last surviving borrowing spouse. This allows eligible surviving spouses the opportunity to remain in the home despite their non-borrowing status.
Under the new policy, lenders will be allowed to pursue claim payments for HECMs by:
The action allows lenders to offer this treatment for eligible HECMs with FHA case numbers issued before Aug. 4, 2014.