A group of consumer advocates has expressed concern over non-borrowing spouses facing foreclosure and eviction following the death of a borrowing spouse, according to comments the group recently submitted totaling 65 pages to the U.S. Department of Housing and Urban Development (HUD).
These requirements keep many from qualifying, because in many cases the surviving spouse is younger, and on top of that, they don’t have the money available to pay such a large sum.
One of the big problems the groups are facing with this issue is that HUD has not revealed how many people are affected or how many non-borrowing, surviving spouses are facing eviction and foreclosure.
“Though HUD stated that it would consider the cost, legality and practicality of its action with respect to non-borrowing spouses, the agency has not provided data or information to support its analysis, conclusions or recommendations,” the letter said. “Indeed, the agency has yet to provide information on the scope of the problem. Nor has HUD disclosed information regarding the actual number of outstanding loans with non-borrowing spouses.”
In a report by the Consumer Financial Protection Bureau last month on consumer complaints regarding reverse mortgages, the most frequent complaint was on surviving, non-borrowing spouses suddenly facing foreclosure upon the death of a borrowing spouse. The report stated that “some consumers report that their loan originator falsely assured them they would be able to add the other spouse to the loan at a later date. Similarly, others complained that the loans are often difficult to repay and that lenders often throw obstacles in the way when consumers take steps to avoid foreclosure.
The government now requires loan underwriters consider the non-borrowing spouse’s age, which solves the problem for newly originated loans. It remains to be seen what will happen with those originated before last August, however.