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DS News Webcast: Monday 6/15/2015

The Federal Housing Administration on Friday announced revisions to its Home Equity Conversion Mortgage program that will allow FHA-approved lenders to offer more options to eligible surviving non-borrowing spouses. The revisions announced Friday allow for the deferral of due and payable status for reverse mortgages, hence protection from foreclosure, for certain eligible non-borrowing spouses upon the passing of the last surviving borrower for case numbers assigned prior to August 4, 2014.

 

The new changes allow lenders to proceed with submitting claims on HECMs under the new policy for eligible non-borrowing spouses and case numbers assigned before August 4, 2014 by exercising the Mortgagee Optional Election assignment, which allows lenders to assign eligible HECMs to HUD in spite of the last surviving borrower's death and regardless of the amount of unpaid balance on the loan. Lenders may also proceed with submitting claims by allowing claim payment after the sale of the property by the heirs or estate, or by foreclosing and filing an insurance claim under the FHA insurance contract.

 

The number of borrowers who owe more money than their home is worth is slowly decreasing; however, more than half of these borrowers are stuck in an underwater free fall with little to no hope of resurfacing, according to Zillow’s first quarter Negative Equity Report released Friday. The report found that even though the negative equity rate is falling, about 4 million homeowners owed at least 20 percent more than their homes are worth, meaning their homes would have to appreciate by more than the percentage at which they are underwater in order for the borrowers to gain equity.

About Author: Jordan Funderburk

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