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Reverse Mortgage with Spouse Under 62 Leaves Vulnerability

July 28th, 2011

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Dear All Reverse, My husband qualifies but I am under 62 and unable to go on the reverse mortgage with him. (Age 55) I’m told that in order for my husband to be eligible for a reverse mortgage my name would have to be removed from the deed because I am not 62. As a spouse this concerns me. I would like to keep my name on this important legal document. My husband expects to close on his reverse mortgage soon. Should I demand to keep my name on the Deed? Thank you for your time and attention to this matter. – Phyllis

Hi Phyllis,

We get this question quite a bit and let me start by telling you that I am not an attorney and I cannot give you legal advice regarding protecting your “title” to the property. Different states have different laws with regard to ownership, what you can do with trusts, and Deeds, signing and not recording, etc. Some states/counties also trigger taxation issues when one spouse is removed from title that often is not discovered until after the change raising taxes on the property that no one expected. I would encourage you to seek legal counsel to protect your ownership rights should something happen to your spouse prior to ever removing yourself from the title of the joint home.

Now, having said that, you have the second issue regarding the loan itself. The reverse mortgage loan becomes due and payable when the last borrower on the loan permanently leaves the residence (moves, passes away, etc). If something were to happen to your husband in the next few years, and we all hope things like this never happen but accidents and illnesses never happen when we want them, and your husband were to pass away, the reverse mortgage would become due and payable at that time. If you and your husband have a set plan in place in this instance that would protect you such as an insurance policy that would pay off the reverse mortgage, a second home that you could move into if you had to sell this home, etc., then it might not be financially devastating as well as emotionally devastating at the time. However, if you had no viable alternate plan and you could not qualify for a loan by yourself to pay off the reverse mortgage at that time, you would be forced to sell the home and move at that time. Who can say what the market for selling would be like, how much you would be able to get and what you would be able to buy.

We have received too many letters from spouses under 62 who did remove themselves from title to complete the reverse mortgage, had no back-up plan and then when something happened to the spouse on the loan, they had the issue of trying to figure out where they would live in addition to trying to live with the grief of losing a spouse then they ask us if we can help them because they say they were never advised otherwise by their lender at that time. This is why we do not recommend this action unless borrowers have absolutely no choice and would lose the home to foreclosure anyway or have a viable plan in the instance the souse on the loan should pass away prior to the younger spouse (which theoretically will happen most of the time even without an accident).

I think you can probably set something up with the attorney to protect yourself regarding the ownership issue. Whether or not your name appears on the Deed, depending on the laws of your state, I believe they can devise a plan to protect your ownership rights but only the attorney can tell you for sure. However, don’t forget that the reverse mortgage becomes due and payable if something happens to your husband and you would be required to pay the loan in full at that time or to sell the home to pay off the loan. If you are not prepared for that eventuality, it would be a very bad time to find out that in addition to recently losing your spouse, now you have to move.

“Reverse Mortgage Spouse Under 62″ by www.allrmc.com

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21 Responses to “Reverse Mortgage with Spouse Under 62 Leaves Vulnerability”

  1. Gloria says:

    Need help. Would got a reserve mortgage about 5 years old. I wasn’t 62, but we decided to process with the reserve mortgage, with the understanding that at 62, I would be able to put my name back on the deed or reserve mortgage. I later found out that we would have to refinance our home in order to get me back on the loan, and start back paying another house note. What do I have to do to get my name back on the deed or reserve mortgage?

  2. Mike Branson says:

    Hi Gloria,

    We always advise borrowers against removing one spouse from title to complete a reverse mortgage unless specific plans have been made for just this eventuality. The problems are that you can’t just add another borrower to title, HUD has specific guidelines that must be met in order to even qualify for a HECM to HECM (reverse to reverse) refinance and with a loan where the balance rises and a younger borrower received less money, unless the loan limit has gone up and you property was above the limit that was in effect at the time or there has been a large increase in your property’s value, most borrowers don’t meet the HUD requirements for the refinance. You can contact a reverse mortgage specialist and let them put your information into the HUD Calculator and they will be able to determine if you meet the requirements for refinance and adding a previously under-aged spouse does give the lender some leeway.

    To be able to determine eligibility, an originator will need to review your most recent statement on your current reverse mortgage and will also need to know when you closed the loan and some of the original information. If you have the closing statement from that transaction (or the Note and Deed), along with the current statement, your birthdates and an estimate of your property’s current value the originator will be able to determine if the refinance to a new reverse mortgage can be done.

    Remember that as your spouse’s heir, you will always inherit the property, but that may be of little comfort if you are forced to sell if anything happens at a time when you are not ready to move and you cannot refinance or pay off the loan. I sincerely wish I had been given the opportunity to discuss this with you before you had dropped from title and closed the loan – but I hope your circumstances allow you to refinance at this time.

  3. lucila says:

    Hi, I like to know if husband and wife are on the title, but only husband in the mortgage loan. Will they both need to sing a reverse mortgage?

    Thank you for your attention to this matter.

  4. Mike Branson says:

    Hi Lucila,

    If both are on title than both will need to be counseled and both will have to be on the mortgage. This is important as many drop one spouse from the title for qualification when one borrower is not old enough or because the couple receives more money when just the older spouse goes on the loan. This is something we do not recommend lightly.

    Because the loan becomes due and payable when the last borrower on the loan permanently leaves the home or passes, if the younger borrower who would not be on title or on the loan is not ready to move when this event occurs and you do not have other provisions in place beforehand to provide for this, it could create extreme hardships on the remaining spouse. Some provisions borrowers have informed us of that worked for them is an insurance policy that paid the mortgage off when the older borrower passed; a second property that the borrowers owned that the spouse intended to occupy after the passing of the older borrower anyway; and also the plans that the younger spouse fully intended to move to another state to be with family if and when the older spouse was no longer living anyway. Absent a clear alternative such as one of these, it would be very sad for the spouse of a reverse mortgage borrower to be uprooted from his/her home at the worst possible time if that was not in the plans simply because the loan was now being called due and payable with the passing of the borrower and the remaining borrower did not have the means to refinance the loan in his or her own name at that time.

  5. Paul says:

    Is there a reverse Mortgage’s for under 62? we’re 59 and wanted to see any options for us?

  6. Mike Branson says:

    Hi Paul,

    There are very few proprietary or private programs available in the marketplace today. Prior to the market collapse in 2008, there were several programs that did offer loans to borrowers younger than 62 years of age) but typically the loan to values available were very low. However, I am not aware of any proprietary programs available at this time for borrowers aged 59…but that does not mean that there is no way one could exist or that one will not in the near future.

  7. Jesse says:

    At the time I got my reverse mortgage my wife was not 62. She will be 62 this year. I was told by the loan officer when my wife reached the age of 62 she could apply for a reverse mortgage in her name Is this Correct? .

  8. Mike Branson says:

    Hi Jesse,

    I’m not sure I understand 100% so let me make sure I’m answering your question correctly. I think what you want to know is whether you can refinance your current reverse mortgage into both your name and your wife’s name now that she is 62 years of age since you took out the first loan in your name only. If this is your question, then the answer is yes, you can refinance now in both your names and HUD allows this scenario as a valid reason to waive the 5 Times Benefit Rule (this is the rule that requires borrowers to receive a minimum of 5 times the amount of the cost of the loan in benefits from the new loan).

    If you are asking me if your wife can now go get a new reverse mortgage on another property in her name, this is a different situation completely and one for which the answer would change depending on the circumstances. Under the Equal Credit Opportunity Act (ECOA), every individual is entitled to apply for credit under their own name. However, under the reverse mortgage program, you can only do a reverse mortgage on your primary residence and if the previously under-aged spouse has not been living in a property in the past, the program may not allow her to move into a new property as her primary residence to qualify. Only certain life changes are recognized as acceptable reasons for this type of move and then for the borrower to obtain a reverse mortgage in her own name if you keep the original property with the reverse loan intact.

    Also, lenders are now changing their requirements for borrowers who wish to obtain a reverse mortgage by dropping one spouse from title in order to qualify or to receive more money under the program due to the age of the borrowers. Effective January 1, 2013, most of the industry moved to disallow any loans which include a non-borrowing spouse for a reverse mortgage unless borrowers can prove; 1)the non-borrowing spouse was never on title, 2) can prove that they do not occupy the premises, and 3)that they have no community property interest in the home to be covered by the reverse mortgage. The scenario you described, that you received your reverse mortgage before your spouse was 62, is not available with most lenders now unless you could prove the 3 requirements above.

  9. I am very concerned that I will lose my home in Galveston, TX. WE bought the home in 2000. My husband decided that the Reverse Mortgage was a “GOOD” thing to do as daughter was ill, even though NOT at home(ADULT with her own children)WE only had 6,000.00 in Equity . WE paid 126,000 for the home. I (wife) was 57 yrs, old. WE recieve NO Monthly Payments, WE recieved 6,000.00 at Closing, Maybe LESS. WE recieve a Monthly Statement from Financial Freedom( no longer canbe found by that name) and WE are charged over 900.00 Per Month Interest……..My husband is NOW 80 and I am 64. WE have been Married 29.5 YRS. THE ONLY war to put my Name BACK on Original DEED (so they say) is to RE FINANCE and will be SHORT TO CLOSE by over 40,000.00 which they want a Check for ……….I have decided to see an ATTY, HOMESTEAD LAWS in TX., ALSO there is the OPTION of SELLING,,,,,,,,,,,,,,,,,,WE WERE TOLD at CLOSING that WHEN I Became 62 Yrs,old , that my name would be put back on DEED. THEY LIED. I have TRIED to RE Finance ( call theirBluff) and BOTH times the Appraisal went wrong or OTHER “Petty” Problems,,………….This is PRIME REAL ESTATE and maybe, due to Husbands age, They want it……………………….HOW would I be RESPONSIBLE for this property IF he passes First when it is HIS LOAN?????Do you Recommend we sell and go to an APT. WE cannot AFFORD 40 to 50 Thousand $ to have my name on The REVERSE, OUR DR. has said that WE MUST be Secure and Settled. This STRESS is DESTROYING our HEALTH. THANK YOU, Dianne and Jerry Chicca……………..HELP!!!!!!!!!!!!

  10. Mike Branson says:

    Hello Diane,

    I hate to hear stories such as yours. At All Reverse we have always discouraged taking a spouse off title to complete a reverse mortgage loan for just this reason. The true answer is “Yes, you can refinance at 62 in both your names”, but the actual answer is that you can refinance when both spouses turn 62 but chances are extremely good that the with interest that has accrued, the younger age of the new borrower coming onto title at that time and the lower benefits you would receive as a result, you would not receive enough money to pay the current loan off at that time and it would require a large cash infusion on your part to obtain the refinance. There are other provisions that can make such a move safe, but absent those provisions such a move to obtain the reverse mortgage is simply not a good move for most people (a life insurance policy that would pay off the reverse mortgage when the older spouse passed, another home that the couple owned that the younger spouse intended to occupy anyway or plans on the part of the younger spouse to move to be with other family anyway, etc). Lenders are also now changing their guidelines that even though HUD allows this, many will no longer allow borrowers to come off title to close a reverse mortgage loan.

    But none of that helps you with your circumstances since you already closed the loan. I am not an attorney and I cannot give legal advice but I would hunt around and see if you have any of the correspondence from you and the lender at the time which asks and answers the question about adding you to title. The lender does not want your home and cannot just “take” the property. Even if your husband passed, you would have the option to pay off the loan or sell the property as his heir and new owner of the home. HUD requires that they work with you during this time and most servicers will work with heirs for many months to allow them to refinance or sell the property as long as they can see that you are making a good faith effort to do so. If the bank had to ultimately begin foreclosure proceedings, they still have to follow those laws and that process also takes many months from the time they ultimately start those proceedings – it does not happen overnight. If properties sell well and quickly in your area, there should be no reason why you would not be able to sell at that time but the question would be what your equity position would be at the time.

    I cannot comment on any attempt to defraud or give you legal advice, but if you have any of the correspondence from the time you took out the loan and you are going to see an attorney anyway, I would certainly take any guaranteed language that you were given with regard to future refinances.

  11. Really need to be put on the right track, well my husband Mr Gulley was married to his first wife when they were on Reverse Mortgage,from my understanding they were both of age for REVERSE MORTGAGE. My husband first wife has pass on. now my husband and I are now married has been for 5 years and I am underage for Reverse Mortgage , but my question is now that my husband has passed on with me not working cause I took care of my husband up until he pass on. What do I need to do ? Will I be put out on the streets ? My name was not put on the house because of the Reverse Mortgage but the house was WILL to me. I NEED SOME HELP ASAP . Where do I go from here ?

  12. Mohan Babu Uppar says:

    If loan is taken on senior citizen name and spouse off title then it is better in the interest of the spouse that the senior person makes power of attorney which is irrevocable so that the property is safe guarded. However on cannot avoid closure of reverse mortgage loan in case of 1st person expires.

  13. Lawrence Rodriguez says:

    I just finished reading all the above posts and appreciate the input from all of your readers. I am currently considering entering into a Reverse Mortgage even though my wife is not yet 62. She will turn 62 in the next year. At that time we can refinance a new reverse mortgage together. In the mean time, and in case of the worst possible scenario, I feel an adjusted life insurance policy for the amount of money my wife will need to pay off my Reverse Mortgage loan will be required and is justified. I have always taken care of my wife and I want to make sure she can manage all of her living expenses when I am gone, in the same home we have lived in for many years. She has mentioned she will most likely not want to move away.
    I have always tried to look ahead and plan for her care, if I am no longer alive and able to care for her myself.
    I hope by obtaining a life insurance policy for her, I will insure her ability to pay off any mortgage that comes due and is demanded of her.
    In response to your article “Reverse Mortgage with Spouse Under 62 Leaves Vulnerability”, do you think my plan of action would solve the dilemma of leaving my wife vulnerable? Thank you very much for your attention.
    Lawrence Rodriguez

  14. Mike Branson says:

    Hi Glenda,

    You have several options at this point. In the end though, it may turn out that only some will work for you. As the new owner of the home by virtue of the inheritance, you have the right to 1) pay off the loan with other funds available to you; 2) pay off the loan with new financing in your name (refinance); or 3) sell the home and any equity in the home belongs to you.

    The first step is to contact a local realtor or to drive around and look at properties that are selling that are similar to yours to see what your home is most likely valued at. This will give you an idea of whether or not a refinance is a viable option. Once you know an approximate value of the home, you can decide which alternative is best for you. HUD and the lender will work with you as long as they see that you are taking positive steps to pay off the existing mortgage. They do not want to have to initiate foreclosure as they would only have to turn around and sell the house themselves. This should give you some time to determine what you need to do to either keep the home or sell it and move. Remember, if the existing balance on the reverse mortgage is greater than the value of the home, then the lender would allow you to pay off the reverse mortgage by accepting an amount equal to 95% of the current appraised value of the home (which is good if you intend to keep the home).

    If the value of the home is greater than the balance owed, you can sell the property and move into other accommodations, keeping any equity above the payoff amount. You would be able to continue to live in the home while it is being sold – provided that the lender and HUD believe you are actually doing everything to realistically market and sell the home. If you believe that the home will not sell for the balance owed and you do not have the means to purchase the home for 95% of the current value and feel that you must leave, then remember that you will never owe any amount on the mortgage as the heir, regardless of the shortfall and as long as you make a good faith effort to sell the home, you could remain in the home while making other plans for living arrangements up until the lender finally believes that the only way the property will ever sell is if they are the owner and marketer of the home. Unless you give the lender a Deed in Lieu of foreclosure, the lender cannot just take the home and different states have different time frames required for a lender to foreclose and take possession of a property. Knowing this information gives you the opportunity to plan accordingly since the lender is still not receiving any payments from you during this time.

    I wish you the best, this is always a very difficult time.

  15. Mike Branson says:

    Hi Lawrence,

    That certainly is one way that another borrower informed us he planned to cover that eventuality. I will give you the same cautions I gave him: 1) be certain that the policy is ample to cover any increase in the balance over the years. The balance on the reverse mortgage will increase so you don’t want your wife to come up short and still have to sell if the policy does not cover all that is owed and she has no other way to pay off the balance or obtain financing for the difference.

    2) Be sure that the type of policy is not one that is a term policy that will get too expensive after you get to be a certain age or no longer allow for renewal.

    3) Be sure to get the advice of a good financial planner and a good insurance representative. I can help you will reverse mortgages but these folks know the other programs much better and can make certain that you don’t miss any pitfalls I cannot foresee due to the fact that this is not my area of expertise.

  16. Grammy H says:

    I am not on the title of the home to be reversed mortgaged. I will be on the mortgage. Do I have to be put on the title in order to qualify for a reversed mortgage. We are both in our 70s.

  17. Mike Branson says:

    I am not sure I understand your question or what you’re hoping to do. If you are not currently on title and you do not wish to be, there are lenders who will allow you to remain off of the title and the loan and do the loan for the remaining borrower and you would be considered a “non-borrowing spouse”. If this is the action you desire, you would have to attend the counseling and sign several loan documents that you are aware of the transaction and the ramifications, but you would not be on the mortgage in this instance. This can be risky for the non-borrowing spouse because if anything happens to the spouse on title, the loan becomes due and payable and if the non-borrowing spouse has no means to refinance the loan, they would be forced to sell the home and move at a very difficult time in their life.

    I am not sure why you would want to do this though. Unless the home is separate property, is meant to always be separate property and you have other safeguards in place, you would not be protected in the event of your spouse’s passing. We do have incidences where borrowers were married later in life, they both had their own homes, and if the spouse on title to the reverse mortgage property passes first, the plan would be for that property to pass to other heirs and for the remaining spouse to move back to their other residence (another home that they also owned). But absent a plan such as this, I don’t know why you would not choose to go onto the title at this time and also be a full borrower on the loan. This way, both you and your spouse would be protected and either of you could stay in the home for as long as you wanted, regardless of who passes first. Unless there is a very specific reason that you and your spouse do not want to have both of you on title, my suggestion would be for both of you to be on title and on the loan. Check with a local tax expert, most areas do not consider a change of title when adding a spouse a taxable event but I would also verify that in your county.

  18. Peggy Damato says:

    I am 72, I married again 4 years ago. My new husband is 67. I want to do a non-borrowing Spouse (NBS) reverse mortgage for the highest rate to me cash wise. The house is my house, for 20 years. My house is in a Revokable Living Trust. My younger husband will become the trustee in event of my illness or death, he will have control…then his son is 3rd in line as trustee as I am the trustee now. I have one son by adoption in Mexico, not adopted in US, he does not stand to be an heir. NOW, my question is this ~ if I allow my husband to be on the reverse mortgage as a borrowing spouse, will he now own my home as community property in the event I divorce him one year after the reverse mortgage is done? Will I have to then pay this husband to buy back my own property which I owned prior to marriage, which has never had any form of a mortgage on it, which he has never contributed any money to maintain or to pay the HOA fees or elec, water, insurance or anything whatsoever to give him any rights to ownership. I have paid all this always. So my question is, would I be better off to do a NBS? He is a vet, has good income and now has parkinsons, which makes him eligible for an additional $1,700.00 per month in VA benefits. He will be fine without my home. But, will I be fine if he dies and will I have to then share my home equity with his son, because it became “COMMUNITY PROPERTY” when I allowed him to become a borrowing spouse? I believe this is my property and feel it should be kept that way, I resent the government or salesmen pushing me to put this short term marriage partner on my reverse mortgage. NOW, the salesman wants me to pay an attorney to EXPLAIN to my HUSBAND his risks of allowing me to do this! WHAT? I think a divorce will come due to this reverse mortgage issue causing us to fight over my property…..so the government should pay for the divorce, don’t you agree?

  19. Mike Branson says:

    Hi Peggy,

    This is a case of which you really need to seek the advice of competent legal counsel. The reverse mortgage will not make the difference on property rights and right of survivorship and so the best thing I can do for you is direct you to a real estate attorney who can answer these questions for you. I don’t know about the salesman you’re referring to or why he wants you to pay for the attorney to explain anything to your husband, but as a reverse mortgage specialist, I am not licensed or capable of giving you competent legal advice regarding community property and inheritance matters. I’m sorry, but I really would suggest that you spend the time and possibly the fee for one visit to determine which route would be best for you – or if you even want to make any changes at this time based on your goals.

  20. Garrett Browning says:

    The law has changed (Aug ’14) such that a spouse under age 62 may assume the reverse mortgage as-is if the qualifying spouse dies. We are meeting with a reverse mortgage counselor in a few weeks and there is a possibility that a spouse under age 62 may remain on title. Talk to a reverse mortgage counselor — many are grant-funded (free) and are objective.

  21. Mike Branson says:

    Hi Garrett,

    You are correct that the program did change effective August 4th, 2014 and non-borrowing spouses now have a lot more protection than they have in the past but there are a few important distinctions that I think I need to point out. Firstly, all individuals on title must be 62 at the time the loan is granted, spouses who are under the age of 62 may not remain on title when the loan is taken out. The spouse may come back on title after the loan closes and in fact, HUD requires that the non-borrowing spouse does take title to the property within 90 days of the death of the last surviving HECM mortgagor if they wish to have the due on sale deferred. HUD has established requirements that the non-borrowing spouse must meet in order to be eligible to further defer the calling of the loan due and payable and those requirements are all spelled out in their Mortgagee Letter 14-07 (ML 14-07) that can be found on the HUD website here.

    It’s important to note that the under-aged or non-borrowing spouse does not “assume” the reverse mortgage at any time (in fact, the ML 14-07 specifically states that “While the due and payable status may be deferred,… the HECM is not assumable”). When the last surviving mortgagor on the original HECM loan passes, the loan would normally be called due and payable but under the new rules, if there was a qualified non-borrowing spouse at the time the loan was originated, that spouse’s age would be taken into consideration in the amount of benefit the borrower would receive and the loan would go into a deferral period for as long as the non-borrowing spouse continued to occupy the home and meet the conditions outlined in ML 14-07. But one of the reasons that the distinction that the loan is not assumed is so important is that the non-borrowing spouse never assumes the rights of the original borrower(s). For example, if the HECM borrower passes while there is still $50,000 available on the line of credit, the line is frozen and the non-borrowing spouse does not have access to those funds.

    So while the loan does now protect the spouses of reverse mortgage borrowers in that it no longer requires them to move upon the death of the borrower, they cannot be on title to the home at the time the loan closes and they definitely cannot assume the reverse mortgage upon the death of the HECM borrower. May seem like splitting hairs on the distinctions until you actually see what the difference means. There are still many borrowers with spouses under the age of 62 who still choose to continue with the process, but that decision needs to be made knowing all the facts.

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