New reverse-mortgage rules kicking off in the US on August 4 would ensure that married couples have peace of mind when they consider taking out these loans.
Reverse mortgages are home loans for people 62 and older that let them convert home equity into cash. They can be a useful way for homeowners to receive extra income in retirement; the loan must be repaid when the borrower dies, moves or sells the home.
But in some cases in the past, husbands have taken out reverse mortgages and their wives then faced foreclosure when they couldn’t pay off the loans after their spouses died. AARP, an NGO, filed a class-action suit against the U.S. Department of Housing and Urban Development (HUD), saying that HUD didn’t protect the women.
The new rules by U.S. Department of Housing and Urban Development (HUD) are aimed at preventing this from happening to new borrowers taking out reverse mortgages.
Starting August 4, if one spouse takes out a reverse mortgage and then dies, the survivor can continue living in the home without fear of foreclosure as long as she or he continues making the tax and insurance payments and keeps up the maintenance.
The new rules also state that a couple can get a reverse mortgage after August 4 even if only one of the spouses is 62 or older.