Congresswoman Maxine Waters (D-Ca.), member of the Committee on Financial Services, introduced a bill on October 27 that is aimed toward preventing unfair foreclosures among seniors with Home Equity Conversion Mortgages.
Titled “Preventing Foreclosures on Seniors Act,” the legislation focuses on reforms to HUD’s HECM program that would help borrowers and non-borrowing spouses of reverse mortgage borrowers avoid losing their homes.
Among other provisions, the bill proposed reforms to the HECM program that would require loss mitigation for borrowers in default; enforce that non-borrowing spouses are treated as borrowing spouses for the purpose of loss mitigation; require mandatory assignment of HECM loans to HUD if there is an eligible non-borrowing spouse living in the home upon the death of the borrower; enforce mortgagees to provide prompt notice to a surviving non-borrowing spouse of their eligibility to remain in the property if they meet certain basic requirements; and prevent foreclosures on non-borrowing spouses once the loan is assigned to HUD, unless they fail to meet certain basic requirements.
“Unfair foreclosures on seniors continue to be a problem in the Department of Housing and Urban Development’s reverse mortgage program. This bill makes key changes to help seniors who are vulnerable to foreclosure under the current program,” Waters said in a press release. “It is critical that we take every possible step to ensure that seniors who take out reverse mortgages, and particularly their surviving spouses, do not unfairly lose their homes.”
Congressman Denny Heck (D-Wa.) is an original co-sponsor on the bill, which has backing by the National Consumer Law Center (NCLC) and the California Reinvestment Coalition (CRC).
The proposed legislation comes following several reverse mortgage program changes that also are geared toward protecting borrowers and non-borrowing spouses, including changes in 2015 that provided more opportunities for those individuals to remain in their homes in the event that a borrower has passed away.
Written by Carlo Calma
