By Thomas G. Wolfe, J.D.
Expressing their concern that President Donald Trump’s fiscal-year 2018 budget would “remove protections for widows and widowers facing eviction under the reverse mortgage program,” Senators Catherine Cortez Masto (D-Nev) and Marco Rubio (R-Fla) have jointly submitted a letter to the Secretary of the Department of Housing and Urban Development and the Director of the Office of Management and Budget. The May 31, 2017, letter asks the HUD Secretary and OMB Director to provide a written response “outlining the rationale underlying this proposed change.”
Both legislators are members of the Senate Special Committee on Aging. While seeking to address a nationwide concern, the letter observes that Rubio’s home state of Florida has the “largest percentage of seniors in the country and countless retirement communities,” and Cortez Masto’s home state of Nevada has a “booming elderly population” with unique housing challenges.
Concerns. The two senators note that while reverse mortgages “can provide an important source of financial security,” a significant concern arises “when a homeowner dies, and is survived by a spouse that was not an original borrower on the reverse mortgage.” Under previous Home Equity Conversion Mortgage (HECM) rules, such a surviving spouse often faced having to pay the loan balance in full or face eviction at a time when he or she was already grieving the loss of a spouse.
While Rubio and Cortez Masto observe that, in recent years, HUD has taken action to “reform the HECM program, protect consumers, and shield taxpayers from the risk posed to the FHA’s insurance fund,” the senators discern a different trend under the Trump Administration. “It appears that the President’s FY 2018 budget seeks to make a change to the reverse mortgage program,” they state. In particular, the senators point out that a “portion of the HUD budget seeks to amend language in the National Housing Act pertaining to safeguards which protect widows and widowers from displacement.”
Request. Accordingly, Cortez Masto and Rubio request additional information about the President’s budget impacting the ability of seniors to stay in their homes after the death of a spouse. Moreover, the letter asks HUD and the OMB to provide the rationale for the apparent policy change.
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