If my spouse dies or moves to a nursing home, what happens with my reverse mortgage?
It will depend on whether you and your spouse are co-borrowers on the reverse mortgage loan, and when the loan was made.
Most reverse mortgages are Home Equity Conversion Mortgages (HECMs). The Federal Housing Administration (FHA), a part of the Department of Housing and Urban Development (HUD), insures HECMs. Under the rules governing HECMs, if you live with a spouse, it is a good idea to make your spouse a co-borrower when you apply for a HECM if you both meet the qualifying age of 62. If you are a co-borrower, you can continue living in the home even if your spouse dies or moves out to a nursing home. A surviving co-borrower can also receive money from the loan.
Sometimes, only one of the spouses is listed as a borrower on the loan. For example, one spouse might not have been 62 yet, and would not have been qualified to be a HECM reverse mortgage borrower. In that situation, what happens to a surviving non-borrowing spouse depends the timing of the HECM.
Any HECM loans with case numbers assigned on or after August 4, 2014, allow eligible non-borrowing spouses to remain in the home after the borrower dies if they meet certain initial and ongoing requirements. To qualify as an “eligible non-borrowing spouse,” you must:
- Be married to the borrower at the time of the loan closing and remain married to the borrower for his/her lifetime;
- Note: If you marry the borrower AFTER he/she takes out a HECM, you will not be eligible to remain in the home.
- Be specifically named as a non-borrowing spouse in the HECM documents;
- Occupy, and continue to occupy the home as your principal residence; and
- The borrower must certify at the time of the loan closing, and each year thereafter, that you are his or her spouse; you must certify at the time of closing that you are an eligible non-borrowing spouse.
If you are a non-borrowing spouse, make sure your spouse sends the annual certification and that you comply with all the requirements applicable to you so that you may be qualified to remain in the home when the borrower dies.
Assuming you have met all the requirements above, you as an eligible non-borrowing spouse may remain in the home when the borrower dies if you:
- Are able to prove legal ownership or obtain the legal right to remain in the property (for example, a lease) within 90 days of the borrower’s death.
- Note: Make sure you meet this qualification while the borrowing spouse is still alive, since 90 days is a short time. You may want to consult with an attorney.
- Meet the obligations of the loan to pay taxes and insurance and maintain the property.
- Annually certify that you are the late borrower’s non-borrowing spouse, and occupy the home, securing the loan as your principal residence.
Be aware that although you may be permitted to remain in the home, you are not eligible to get any money from the reverse mortgage, including any money remaining in a set-aside account established for the payment of property taxes and insurance.
To make sure you and your spouse understand these rules and meet these requirements, talk to your lender or servicer, a housing counselor, or attorney – they can help you be prepared should the borrower die before you.
If you are a non-borrowing spouse or partner in a home with a HECM with a case number assigned before August 4, 2014, you may not be able to keep the home without repaying the loan unless your lender or servicer elects to apply to HUD to allow you to stay in the home after the borrower dies. You should contact your lender or servicer to ask if they would seek this approval for you. Both you and the lender or servicer must meet a number of conditions within specific time frames, and HUD must approve the application.
If you think you might qualify for this benefit, not only should you reach out to your lender or servicer, but also a housing counselor or an attorney to help you with this process.
If you are considering something like changing the title or ownership of your home, make sure to talk with a lawyer or with a HUD-approved counselor. To talk to a HUD-approved reverse mortgage (HECM) counselor visit HUD's counselor search page, or call HUD's housing counselor referral line at (800) 569-4287.
Here are two ways to find a lawyer:
- The Legal Services Corporation (LSC) offers a directory of legal services that are free for eligible clients.
- The American Bar Association (ABA) also offers a directory to help you find a lawyer.