Consumer Groups to FHA Commissioner: More Protections Needed For Reverse Mortgage Borrowers

Consumer Groups to FHA Commissioner: More Protections Needed For Reverse Mortgage Borrowers

While a 60-day moratorium on all foreclosures and evictions is “an important first step,” the National Consumer Law Center, along with 41 other consumer advocacy organizations, urged FHA Commissioner Brian Montgomery to implement more protections specifically for reverse mortgage borrowers impacted by the COVID-19 pandemic.  

In a letter dated March 24, 2020, NCLC proposed that “HUD further protect this vulnerable population by taking these crucial steps:

  • Make clear that the reasonable diligence deadline for servicers to initiate an assignment through the MOE program for surviving spouses also has been extended by 60 days, and consider further extensions as needed;
  • Direct servicers to make property charge payments only where no repayment arrangement, extension, or tax foreclosure moratorium has been granted by the taxing authority, because otherwise it will put many homeowners at risk of reverse mortgage foreclosure at a time when the taxing authority was not threatening to foreclose;
  • When servicers do make tax payments on behalf of HECM borrowers during the state of emergency, provide for an additional 6-month delay in taking the first legal action to foreclose, so that homeowners have the opportunity to repay the advances, and encourage full use of loss mitigation to prevent avoidable foreclosures;
  • Expand access to loss mitigation for qualified homeowners by extending all deadlines related to acceptance of loss mitigation options, including the return of any loss mitigation agreements, and by allowing for new repayment plans when borrowers default during the national emergency; and
  • Extend the foreclosure and eviction moratorium announced on March 18th to at least six months, with a commensurate extension of reasonable diligence deadlines imposed on mortgagees.”

“We commend HUD for taking the crucial first step of imposing a foreclosure and eviction moratorium,” the letter adds, “but more assistance is needed to adequately protect borrowers through this crisis, and we ask that the agency take these further steps to protect reverse mortgage borrowers.”