Q & A: Reverse Mortgage Rules and Non-Borrower Spouse

Q: I am 53 and recently married a gentleman who's 67. He wants to buy a home with a reverse mortgage. I am worried about this as I can't be named as a co-borrower according to reverse mortgage rules. What can we do? I am nervous about not having my name on our home and mortgage papers.

A: Two situations lead to younger spouses not being included on a reverse mortgage loan. According to HUD regulations, homeowners under 62 are not eligible to borrow with a reverse mortgage, and the amount available for withdrawal on a reverse mortgage is determined in part by the age of the youngest borrower. A significant age difference between co-borrowers results in a lower payout amount than if an older homeowner takes out reverse mortgage on his or her own.

Not being named on mortgage documents creates certain risks for non-borrower spouses. Most reverse mortgages are insured by HUD under its Home Equity Conversion Mortgage (HECM) program. Under original HUD rules, reverse mortgage lenders may call a reverse mortgage loan due and payable after the elder spouse / borrower passes away or permanently leaves the mortgaged home.

Recent court decisions about reverse mortgages have potentially provided protection for surviving non-borrower spouses, but policy changes announced by HUD in April 2014 become effective with HECM case numbers issued on August  4, 2014 . HUD determined that it has no authority to change rules in place for HECM reverse mortgages approved before August 4, 2014.

Based on these developments, it may be in your best interest to apply for your husband's HECM after August 4, 2014. In the meantime, we suggest researching real estate and community property laws in your state that may impact your decision to proceed with a reverse mortgage.

If you decide to go with a reverse mortgage, please request mortgage quotes from our network of reverse mortgage lenders. They can also answer general questions about reverse mortgages and  help you compare a reverse mortgage to other mortgage options.

Find out how much you qualify for.