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New Rules Protecting Non-Borrowing Spouses

To qualify for a reverse mortgage, one must be at least 62 years.  In the past, when there was a younger spouse, the couple did not qualify for the HECM.  While it’s best for both husband and wife to be on title and borrowers on the loan, there are now protections for younger spouses.   It is to be evaluated seriously as the younger spouse must deed off title.  It is important to talk to an attorney to  properly set up the deed or living trust so the non-borrowing spouse (NBS) can be quickly added to title if the ‘borrowing’ spouse passes.  The younger spouse has the right to remain in the home indefinitely during what’s called a deferral period if all the requirements are met. The surviving spouse must transfer the home into their name and become the legal owner within 90 days of death. Any funds remaining in the reverse mortgage account will not be available to the younger spouse.

In order for the Deferral Period to apply to a Non-Borrowing Spouse, the NBS must:
1. Have been the spouse of the borrower at the time of loan closing and remain married for the duration of the borrowing spouse’s lifetime;
2. Have been properly disclosed at origination and specifically named as a Non-Borrowing Spouse in the loan documents; and
3. Have occupied, and continue to occupy, the property as the Principal Residence.

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