Reverse Mortgage Eligibility

Undoing the mortgage entitlement

Reversed mortgage rules re. Survivors married partners referred to Hud. At Bennett v. Donovan, three applicants filed an action against the Secretary of the Ministry of Housing and Urban Development (HUD) claiming that the provisions transposing the Home Equity Conversion Mortgage (HECM) programme infringed the Administrative Procedure Act (APA). HECM' s are reverse Mortgages as our reader knows - when an older person completes an HECM, they get cash in return for a safety interest in their home.

The three claimants in the present case were older surviving dependants whose late husbands had completed an HECM on their apartments. At any rate, the late husband was the only name on the document and the only debtor on HECM. Since a home can lose value over the years, Congress has established a HECM policy under HUD.

According to the contested HUD rules, if a mortgage holder dies and the living partner is not also on the mortgage, the creditor can claim an immediate repayment of the remaining amount. In Bennett, the claimants claimed that the HUD provisions infringed German government legislation because they did not provide protection to non-Mortgagor married partners. The applicants quoted USC 1715z-20(j) in the grounds of their arguments, stating that'[t]the secretary may not secure a mortgage to convert a home into own capital under this section, unless such a mortgage provides that the owner's duty to fulfil the lending commitment is postponed until the owner's life, the selling of the home or the commencement of any other event referred to in the secretary's rules.

When used for the purpose of this sub-section, "homeowner" shall mean the wife of the homeowner." Claimants reasoned, and the tribunal accepted, that the clear text of the law protected non mortgage debtor married couples from the obligation to pay. With a view to determining whether the way in which an agent interprets a law should be respected, a tribunal will consider whether Congress has clarified itself in the law.

There was agreement among both the claimants and the authorities that the case called into question the significance of the last sentence: "For the purpose of this sub-section, the expression "homeowner" shall include the marriage partner of the homeowner." U.S. District Court for the District of Columbia found that the law was clear and the claimants were not required to pay.

Consequently, the Tribunal referred the case back to HUD, stating that HUD had infringed German legislation when it insure the reverse mortgage of the plaintiff's spouse.

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