A reverse mortgage, specifically a Home Equity Conversion Mortgage (HECM), can provide retirees access to home equity without monthly mortgage payments. However, if only one spouse qualifies as a borrower (age 62 or older) and the other does not, that spouse is called the “non-borrowing spouse.” For many years, this non-borrowing spouse faced the risk of foreclosure once the borrowing spouse died or moved to long-term care.

Recognizing this problem, the Department of Housing and Urban Development (HUD) and the FHA introduced “Non-Borrowing Spouse Protection” for HECMs originated on or after August 4, 2014. This protection prevents the loan from becoming due and payable immediately upon the death or permanent absence of the borrowing spouse, allowing the surviving spouse to remain in the home.

How Non-Borrowing Spouse Protection Works

When the borrowing spouse dies or leaves the home for more than 12 consecutive months (for example, entering a nursing home), the loan repayment is deferred rather than immediately required. The surviving non-borrowing spouse can live in the home for their lifetime, provided they:

  • Were legally married to the borrower at the time the loan was originated and remain married through the borrower’s death.
  • Have the home as their principal residence and continue to live there.
  • Keep the loan in good standing by paying property taxes, homeowners insurance, and maintaining the home condition.
  • Establish legal ownership rights within 90 days after the borrower’s death, typically by having their name on the title or through estate planning documents.

Unlike co-borrowers, non-borrowing spouses cannot receive additional loan advances or payments. The loan balance continues to accrue interest and will become due when the spouse sells the home, permanently leaves, or dies.

Important Eligibility Criteria

If the non-borrowing spouse does not meet these requirements, the lender can declare the loan due and payable, potentially leading to foreclosure. Active communication with the loan servicer and submitting required documentation—such as marriage and death certificates—is essential.

Clarifying Common Misconceptions

  • Is protection automatic? No; you must notify and prove eligibility to the loan servicer.
  • Can the non-borrowing spouse access more funds? No; the loan is deferred but not expanded.
  • Do home expenses still apply? Yes; property taxes, insurance, and upkeep must be paid to maintain protection.

Additional Resources

Learn more about Reverse Mortgages and Department of Housing and Urban Development (HUD) Loans on FinHelp.io.

For authoritative information, visit the Consumer Financial Protection Bureau’s Guide on Reverse Mortgages.