If the borrower on a reverse mortgage dies, the lender typically calls in the loan. However, if there’s a co-borrower on the reverse mortgage, this person can stay in the home and continue to draw funds.
For reverse mortgages with FHA case numbers assigned on or after Aug. 4, 2014, a nonborrowing spouse may be eligible to remain in the home without repaying the loan balance, as long as:
- The spouse was married to the borrower at the time of loan closing.
- They remained married until the borrower’s death.
- The spouse was named as an eligible nonborrowing spouse on the loan documents.
The nonborrowing spouse may not continue to draw money from the reverse mortgage.
“They would be protected and wouldn’t be foreclosed upon and left out on the streets, provided that they kept up the property, meaning that they still, outside of the mortgage, have to maintain the taxes and insurance, so it has to be in the same condition,” says Monique D. Hayes, partner at DGIM Law.
