Source: US State of New York
AG James Asks HUD to Take Immediate Action to Ensure that Senior Citizens
with Reverse Mortgages Will Not Be at Risk of Foreclosure Due to COVID-19 Crisis
NEW YORK – New York Attorney General Letitia James today led a bi-partisan coalition of 26 attorneys general in calling on the U.S. Department of Housing and Urban Development (HUD) to take immediate action to protect senior citizens from homelessness as a result of the coronavirus disease 2019 (COVID-19) public health crisis. In a letter to HUD Secretary Ben Carson, the coalition recommends specific actions that can help ensure senior citizens with reverse mortgages do not lose their homes to foreclosure as result of the COVID-19 pandemic.
“This pandemic is harming all Americans, but our senior citizens are especially at risk,” said Attorney General James. “While HUD has taken critical first steps to pause reverse mortgage defaults and foreclosures, we must do more to anticipate and counter the long-term economic effects of this pandemic, especially since our older neighbors will remain vulnerable to COVID-19 after HUD’s immediate relief ceases. This is about ensuring seniors have access to permanent housing and don’t have to stare down the barrel of homelessness in the future.”
Reverse mortgages in the United States are typically home equity conversion mortgages (HECM) that are insured by HUD and that do not require borrowers to make monthly mortgage payments. Instead, mortgage borrowers just pay recurring charges (such as property taxes and homeowner’s insurance) and must keep their homes in good condition to avoid defaulting on their loan. Because HUD insures these loan products, the agency sets the rules that the servicers of these reverse mortgages must follow — enabling it to help homeowners who fall behind on these obligations. This is why HUD’s actions are even more critical in providing housing stability for homeowners during the COVID-19 crisis.
Over the last two months, HUD has taken significant steps to limit reverse mortgage foreclosures as Americans battle COVID-19. While Attorney General James and the multistate coalition applauds HUD’s efforts to implement relief for reverse mortgage borrowers — as included in the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) — today’s letter outlines additional steps that would bolster the effectiveness of HUD’s existing actions, and would help ensure that seniors with reverse mortgages do not lose their homes because of their inability to pay recurring charges during this crisis.
The multi-state coalition is asking HUD to:
- Require servicers to educate their customers about available relief, so that no senior citizen slips through the cracks and loses their home.
- Grant servicers additional flexibility to allow reverse mortgage borrowers who need property tax assistance to seek relief from local taxing authorities (Currently, reverse mortgage holders cannot take advantage of most local tax relief programs because such programs usually create a property lien that protects the local government’s ability to collect any past-due tax revenues.).
- Grant automatic renewals to homeowners with “at-risk” extensions (This existing HUD program prevents foreclosure for homeowners who have defaulted on their reverse mortgage, are over 80 years old, and have a critical medical condition. But unless HUD takes action, these borrowers will need an annual medical certification in order to extend that relief for another year.).
- Allow servicers to add missed property tax and insurance payments to the end of a reverse mortgage loan balance, so that homeowners do not need to make up these missed payments as soon as a forbearance period ends.
- Prepare now to extend relief beyond 12 months, if needed, to protect senior homeowners affected by COVID-19.
Attorney General James is working to ensure that both the mortgage industry and government entities work together to provide effective long-term relief for homeowners affected by the COVID-19 pandemic. Attorney General James will also be working to connect New Yorkers with information and available services to access loan modifications through HUD and the Federal Housing Finance Agency, as well as through the providers of other mortgage relief programs.
Joining Attorney General James in sending today’s letter to HUD are the attorneys general of California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, the District of Columbia, and Puerto Rico.
This matter was handled by Assistant Attorneys General Mark Ladov and Elizabeth M. Lynch, under the Supervision of Consumer Frauds Bureau Chief Jane M. Azia and Deputy Bureau Chief Laura J. Levine. The Consumer Frauds and Protection Bureau is a part of the Division of Economic Justice, which is overseen by Chief Deputy Attorney General for Economic Justice Christopher D’Angelo and First Deputy Attorney General Jennifer Levy. Chief Deputy Attorney General for Social Justice Meghan Faux also provided additional support in this matter.