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26 Attorney Generals Call for Seniors with Mortgage and Loans to Be Pandemic Protected. Texas Ain’t One of Them

As a result of the COVID-19 pandemic, millions of Americans are now facing financial uncertainty; senior citizens have been among the hardest hit. Yet only 26 AG’s -and excluding TEXAS – are demanding their Senior Citizens are protected from Homelessness.

Attorney General Frosh calls on HUD to protect seniors’ homes during pandemic

May 1, 2020

BALTIMORE, MD—Maryland Attorney General Brian E. Frosh on Friday joined a bipartisan 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 COVID-19 pandemic.

In a letter sent 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 pandemic.

“Senior citizens should not lose their homes because the COVID-19 crisis has made it impossible for them to maintain their current reverse mortgage obligations,” said Attorney General Frosh. “We are asking HUD to take additional steps to ensure that vulnerable citizens are not rendered homeless in the midst of this pandemic.”

Reverse mortgages in the United States are typically home equity conversion mortgages (HECM) that are insured by HUD and 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, which enables it to help homeowners who fall behind on these obligations. The coalitions argues that this is why HUD’s actions are even more critical in providing housing stability for homeowners during the COVID-19 crisis.

Per the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act), HUD has taken steps to limit reverse mortgage foreclosures as Americans battle COVID-19. Friday’s letter outlines additional steps that would bolster the effectiveness of HUD’s existing actions and help ensure that seniors with reverse mortgages do not lose their homes because of their inability to pay recurring charges during this crisis, according to the coalition.

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 (an 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; however, unless HUD takes further 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; and

Prepare now to extend relief beyond 12 months, if needed, to protect senior homeowners affected by COVID-19.

Joining Attorney General Frosh in sending today’s letter are the attorneys general of California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Iowa, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Puerto Rico, Rhode Island, Vermont, Virginia, and Washington.

Excluded from the list of course is TEXAS, LOUISIANA, MISSISSIPI, FLORIDA, GEORGIA and ALABAMA.

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26 Attorney Generals Call for Seniors with Mortgage and Loans to Be Pandemic Protected. Texas Ain’t One of Them
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