When must Mortgagees provide a HECM Deferral Period Notice to an Eligible Non-Borrowing Spouse?

Within 30 days of receiving notice of the last surviving borrower’s death, the Mortgagee must provide to the Eligible Non-Borrowing Spouse a notice including information on:

  • the eligibility requirements for a Deferral Period;
  • the conditions and requirements for the continuation of a Deferral Period; and
  • the ability to cure the default (due to failure to maintain the property or failure to pay property charges) in order to be in compliance with the requirements for the continuation of a Deferral Period.  

When a Deferral Period ends because an Eligible Non-Borrowing Spouse has become an Ineligible Non-Borrowing Spouse, the Mortgagee must notify the Non-Borrowing Spouse, within 30 days of the end of the Deferral Period, that:

  • the Deferral Period has ended;
  • the Home Equity Conversion Mortgage (HECM) is due and payable; and
  • the borrower’s estate, heir, or other party with authority to dispose of the  property may either satisfy the HECM, sell the property for at least the lesser of the outstanding principal balance or 95% of the appraised value, or provide the mortgagee with a Deed in Lieu of foreclosure.  

When a HECM is in a Deferral Period, if any other applicable requirements for deferral cease to be met, the Mortgagee must notify the Eligible Non-Borrowing Spouse within 30 days that:

  • a requirement of the Deferral Period has not been met;
  • the Eligible Non-Borrowing Spouse has 30 days to cure; and
  • failure to cure within such time will result in the Deferral Period ending and the HECM becoming due and payable.  

For more information see Mortgagee Letter 15-10 available at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee

Any questions may be directed to the FHA Resource Center at Toll-Free (800) CALLFHA (225-5342) or by email to answers@hud.gov.  Persons with hearing or speech impairments may reach this number by calling the Federal Information Relay Service at (800) 877-8339.

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-02464