If a Deferral Period ceases, can a Mortgagee offer the Non-Borrowing Spouse an opportunity to cure the default?

If a Deferral Period ceases or becomes unavailable because a Non-Borrowing Spouse no longer satisfies the Qualifying Attributes for a Deferral Period and has become an Ineligible Non-Borrowing Spouse, a Mortgagee may not provide an opportunity to cure the default.
In the event a Deferral Period ceases because the Home Equity Conversion Mortgage (HECM) has become eligible to be called due and payable and is in default for a reason other than death, the Mortgagee must provide an Eligible Non-Borrowing Spouse with 30 days to cure the default.

  • If the default is cured within such time, the Deferral Period must be reinstated, unless:
    • The Mortgagee has reinstated the Deferral Period within the past two years immediately preceding the current notification to the Eligible Non-Borrowing Spouse that the mortgage is due and payable;
    • Reinstatement of the Deferral Period will preclude foreclosure if the mortgage becomes due and payable at a later date; or
    • Reinstatement of the Deferral Period will adversely affect the priority of the HECM lien.
  • If the default is not cured within such time, the Mortgagee must proceed according to the established timeframes to start foreclosure and reasonable diligence in prosecuting foreclosure.

For more information see Mortgagee Letter 15-02 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-02477