Is a HECM borrower eligible if their Non-Borrowing Spouse has a delinquent FHA-insured mortgage?

Yes. Where a Non-Borrowing Spouse has a delinquent FHA-insured mortgage, even if the property is located in a community property state, the borrower is still eligible for a HECM.  Mortgagees (Lenders) must not consider the credit history of a Non-Borrowing Spouse in the credit analysis of the borrower.  Whether the Non-Borrowing Spouse has a delinquent FHA-insured mortgage or not will not affect the eligibility of the borrower for a Home Equity Conversion Mortgage (HECM).
 
For additional information see Mortgagee Letter 2016-10 and the attached revised HECM Financial Assessment and Property Charge Guide, Section 2.12 at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee

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-02773