Under what conditions may Mortgagees refuse to reinstate a HECM and the Mortgagee Optional Election (MOE) Assignment Deferral Period?

The Mortgagee may require the Eligible Surviving Non-Borrowing Spouse to pay any costs that the Mortgagee incurred to reinstate the Home Equity Conversion Mortgage (HECM), including foreclosure costs and reasonable attorney’s fees. Such costs may not be added to the mortgage balance and must be paid from some other source of funds. Such reinstatement is solely at the election of the Mortgagee.

The Mortgagee may refuse to reinstate the mortgage and the Mortgagee Optional Election (MOE) Assignment Deferral Period if:

  • The Mortgagee has accepted a reinstatement of either the MOE Assignment Deferral Period or mortgage within the past two years immediately preceding the current notification to the Eligible Surviving Non-Borrowing Spouse that the mortgage is due and payable;
  • Reinstatement of either the MOE Assignment Deferral Period or mortgage will preclude foreclosure if the mortgage becomes due and payable at a later date; or
  • Reinstatement of either the MOE Assignment Deferral Period or mortgage will adversely affect the priority of the mortgage lien.  

A Mortgagee may not assign a mortgage to HUD where the MOE Assignment Deferral Period has ceased, but may assign a mortgage after the MOE Assignment Deferral Period has been reinstated.

For more information see Mortgagee Letter 15-15 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-04914