Reverse Mortgage And Divorce
In certain cases, when approved by HUD, a HECM refinance can buy out an ex-spouse’s legal interest in the home, and a divorce changes how an existing HECM treats a former spouse. Here is what HUD and our reverse mortgage program look at.
Buying out an ex-spouse
In certain cases, when approved by HUD, a HECM refinance can buy out an ex-spouse’s legal interest in the home under a divorce decree.
- Our reverse mortgage program allows a borrower to buy out another party’s limited interest in the home as a refinance, when approved by HUD.
- One example the program gives is the legal interest of an ex-spouse through a divorce decree.
- Our reverse mortgage program requires the borrower to have been on title and lived in the home for at least twelve months.
- Our reverse mortgage program requires everyone on title to attend counseling, sign and date the counseling certificate, and sign the security instrument.
- Anyone on title who will quit claim their ownership interest to the borrower at closing must sign the counseling certificate and a Certificate of Acknowledgement.
- Anyone who quit claimed their ownership interest in the six months before the application must sign the counseling certificate and an Ownership Interest Certification.
Buyout handled as a refinance
Non-borrowing owners can stay on title
Support income can count
Older decrees still count
Divorce hardship is considered
A new HECM after release
Divorce And An Existing HECM
HUD treats a former spouse differently from a spouse who stays married, and the final divorce decree is the key document.
HUD defines a non-borrowing spouse as the spouse of a HECM borrower who is not a borrower. An eligible non-borrowing spouse must have been the borrower’s spouse at closing and stayed the spouse for the rest of the borrower’s lifetime. For HECMs with FHA case numbers assigned on or after August 4, 2014, that eligibility can allow a deferral period, when the due and payable status is put off for the eligible spouse after the last borrower dies, as long as all other FHA requirements are still met.
If a HECM borrower and a non-borrowing spouse divorce, the servicer must get a copy of the final divorce decree, and the former spouse is no longer eligible for a deferral period. If you are both borrowers, HUD’s automatic due and payable rule for a transfer of title applies when a borrower conveys all of their title and no other borrower keeps title.
A borrower who leaves can be eligible for a new HECM later by showing legal documentation that releases them from the existing one. HUD accepts a final divorce decree or court order releasing the departing borrower from the debt, along with a recorded quit claim deed or equivalent.
Why choose Saxton for a reverse mortgage after divorce
This page is for borrowers going through or past a divorce who want to stay in the home, and for adult children helping a parent sort out the home after a divorce.
Marital Status Is Confirmed
HUD has every borrower state whether they are legally married at application and confirm it at closing by signing a certification.
Older Decrees Still Count
Most documents in a HECM file cannot be more than 120 days old at disbursement. Documents that do not go stale with time, such as divorce decrees and tax returns, can be older.
Support Income Can Count
Alimony, child support and maintenance you receive from a former spouse can count as income. With a final decree or court order, HUD calls for proof of the most recent three months of receipt and evidence the income will continue for at least three years.
Support You Pay Is Counted
Child support and maintenance you pay are treated as a recurring liability in your monthly expenses. Alimony is included in your monthly expenses unless it was already taken out of your income.
Divorce Hardship Gets Considered
HUD lists loss of income due to the divorce of a spouse that directly led to late payments as an extenuating circumstance. Added costs from a divorce that directly led to late payments are on the list too.
Debts Assigned In The Decree
When a divorce decree orders your former spouse to pay a debt you could still be held responsible for, HUD does not require proof that they have been paying it on time. The lender gets a copy of the decree ordering those payments.
Hear From Homeowners Like You
Frequently Asked Questions
Borrowers and their families ask these questions most often about divorce and a HECM.
In certain cases, when approved by HUD, a HECM refinance can buy out another party’s limited interest in the home, such as an ex-spouse’s legal interest through a divorce decree. You may want to talk with your attorney about what your decree says about the home before you apply.
Our reverse mortgage program allows non-borrowing owners to remain on vesting. HUD defines a non-borrowing owner as someone on title who is not a borrower and not a borrower’s spouse. Everyone on title must attend counseling and sign the security instrument, and a non-borrowing owner signs a certification consenting to the HECM.
If they are on title, yes. HUD requires all borrowers, non-borrowing spouses and non-borrowing owners with legal competency to receive HECM counseling before the application is processed. If they quit claim their interest to you at closing, or did so in the six months before your application, our program still requires them to sign the counseling certificate confirming they attended.
If a HECM borrower and a non-borrowing spouse divorce, the servicer must get a copy of the final divorce decree, and the former spouse is no longer eligible for a deferral period. An eligible non-borrowing spouse must have stayed married to the borrower for the borrower’s lifetime.
It can. HUD calls for a fully executed copy of your final divorce decree, legal separation agreement, court order or voluntary payment agreement with documented receipt. With a decree or court order, the lender also needs proof of the most recent three months of receipt and evidence the income will continue for at least three years.
Child support and maintenance are treated as a recurring liability and included in your monthly expenses. Alimony is included in your monthly expenses unless it was already taken out of your income. HUD calls for the signed divorce decree, separation agreement, maintenance agreement or other legal order.
You can be eligible for one if you show legal documentation releasing you from the existing HECM. HUD accepts a final divorce decree or court order releasing you from the debt along with a recorded quit claim deed or equivalent, or proof the existing HECM is repaid in full.
Saxton Mortgage does. In certain cases, when approved by HUD, a HECM refinance can buy out an ex-spouse’s legal interest in the home under a divorce decree.
Find out what you qualify for
Tell us what your divorce decree says about the home and title, and we will check how it fits our program.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.