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Senators urge HUD to better protect HECM heirs wishing to purchase home
Last Wednesday two U.S. senators have sent a letter to HUD calling for better enforcement of existing rules which may prevent foreclosure for heirs of HECM borrowers. Senators Barbara Boxer & Charles Schumer implored the agency to take measures to ensure heirs of a deceased borrower are not forced out of their homes illegally. At the crux of the matter is the rule of 95. According to the senator’s letter HECM lenders are required to offer heirs the option of satisfying the reverse mortgage by paying 95% of the home’s present appraised value. According to a recent New York Times article this option is not always offered. The article prompted senators Boxer and Schumer to write “ “The failure on the part of the mortgage companies to offer the option of satisfying the loan by paying ninety-five percent of the home’s appraised value unfairly penalizes a borrower’s family members and heirs, who are unable to obtain refinancing to pay off the loan.” While anecdotal evidence points to a problem the question is how wide spread it such a predicament?
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