Joint Letter: Letter to HUD asking for COVID-19 protections for reverse mortgage borrowers

View or download pdf copy of the letter here.

March 24, 2020

Brian Montgomery
Acting Deputy Secretary
Department of Housing and Urban Development
451 7th St S.W.
Washington, D.C. 20410

Re: Comment on Mortgagee Letter 2020-04
Urgent steps to protect reverse mortgage borrowers during the COVID-19 public
health crisis

Dear Deputy Secretary Montgomery:

We write in response to the issuance of Mortgagee Letter 2020-04, to ask that HUD take certain
steps to ensure the ongoing housing stability of borrowers who have taken out reverse mortgages
under FHA’s Home Equity Conversion Mortgage (HECM) program, and their non-borrowing
spouses, in light of the current COVID-19 public health emergency. Older Americans face the
greatest risk from the current pandemic, and any housing instability will exacerbate the health
risk for those borrowers as well as for the community at large.

HUD’s sound decision to put in place a 60-day moratorium of all foreclosures and evictions of
FHA-insured mortgages is an important first step. We ask that, with respect to reverse mortgage
borrowers, HUD further protect this vulnerable population by taking these crucial steps:

• Make clear that the reasonable diligence deadline for servicers to initiate an assignment
through the MOE program for surviving spouses also has been extended by 60 days, and
consider further extensions as needed;
• Direct servicers to make property charge payments only where no repayment
arrangement, extension, or tax foreclosure moratorium has been granted by the taxing
authority, because otherwise it will put many homeowners at risk of reverse mortgage
foreclosure at a time when the taxing authority was not threatening to foreclose;
• When servicers do make tax payments on behalf of HECM borrowers during the state of
emergency, provide for an additional 6-month delay in taking the first legal action to
foreclose, so that homeowners have the opportunity to repay the advances, and encourage
full use of loss mitigation to prevent avoidable foreclosures;
• Expand access to loss mitigation for qualified homeowners by extending all deadlines
related to acceptance of loss mitigation options, including the return of any loss
mitigation agreements, and by allowing for new repayment plans when borrowers default
during the national emergency; and
• Extend the foreclosure and eviction moratorium announced on March 18th to at least six
months, with a commensurate extension of reasonable diligence deadlines imposed on

The World Health Organization recently declared COVID-19 a “pandemic.” The CDC has
recommended that individuals over 60, and those with existing health concerns, avoid large
gatherings and non-emergency travel. The spread of the virus within the United States has
created widespread concern and has led to closure of schools, courts, and many places of
business due to the fact that immediate social distancing is necessary to mitigate the likely toll in
human lives related to the spread of this disease. Many homeowners have been laid off from jobs
or are unable to work due to elevated risk factors.

These interruptions in income and restrictions on travel outside of the home will lead to new
challenges for reverse mortgage borrowers, including defaults on property charges, defaults on
existing repayment plans, and an inability to obtain assistance from legal advocates or housing
counselors. The elderly population of reverse mortgage borrowers is at even greater risk from the
virus if they attempt to attend a court hearing related to a foreclosure or eviction or leave their
homes to seek legal assistance. Moreover, the restriction of large public gatherings is likely to
chill the bidding on foreclosure auctions in communities around the country.

Further delaying foreclosures for a period of time, and extending all related deadlines, makes
sense for humanitarian, public health, and financial reasons. We know that the aftermath of this
crisis will extend well beyond 60 days, especially the financial consequences. As a result, we
urge HUD to extend the moratorium to six months and to consider extending further as needed.
We hope this timeframe will give borrowers and mortgagors the time they need to address the
payment issues that will arise.

In addition to extending the moratorium, HUD should clarify the impact of Mortgagee Letter
2020-04. HUD’s March 18th Mortgagee Letter states, “In addition, deadlines of the first legal
action and reasonable diligence timelines are extended by 60 days.” This should apply to
mortgagees’ reasonable diligence timeframe to submit an assignment through the Mortgagee
Optional Election (MOE) program by extending that deadline by 60 days. Mortgagee Letter
2019-15 implemented a “reasonable diligence” timeframe of 180 days from the latter of the
death of the borrower or issuance of the mortgagee letter. The 180-day window from issuance of
the mortgagee letter would have expired March 21, 2020. HUD should clarify, through a
mortgagee letter or FAQ, that the MOE submission due diligence window has indeed been
extended from March 21 for another 60 days. Depending how long the public health emergency
lasts, a further extension may be necessary.

HUD also should issue guidance on property charge defaults. It is reasonable to expect a new
wave of defaults on homeowner payments for taxes and insurance as a result of the public health
emergency. A number of states have property tax bills that come due in March or April. It is to
be expected that many seniors will be unable to make their tax bill payments by these deadlines,
whether because of illness, loss of income, or the fact that it is not safe for them to leave their
homes to travel to the taxing authority’s offices. Some states and localities are discussing
extensions of the deadlines due to the public emergency. HUD should direct mortgagees not to
advance any property tax payments if the taxing authority in question has granted a broad
extension or tax foreclosure moratorium related to the crisis or has approved an individual grace
period or payment plan with the particular borrower. In such a situation, the taxes should not be
deemed delinquent, and a servicer should not advance the funds.

Advancing payments in this circumstance would unnecessarily increase homeowners’ debts and cause avoidable foreclosures. When taxes go unpaid and no extension has been granted by the taxing authority, mortgagees should advance the charges but should be given an additional six-month delay in taking the first legal action to foreclose, and should be encouraged to make use of all available home retention options to help the borrower cure the default over time.

Finally, many reverse mortgage borrowers who are presently attempting to obtain a repayment
plan or who are active in a repayment plan to cure a property charge default may struggle as a
result of the pandemic. HUD should direct servicers to extend any deadline to accept a
repayment plan through 60 days after the conclusion of the public health emergency. HUD also
should instruct servicers to allow borrowers who may default on a repayment plan to be
considered for a new or recalculated payment plan, regardless of whether they owe more than
$5,000 in arrears.

In response to this pandemic, government agencies and municipalities have taken significant
steps to address the serious health concerns. We commend HUD for taking the crucial first step
of imposing a foreclosure and eviction moratorium, but more assistance is needed to adequately
protect borrowers through this crisis, and we ask that the agency take these further steps to
protect reverse mortgage borrowers. If you have any questions, please reach out to Alys Cohen at or Sarah Mancini at


The National Consumer Law Center (on behalf of its low-income clients)
Americans for Financial Reform Education Fund
Atlanta Legal Aid Society, Inc.
California Reinvestment Coalition
Center for Community Progress
Center for NYC Neighborhoods
Coast to Coast Legal Aid of South Florida
Community Legal Services (Philadelphia, PA)
Connecticut Fair Housing Center
Consumer Action
Consumer Federation of America
Empire Justice Center
Financial Protection Law Center
Housing Options Provided for the Elderly
Institute on Aging
JASA/Legal Services for Elder Justice
Justice in Aging
Legal Aid Chicago
Legal Aid Society of Southwest Ohio
Legal Services NYC
Legal Services of Greater Miami Inc.
Legal Services of the Hudson Valley
Mid-Minnesota Legal Aid
Montana Organizing Project
NAACP Legal Defense and Educational Fund, Inc.
National Association of Consumer Advocates
National Community Stabilization Trust
National Council on Aging
National Fair Housing Alliance
National Housing Law Project
New Jersey Citizen Action
Ohio Poverty Law Center
Pro Seniors, Inc.
Public Citizen
Public Counsel
SeniorLAW Center
Southeastern Ohio Legal Services
The Legal Aid Society of Columbus
Three Rivers Legal Services, Inc.
Vermont Legal Aid, Inc.
Woodstock Institute