Safeguards to prevent displacement of homeowner

Subsection (j) of section 255 of the National Housing Act (12 U.S.C. 1715z–20(j)) is amended— (1)by striking the subsection designation and all that follows through The Secretary and inserting the following:

(j)

Safeguards To prevent displacement of homeowner

(1)

Deferral of homeowner’s obligation

The Secretary

; and

(2)by adding at the end the following new paragraphs:

(2)

Assignment of mortgage to HUD upon death of borrowing spouse with surviving non-borrowing spouse

(A)

Assignment; notice

The Secretary shall require the mortgagee of a mortgage insured under this section, upon the death of the last surviving borrower under such mortgage who is survived by an eligible non-borrowing spouse— (i)to assign the mortgage to the Secretary; and (ii)not later than the expiration of the 7-day period beginning upon notice to the mortgagee of the death of the borrower, to notify the eligible non-borrowing spouse in writing— (I)of the opportunity, pursuant to subparagraph (B), for the eligible non-borrowing spouse to remain in the property that is subject to the mortgage; and (II)that the eligible non-borrowing spouse should contact the mortgagee regarding such assignment. (B)

Treatment of eligible non-borrowing spouse

After assignment of a mortgage to the Secretary pursuant to subparagraph (A), the Secretary shall provide the eligible non-borrowing spouse with a deferral of the due and payable status due to the death of the borrowing spouse as long as the eligible non-borrowing spouse qualifies as such pursuant to paragraph (4)(B). (3)

Loss mitigation in cases of delinquent taxes or insurance

(A)

Requirement

The Secretary shall require that, in the case of a mortgage insured under this section that is in default by reason of failure to make payment of taxes or insurance required under the mortgage or homeowners association fees, the mortgagee shall, as a precondition of sending a due and payable request to the Secretary, take the following actions: (i)

Loss mitigation

The mortgagee shall take appropriate loss mitigation actions, which may include the following actions: (I)Establishing a realistic repayment plan for the delinquent property charges. (II)Assisting the borrower in contacting a HUD-approved Housing Counseling Agency (HCA) to obtain free assistance in finding some viable resolution to the delinquency, or in identifying local resources available to provide funds or homestead exemptions. (III)Refinancing the delinquent mortgage into a new home equity conversion mortgage if— (aa)there is sufficient equity to satisfy the existing mortgage and outstanding property charges; and (bb)the applicant for refinancing meets the financial assessment guidelines of the Secretary. (IV)Extending the deadlines for foreclosure in cases in which the youngest living borrower or spouse is at least 80 years of age and has critical circumstances such as a terminal illness, long-term physical disability, or a unique occupancy need. (V)Refraining from submitting a due and payable request to the Secretary in cases in which the total arrearage for property taxes and hazard insurance is less than $2,000. (VI)Such other loss mitigation actions as the Secretary considers appropriate in such cases. (ii)

Treatment of non-borrowing spouse

The mortgagee shall treat any non-borrowing spouse as a borrowing spouse for the purposes of loss mitigation. (B)

Failure to comply

In any case of claim for insurance benefits for a mortgage insured under this section made by a mortgagee who has failed to comply with the requirements under subparagraph (A), the Secretary may reduce or deny such benefits based upon such failure. (4)

Definitions

For purposes of this subsection, the following definitions shall apply: (A)

Borrower

The term borrower means, with respect to a mortgage insured under this section, the original borrower under the note and mortgage. Such term does not include successors or assigns of a borrower. (B)

Eligible non-borrowing spouse

The term eligible non-borrowing spouse means a non-borrowing spouse of a borrower under a mortgage insured under this section that was assigned an FHA Case Number before August 4, 2014, who— (i) (I)was legally married, as determined by the law of the State in which the spouse and borrower reside or resided or the State of celebration, to the borrower at the time of loan closing and who remained married to the borrower until the borrower’s death; or (II)engaged in a committed relationship with the borrower akin to marriage but was prohibited, at the time of the mortgage loan origination, from legally marrying the borrower based on the gender of both the borrower and non-borrowing spouse, but was legally married before the death of the borrower, as determined by the law of the State in which the spouse and borrower reside or resided or the State of celebration, to the borrower and remained married until the death of the borrower; (ii)currently resides and resided in the property secured by the mortgage insured under this section as his or her principal residence at origination of the mortgage and throughout the duration of the borrower’s life; and (iii)has obtained or is able to obtain, before the date of foreclosure on the mortgage pursuant to the death of the last surviving borrower— (I)good, marketable title to or an ownership interest in the property subject to the mortgage; or (II)a legal or other right (including a will, an executed lease, or court order) to remain in the property for life. (C)

Non-borrowing spouse

For purposes of this subsection, the term non-borrowing spouse means, with respect to a borrower under a mortgage insured under this section, the spouse of such borrower who is not also a borrower. (5)

Mortgagee optional election assignment

In implementing the Mortgagee Optional Election Assignment for home equity conversion mortgages insured under this section, the Secretary shall use the definition of eligible non-borrowing spouse under paragraph (4) of this subsection in lieu of the definition of eligible surviving non-borrowing spouse under the definition provisions of Mortgagee Letter 2015–15 (June 12, 2015) or any other definition.