The due and payable status may be deferred for an eligible non-borrowing spouse (NBS) after the death of the last borrower. The are certain criteria that must be met though, so please pay close attention to the following:

  • The NBS must have been the borrower’s spouse at the time of closing the loan  must have closed with the NBS as an eligible NBS. Many HECMs originated before this change was made in 2015.
  • The NBS must have been disclosed at closing and been named an NBS on the loan documents. That means that the principal limit would have been based on the younger NBS’s age.
  • The NBS must have remained the borrower’s spouse during the time the HECM was being serviced.
  • The NBS must continue to occupy the home as their primary residence.

It is of utmost importance that the NBS obtain legal ownership of the property or other legal right to stay in the property within 90 days of the last borrower passing away. The NBS will then be responsible for maintaining the property; paying property taxes, homeowner insurance and any other fees associated with the maintenance of the property, such as HOA dues. If the NBS fails to keep current on those items, the loan could become due and payable.

Lastly, it’s important to remember that the NBS will not have access to any monthly payments or line of credit following the death of the spouse.