Appeals Court Revives Reverse Mortgage Lawsuit Against HUD

Posted by Orb Staff on January 07, 2013 No Comments
Categories : Mortgage Servicing

13028_hud Appeals Court Revives Reverse Mortgage Lawsuit Against HUD A previously dismissed lawsuit that challenged the setup of the U.S. Department of Housing and Urban Development's (HUD) reverse mortgage program has been revived by a federal appeals court.

Bloomberg News reports that a three-judge panel of the U.S. Court of Appeals in Washington, D.C., has ruled that a case brought by two widowers against HUD is able to proceed. In their lawsuit, the widowers allege that HUD's rules on when reverse mortgages become due and payable contradict laws designed to protect surviving spouses from being foreclosed upon. The lawsuit points to a 1987 law that states the term ‘homeowner’ on a reverse mortgage loan document is meant to include the spouse of the homeowner.

A lower court judge who had stated the widowers were not borrowers on the loans and that the foreclosure judgment belonged to the lender dismissed the lawsuit. The court of appeals, in a 13-page opinion, saw the case differently.

‘We admit to being somewhat puzzled as to how HUD can justify a regulation that seems contrary to the governing statute,’ U.S. Circuit Judge Laurence Silberman wrote in the court's opinion.

HUD did not issue a public comment on the ruling.

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