"The lawsuit alleges that despite Cleveland's estate trying to use the Mortgagee Optional Election (MOE) program, which lets non-borrowing spouses remain in the home if the mortgage is assigned to HUD, Mortgage Assets Management refused and PHH, as the mortgage servicer, relayed that refusal."
"The plaintiffs argue federal law requires protections for surviving spouses, even if they are not listed as borrowers, and accuse HUD of failing to fully implement those protections for loans issued before 2014."
"Many non-borrowing spouses are still, contrary to Congressional intent, being forced to vacate their home, the complaint states. HUD's regulations did nothing to protect widows or widowers."
Cleveland Mayo obtained a Home Equity Conversion Mortgage in 2011, believing it would secure housing for his wife after his death. Following his death in 2024, the loan was declared due, leading to foreclosure in 2025. The lawsuit claims HUD failed to provide necessary counseling for non-borrowing spouses until after the loan was issued. It argues that federal law mandates protections for surviving spouses, which HUD did not enforce adequately. The suit also alleges fraud by the original lender and violations of the Real Estate Settlement Procedures Act by the mortgage servicer.
Read at www.housingwire.com
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