Legal Question in Real Estate Law in California

Let me first qualify this answer in two ways - first, the laws that govern reverse mortgages are ones with which I am not specifically familiar. I do not actually know any attorneys who specialize, or even devote a small part of their practice to HECM law. Second, without reviewing your specific loan documents, this answer cannot be complete - to provide a solid answer, an attorney needs to review your loan documents as well as the applicable law. My answer here is based mostly on my understanding of the underwriting process for HECM loans, and a general understanding of the basics of HECM loans.

I believe your conclusion regarding adding your husband is correct. The reason why the lender will not likely change the terms of the HECM to include your husband are pretty simple. The whole idea behind a HECM loan is that you are converting the equity in your home to another purposes - effectively eliminating your monthly payment obligation. The calculation used by these lenders is very complex, and in very large part is based on the age(s) of the borrowers at the time the loan is made. In your case, the loan was based on a married female, age 65, and I am sure they utilized a lot more information such as lifestyle, where you live and other matters to determine your life expectancy. From there, they determine how much they will loan, and under what terms.

When you ask the lender to add another person to the loan, you are effectively asking them to change the terms of the loan. In other words, your husband's life expectancy (especially because he is younger) may be longer than yours, which would delay the eventual recovery of the property, making the loan less-beneficial to the lender. A trust won't help - you can put the home in trust, but it won't change the terms of the loan. The best you can do is contact the lender and ask that they consider the change. They will almost certainly charge you some money to make the change, assuming they approve it, and given that the house is presently upside down, they are almost certain to say no.

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