I have a reverse mortgage on my home. If my borrower spouse dies, do I lose the house to foreclosure?

Perhaps not.

In a recent case from the U.S. District Court n the District of Columbia, the court ruled that a non-borrower spouse can't be foreclosed on by a reverse mortgage lender, after the borrower spouse passes away. Bennett v. Donovan, 2013 WL 5442154 (D.D.C. Sept. 30, 2013).

The most common reverse mortgage is the Home Equity Conversion Mortgage ("HECM"), insured by HUD's FHA program. For years, mortgage brokers were telling elderly couples to transfer their homes from one spouse to the older spouse, because that increases the amount that can be borrowed, and thereby increases the broker's commissions.

Many couples were falsely told that their surviving, non-borrower spouse could stay in the home if the borrower spouse died, when this was not true. Now a court has ruled that it is true, and HUD is supposed to come up with regulations to implement it.