A Virginia widow has filed a lawsuit against the Department of Housing and Urban Development and multiple lenders, alleging wrongful foreclosure proceedings on a reverse mortgage loan originated in 2011. The case centers on a Home Equity Conversion Mortgage (HECM) loan that entered foreclosure in 2025 following her husband's death.
The plaintiff claims that HUD and the involved lenders improperly denied her mortgage option election (MOE), which typically allows eligible surviving spouses to remain in the home under certain conditions. The MOE provision was designed to protect non-borrowing spouses from immediate foreclosure after the borrowing spouse's death.