Reverse Mortgage Daily reported that lenders agree that the new condominium approval process announced by the Department of Housing and Urban Development (HUD) and the FHA will expand the availability of reverse mortgages.
“For many seniors, it can be a struggle to obtain a reverse mortgage on their condo, which is why we launched a specialized division in 2016 to help borrowers obtain FHA approval, and this policy change should help elevate that program,” said Jesse Allen, EVP of Alternative Distribution at American Advisors Group. “The challenges facing many older homeowners are real and we welcome positive changes that will enable lenders to serve more of this need no matter the property type.”
The FHA and HUD announced earlier in August new regulations and policies for the condo approval process as an alternative to affordable homeownership.
“Condominiums have increasingly become a source of affordable, sustainable homeownership for many families and it's critical that FHA be there to help them,” said HUD Secretary Ben Carson. “Today, we take an important step to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age-in-place.”
The new policy will allow certain condo units to be eligible for FHA mortgage insurance, even if the total property is not FHA approved. This new policy goes into effect on October 15, 2019.
New aspects of the policy include:
- Introduces a new single-unit approval process to make it easier for individual condominium units to be eligible for FHA-insured financing;
- Extends the recertification requirement for approved condominium projects from two to three years;
- Allows more mixed-use projects to be eligible for FHA insurance.
The Reverse Mortgage Daily continued to report that lender Reverse Mortgage Funding (RMF) has a dedicated condominium division and optimistic about what the new policies will mean for its condo efforts.
“At first blush, the newly loosened FHA condominium rules look to be a positive change for the industry as a whole,” said Mark O’Neill, wholesale and correspondent national sales leader at RMF. “We hope that these recent developments will help to eliminate hurdles for older condo owners and buyers who want and/or need a HECM reverse mortgage. RMF is currently reviewing all of the updates and documentation surrounding the revised guidelines—we will be sharing more details in the coming weeks prior to the October effective date.”
Melissa Macerato, EVP at Longbridge Financial, said in the report that her company is “excited” to see this change for homeowners, and that it can improve the health of the Home Equity Conversion Mortgage Program (HECM).