If you are considering using a Reverse loan to increase your monthly cash-flow or to pay off an existing mortgage and your property is a condominium, there is the possibility that you may not be eligible for the federal loan program.
Many condominiums are not approved for FHA loans and the Reverse mortgage happens to be one of their programs. If you live in a Condominium project, it’s important to find out if your’s is approved with them before you apply for the loan & save yourself a lot of aggravation and time.
The quickest way to find out, is to ask your HOA about it and if it is determined that it’s not approved, then you will not be able to get a Reverse mortgage. And if the HOA wants to persue the approval process, it’s up to them to provide the necessary documentation in order to be put on a list of approved projects.
This could be a very lengthy process and take many months to complete. It’s unfortunate that many Condos are not approved and that is leaving many seniors in a very difficult situation when they need additional funds each month to meet their expenses and now an option has been taken away from them
Prior to a year ago, we as Reverse loan professionals, could by pass this problem by having the HOA complete a “Condo Cert” form and with that, we could move forward on originating a loan without any difficulties.
But we are no longer able to utilize this option for the projects that are not approved and there are no other solutions to this issue at this time.
This means that it’s up to you, if you own a Condo to check with your HOA and verify that they are approved with FHA. And if they are, then there’s nothing to prevent you from applying for the mortgage and enjoying the peace of mind that comes with having some financial security.
We in the Reverse Mortgage industry are very frustrated by this new ruling, as many senors live in Condos but now will not be eligible for the loan.
There’s nothing that we can do about it and personally I am angry with this decision, as I have talked to any number of seniors who could benefit from the loan but will not be allowed to use it unless something changes in the future.