Florida Elder Law & Estate Planning Blog
Condo Owners Get Increased Access To Reverse Mortgages
September 25, 2019
The Department of Housing and Urban Development (HUD) is making it easier for owners of condominium units to obtain FHA-backed reverse mortgages (Home Equity Conversion Mortgage, or HECM).
A reverse mortgage allows a homeowner age 62 and over to borrow against the equity in his/her home, without having to pay back the loan until the borrower moves, passes away, or sells. Many seniors with equity in their homes turn to reverse mortgages to generate cash in retirement and to “age in place.”
Since 2008, the owner of an individual condo unit could not qualify for a HECM mortgage unless the entire condominium complex was FHA approved. Due to the cumbersome paperwork and expense required to secure approval, many condo associations chose not to bother. This barrier made it impossible for individual unit owners to secure a reverse mortgage, even though they might have qualified in all other respects.
Beginning October 15, a new HUD rule loosens the requirements for condo associations to secure FHA approval. The agency expects that the number of condo facilities that are FHA approved will increase dramatically, and with it, the number of seniors who will be able to tap into their home’s equity with a reverse mortgage.