Shocking Truth About Condominiums and Reverse Mortgages

December 6, 2022

Many senior borrowers eligible for reverse mortgages or about to become qualified and live in condominium projects have yet to learn of the surprises that may be waiting for them. You may know neighbors who live in your project, currently have reverse mortgage financing, and have heard about how easy it was.

Unfortunately, changes in condominiums and HUD programs in the past few years have changed much of this. If you live in a condominium, before you start making plans that include a reverse mortgage, you should know about the rules for condominium projects that have prevented many borrowers from obtaining a reverse mortgage.

HUD recently changed its program guidelines, making condominiums easier to use as security for a reverse mortgage. However, it is still more challenging than a single-family detached residence. You should know the issues from the start.

Table of Contents

• How do condo associations benefit from Reverse Mortgages?

• History of the HUD condo approval process

• Condominium approval requirements

• Reverse Mortgage Condominium Eligibility Criteria

• Maximum FHA concentration %

• HOA boards blocking approvals

• 6 Key Condo Approval Requirements

• Top FAQs

How do condo associations benefit from Reverse Mortgages?

We had shown that the sales prices of many projects increased when they opened the project to more potential buyers. But sadly, some HOAs still confused HUD approval with Section 8 and low-income housing and have refused to cooperate, forcing their senior owners into decisions they were not ready to make

So, the shocking truth about reverse mortgages with condominiums is that even though you may not owe anything on your unit, and you may meet the age requirements, the inability to lend with a government-insured loan in your project or even the project manager may prevent you from being able to get a reverse mortgage.

We see more projects being declined than approved by about a 2 – 1 ratio. This is something to remember if you plan to purchase with a reverse mortgage, considering the time constraints on most purchases and that a project approval can take eight weeks or longer (if it gets approved).

The last thing you want to do is place an offer on a condominium unit only to find that you have a deadline and cannot perform, must waive contingencies, and then find out that HUD will not approve the project through no fault of yours or your lender’s. You want to avoid finding yourself in a situation where you risk losing your deposit or worse.

Finally, if you are looking at a reverse mortgage for your existing condominium and the project is not on the current HUD-approved list, check with your HOA to see if they have recently applied for approval as it might save you some time and expense, and remember the 7 most common reasons for project denial. You can always look at the HUD condominium guide online at https://www.hud.gov/sites/documents/11-22MLGUIDE.PDF. Still, I warn you about trying to be your own “condominium expert.”

Your best bet is always to look for a property already on the HUD-approved list but remember; this is not a 100% guarantee if something happened between the time HUD placed the project on the list and now you wish to purchase. Leave yourself enough time to get the project documentation together, review it, and leave an out in the contract if the project status changes.

The association is involved in litigation other than foreclosure proceedings involving unit owners. If so, HUD must review this issue at approval and may decline the project.

History of the HUD condo approval process

It all started when HUD published the Mortgagee Letter 2009-46. By way of a bit of history, on August 1, 1996, HUD established the “Spot Approval” process for condominium projects, which also contained a 14-question “Suggested Checklist for Spot Loan Approvals” (Mortgagee Letter 96-41). This allowed reverse mortgage lenders (and banks) to fund FHA loans in condominium projects not previously approved without having to get the entire project submitted for approval if the reverse mortgage lender was willing to make a relative few certifications.

HUD stipulated that they could not already have more than a concentration of insurance outstanding on loans on 10% or more of the units in the project (without having the entire project approved and then the 10% limitation removed). Many borrowers could obtain forward and reverse mortgage loans insured by FHA on HUD programs in condominium projects with a minimal review, as most projects only approached the 10% maximum after obtaining HUD approval.

Mortgagee Letter 2009-46 eliminated the Spot Approval Process and established a 2-year recertification period for all projects already on the approved list. All new loans had to follow the new guidelines for all borrowers who got their Case Numbers on or after December 7, 2009. In other words, a project approval expired with this new process every 2 years, and the project had to go through a whole new project approval every two years.

That Mortgagee Letter established two ways to approve projects: the HRAP or DELRAP process (the difference being whether a delegated lender does the approval or HUD does). HUD sought to allow lenders to approve projects with the DELRAP option while the HRAP would still be HUD receiving the documentation and approving the project. The HRAP and DELRAP that HUD thought would be a system that would take a lot of the project approval of HUD and allow lenders to make some of the determinations did not meet this objective. The lender became responsible for the project’s approval even when they were not necessarily the company closing other loans. Lenders were unwilling to assume this risk. The project packages went back to HUD for approval in almost all cases, and that is where it stands today – with HUD.

The project must be reviewed if it has not been approved within the past 2 years. The issues preventing your project from being approved may be things you don’t know, wouldn’t have even thought about, and can’t readily see. The lender must gather a complete list of project documentation for delivery to HUD for review. The review and approval can take 6-8 weeks to complete once the package is submitted to HUD. During the COVID-19 Pandemic, those timeframes often stretched longer.

Homeowners and others often need to find a way to search titles and see evidence of reverse mortgage loans in a project and assume that the project is approved. At the same time, this might be true. The fact that there are existing reverse mortgages in the project is no guarantee that the project is approved or will even meet current approval criteria.

We’ve had several borrowers tell us they were not worried about their project because they were sure it would be approved. Their place and project were gorgeous and desirable and had great common amenities. But the things that most often prevent a project from being approved have nothing to do with this. HUD will conduct a budget review. Suppose the reserves need to be more adequate in their estimation for ongoing operation. In that case, maintenance of common amenities, etc., the project will not be approved.

Many new projects only need a little replacement of roofs and maintenance of the common areas, but they will eventually.

Condominium approval requirements

Reverse Mortgage Condominium Eligibility Criteria

Eligibility Criteria	Details
FHA Approval	The condominium project must be approved by the Federal Housing Administration (FHA) for HECM reverse mortgages.
Occupancy Requirements	The condo unit must be the primary residence of the borrower.
Financial Health of the Condo Association	The condo association must be in good financial standing, with adequate reserve funds and no significant legal disputes.
Insurance Coverage	The condominium must have appropriate insurance coverage as required by the FHA.
Owner-Occupancy Ratio	At least 50% of the units (as specified by the FHA) must be owner-occupied or second homes.

This table provides an overview of the key eligibility criteria for condominiums to qualify for reverse mortgages, specifically focusing on HECM (Home Equity Conversion Mortgage) reverse mortgages. It outlines the various aspects, such as FHA approval, occupancy requirements, financial health of the condo association, insurance coverage, and owner-occupancy ratio, that are typically considered when determining a condominium's eligibility.

Suppose your dues need to place more money aside so it is available when these things need fixing and replacing. There will be special assessments in that case, and the project could be in disrepair. HUD requires that the project is solvent and has adequate money in reserves for capital expenditures and deferred maintenance repairs. The money in a trust account for such items should equal at least 20% of the budget.

This would impair the marketability of the units over time. Unless it’s for a minor issue that would be covered by the liability insurance anyway, HUD will generally not approve a project currently being sued (in litigation). When applicable, hazard and liability insurance requirements and fidelity and flood insurance must be maintained at adequate levels. We usually see that the projects carry sufficient hazard insurance but often find projects containing 20 units or more that fall short of the fidelity bond coverage.

This insurance would protect the unit owners if someone on the HOA Board or in an outside management company were to steal association funds. HUD has a formula that they follow which takes into effect three months of the total monthly dues of all units plus the amount in reserves.

Other things borrowers may not even be aware of could prevent their project from being approved, including other homeowners who are delinquent on their HOA dues. A maximum of 15% of the total units can be in arrears on their association dues of 30 days or more past due*. * HUD can review and grant a waiver to 20% if they feel it is warranted

Rule: Generally, no more than 50% of the units may be occupied by people other than the unit owners as their primary residences (that would include rental units and second homes), and HUD does not allow any one entity to own more than 10% of the units in any project unless there are less than 10 units in the case of 10 units or less. HUD does allow for some exceptions, but if you know your project contains less than 50% primary owner-occupied residents, you should bring that to the attention of your loan originator so they can research up-front immediately to avoid unnecessary time and expenses.

HUD will review all pending litigation to determine its effect on the viability of the project or its finances. Pending litigation can be the reason for a rejection of the project.

Maximum FHA concentration %

HUD will not exceed a 50% concentration in any project. In other words, if they have already insured loans on half of the units in the project, they will not accept any additional risk in the project.

That means that even if your project meets all the condominium project approval requirements and is on the current HUD list, if HUD has existing Case Numbers issued or loans insured that equal 50% or more of the total units, no new Case Numbers shall be issued. They may accept a small amount over 50% to accommodate some fall-out. Still, once their tolerance is met, they will cease issuance of new Case Numbers, which would not allow lenders to begin processing a reverse mortgage (or any HUD/FHA insured loan) in the project).

This would be especially easy to hit in the case of smaller projects where just a few units could account for 50% of the entire project. With projects of three or fewer units, one loan will fill the quota. HUD would only be able to insure another loan once that loan is paid off since HUD will approve the insurance on loans in projects as small as 2 units.

HOA boards blocking approvals

Many Homeowner Associations are unable or unwilling to change any of the areas mentioned above. This can be because of the approvals required from their boards, the unit owners, the costs involved, or, in some cases, the stigma they perceive about FHA-insured financing. They don’t want HUD approval.

We have run into several Unit-Owner controlled boards who felt that having a HUD project approval would bring in less-qualified owners and thought that might hurt the appearance of their project. (I did a quick search on the internet and found Reverse Mortgage Daily and the LA Times have reported similar stories)

Sometimes, we can show them that having HUD approval opened reverse mortgages to their senior owners. Other times, we could show that adding the availability of FHA financing to well-qualified purchasers increased the marketability of the units. We are not talking about small, insignificant units at these property values! After all, the maximum lending limit for loans in 2024 is over $1,000,000 at $1,149,825.

6 Key Condo Approval Requirements

Your fiscal year’s budget must reflect at least 10% of the standard assessment value deposited into reserves.
No entity may own more than 10% of the units within any association if there are 10 units or more or a maximum of 1 unit if there are less than 10 units. A condominium developer is exempt from this calculation if the association turnover has not occurred.
A maximum of 15% of the unit owners may be more than 30 days behind on HOA dues.
The owner-occupied ratio must be greater than 50% of the units. Non-owner-occupied units that must stay below 50% of the total include rentals and 2nd homes that are not the owner’s primary residences.
Your association and anyone who handles association funds (management companies included) must maintain Fidelity Bonding equal to three (3) months of standard assessments PLUS the sum of the current balances of all reserve accounts combined.
No active special assessments, collections, associated work, or special assessments are planned within the next 2 fiscal years.

Top FAQs

Can I get a reverse mortgage on my condominium?

Condominiums are an eligible property type for the reverse mortgage program. They must go through some additional steps to be approved, but they are acceptable once they meet all conditions.

Does FHA need to approve my condo?

For the Condo Project to be fully approved, HUD does have to approve the project. When HUD approves a project, those approvals are valid for 2 years before expiration. The project would need to recertify for approval every two years. HUD has an additional process known as “Single Unit Approval,” which allows an individual homeowner to apply for approval. During this process, the homeowner would provide the documents the project must provide for approval. This process is for those homeowners who live in a project that wishes to have only partial FHA approval. When a Single Unit Approval is given, it is suitable for that homeowner only for that one transaction. Additional qualifying restrictions for their loan would not be present if HUD approved the entire project.

Are there any Non-FHA reverse mortgages for condo owners?

There are private or proprietary reverse mortgage programs that do not require HUD approval. The process and guidelines for these products vary depending on the investor. Some follow the FHA process very closely but have the discretion to approve a project that does not meet FHA guidelines. Others follow a more streamlined process like Fannie Mae.

Are condos and townhomes the same thing?

Condominiums and Townhomes are different. A Condominium is a type of ownership, and a Townhome is a building style. The confusion comes from Condos listed as “Townhome” or “Townhouse Style.” Still, it all comes down to the legal description of the property. In a condominium, the unit owner has a right to occupy their unit and fractional ownership in the whole complex. A Single-Family Residence is where the homeowner owns the home and the land that it sits on. A “Townhouse” can be a Condominium or a Single-Family Residence, depending on the legal description of the property.

How do I find out if my condo is on FHA’s approval?

You can visit the HUD website to determine if your condominium project is already HUD-approved. It is best to start by inserting the state, county, or zip code and clicking “send.” You will see all projects in your zip code. That way, if your project’s legal name is slightly different or listed differently due to the managing HOA, it will still come up if it is on their list.

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80 Comments on this Article

Judy D.
August 31st, 2024

I have gone through paperwork with Mutual of Omaha. I own a $600,000 condo, but the bylaws state the HOA board must unanimously approve rentals. This is preventing me from getting approved.
Reply to Judy
- Michael Branson
  August 31st, 2024
  
  Hello Judy,
  It seems that your project is not HUD-approved, and you're trying to get the condo project approved. The issue is that your project does not meet HUD's requirements for approval. As a result, no lender will be able to close a loan that requires FHA (HUD) mortgage insurance on a unit within that project. The HUD HECM reverse mortgage is one of those programs that requires FHA insurance.
  You can check HUD's website to see if your project is currently approved, was previously approved, or has been rejected. If it's not listed, it needs to be reviewed, and there are several factors that could render a project ineligible for FHA insurance. I've spoken to people in HUD's property department who have mentioned that placing restrictions on the owner's right to rent the unit can increase the risk to the owner, especially if the need arises to sell the property to prevent a loss. This could also be a concern for HUD if they needed to sell the home, which is why HUD will not approve projects that increase the risks to the MIP fund.
  You might want to consider one of the private or proprietary reverse mortgage programs. These programs have their own criteria for approving condominium projects, which are not identical to HUD's requirements. You may find one that works for you.
  Reply to Michael
Betsy S.
October 31st, 2022

Do all reverse mortgages on a condo take the rental ratio into count?
Reply to Betsy
- Michael Branson
  October 31st, 2022
  
  Hello Betty
  
  All reverse mortgages require some sort of condo project approval and for the HUD HECM program, the project must be on their approved list (and yes, HUD looks at the owner occupancy ratio). Typically, the programs are only available to properties with values at or above certain minimum amounts.
  The investors to whom we sell loans do have the 50% owner requirement for project eligibility and while I believe this is probably a standard secondary marketing requirement, I cannot make the assurance that there are or are not other programs available with other parameters.
  Proprietary or Jumbo programs are not limited to HUD requirements and will review the project with their own guidelines so you really need to speak with each individual lender to determine what their requirements will be.
  Reply to Michael
Jim H.
October 12th, 2022

Arlo,

I am the volunteer Treasurer of a 35-unit condo complex. One of the owners passed away August 30, 2021. She had a reverse mortgage, originally with Wells Fargo, then Champion's (I think) and now to HUD with Novad as the servicer. The family had paid dues for a couple of months but then their attorney told them to quit as there is no equity in her home. I think he stated this because of all the medical bills that piled up towards the end of her life. A firm called Guardian is checking on the property but, otherwise, it just sits there. It looks like someone is paying the property taxes, but we are receiving no dues payments, which are really piling up. I have no leverage in contacting Novad for the status of this property. Any suggestions? We'd sure like to get this property sold but understand the HUD bureaucracy.
Reply to Jim
- Michael Branson
  October 12th, 2022
  
  Hello Jim,
  
  Do you even know if HUD owns the property yet? I think the first thing I would suggest is to check public records to see who the legal owner of the property is if you are not sure. If HUD doesn't own the home yet, there may be something that has slowed/stopped the foreclosure process and if that were the case, I honestly would not know what to tell you was the delay or where to start.
  If HUD does own it, the foreclosure has been completed and there should not be any reason for a delay in the marketing/sale of the unit by NOVAD's chosen real estate representative. HUD has a bureaucracy that is not easy to get around and NOVAD is not the easiest company with which to deal, but if the property is still owned by the original owner, they will tell you nothing because you are not authorized by the borrower or their estate/heirs to receive information about the loan or anything to do with it. I'm sorry, this isn't much help but it's all I can tell you.
  Reply to Michael
Susan
September 17th, 2022

Hi Arlo,

My condo community has been approved for the existing units. I purchased a unit in a new phase of the development, which I understand must receive its own approval (i.e., the existing approval does not apply to the new phase). My HOA is dragging its feet on this process, and I am having a hard time understanding why - since they had already obtained the approval on the old units. Would it be like starting over again to obtain the certification for the new units? I purchased the unit because they already had an approval in place, not understanding that the existing approval would not apply to my new unit.
Reply to Susan
- Michael Branson
  September 22nd, 2022
  
  Hello Susan,
  
  Sometimes the CC&R's, Bylaws, or other legal docs change which could change the way HUD views the newer phases of the project. Builders may try to add in new features that could render the new phases unacceptable to HUD, so those phases also need to be reviewed and approved.
  Unfortunately, just because older phases were approved, there is no guarantee that the new phases will also meet the HUD requirements. Sometimes it doesn't even need to be the legal documents that could cause an issue - it can be the rental percentages in the new phases (the newer phases are primarily being used as rental units and HUD will not allow more than 50% rental units) or something else that precludes the phase from being approved.
  The only way to know for sure that a project or phase is HUD approved/approvable is if it is currently on the HUD approved list but even then, a new lawsuit could render the project uninsurable by HUD and no one may know about it until the HOA does their paperwork for the certification.
  Reply to Michael
Ray
September 10th, 2022

There are 175 units in my condo complex. Only 50 units are used as primary residences. The rest are used, by the owners, for the summer. This is Not a time share. Condo price ranges $750,000-$1,000,000. I was denied a HECM loan and I am also being denied jumbo reverse mortgages because of rental guidelines. Some people rent their home for the summer, guess, 20 units. You can also rent your unit year around. I know this is limited info. Can you render a guess? Thanks Arlo!
Reply to Ray
- Michael Branson
  September 10th, 2022
  
  Hello Ray,
  The problem you're having is that HUD and private investors have guidelines that only allow up to a certain percentage of a project to be rental units. They want to insure loans on primary residential properties, not commercial or rental units.
  History shows that people who do not live in the unit will not be as diligent with maintenance or paying HOA dues, etc. and therefore there is a greater risk to the entire project when there are primarily rental units as opposed to one occupied by the owners. For this reason, owner occupancy ratios are reviewed by HUD and investors when determining whether to lend or insure loans in the project.
  The lenders receive their occupancy information from affidavits completed by the HOA or an association hired by them for such purposes. If the non-owner numbers are accurate, that doesn't mean your project is substandard, it just makes it ineligible for this type of financing.
  Reply to Michael
John
August 31st, 2022

Hi Arlo,

I am looking into a reverse mortgage. I live in a community with an HOA. Currently, the HOA does not have FHA certificate or certification and the board does not wish to apply for FHA certification. Will I still be able to apply for a reverse mortgage? If not, is there another way to apply for a reverse mortgage without having an HOA FHA certificate?
Reply to John
- Michael Branson
  August 31st, 2022
  
  If by community with HOA you mean a condominium project, the project must be on HUD's approved list to be eligible for the HUD HECM reverse mortgage program. If you are part of an HOA but are still a single-family home, you do not need to have the HOA or project approved.
  If you are an owner in a condominium project that is not approved and cannot or will not be approved, then your only other option is to check to see if you can qualify under one of the jumbo or proprietary programs. Most start with a minimum loan amount of $450,000 though so that would mean a property value of close to $1,000,000 or more.
  
  The only other option would be to seek HUD approval on your own, the HOA board is not required to get the approval. You would need to get the documents together that include CC&R's, By-laws, budgets, etc. (which you may have and if not, should be able to get as an owner in the community) and there is a certification the management company must complete and sign. There are companies that can do all this for you with your assistance gathering the documents, but they will charge a fee.
  The good news is that they typically will not charge anything if the project cannot be approved. We are not affiliated with any condo approval companies but one such company with whom our borrowers have worked with success is FHACondosApproval.com. An internet search for condominium approval companies will show many others though so you can choose any company with whom you wish to work if you decide to try this avenue.
  Reply to Michael
Michael
August 17th, 2022

Hi Arlo,

I live in Broward County Florida and tried to get a reverse mortgage and was denied. When I tried to look up my condo on HUD, it said the following.

"Composition of Project: Project is ineligible for (FHA due to Prohibited leasing restrictions. Status: Rejected leasing restrictions"

What does this mean? No chance to obtain a reverse mortgage?
Reply to Michael
- Michael Branson
  August 17th, 2022
  
  Hello Michael,
  
  I can't tell you exactly which restrictions HUD determined were prohibited. If those conditions are still present and HUD has not changed the criteria that rendered the project ineligible since the last time they reviewed the documentation, then the project would be denied again with a new resubmission.
  However, there are companies that do nothing but condominium project approvals that may be able to assist you (especially if HUD has made any changes since the last time, they reviewed the project). One such company with whom some of our borrowers has worked is The FHA Condos Approval Company, Inc.
  We are not affiliated with this company and there are several on the internet who advertise this service so I would encourage you to check around, but our customers indicated that this company charges no fees until your project is approved so there was no risk in checking with them. It just might be that they can help you or your project if there is a way to make it eligible for approval.
  Reply to Michael
Charles B.
July 23rd, 2022

I am in Broward County Florida. Own a townhouse condominium. I am told it's very difficult to arrange this in this county.
Reply to Charles
- Michael Branson
  July 23rd, 2022
  
  Hello Charles,
  
  Depending on the property type, the project may need to be on HUD's approved project list in order to be able to do a HUD HECM reverse mortgage. HUD classifies condominiums differently and some projects require advance HUD approval in order for lenders to be able to lend within the project in order for HUD/FHA to insure the loan.
  Most condominiums do require approval but if the particular home is a condominium but is on its own lot with minimal shared amenities, it may be considered a "site condominium" which does not require project approval. But typically, most condominiums do not meet the definition of site condominiums and do require project approval before the lender can proceed.
  
  In that case, you must first check the HUD project approval lists to see if your project is already approved. The easiest way to do so is to put in your state and your zip code and review all the approved projects in your zip code. Some projects have different names for management companies and if you try to narrow your search down too much on your initial check, you may exclude your project simply because you put in the wrong management name, condo name or something was misspelled or the address is different if the management company is in a different location.
  If your project is listed on the site, be sure to go to the right side of the chart and check the box that is the third from the right that gives the status. If your project is approved, you can close and insure a loan in your project now (but be sure to check that it is not expiring soon). If it was approved but has expired, it must be submitted again but that is good news because it was approved at one point. The next three statuses are the ones that could create more work or keep you from being able to get a HUD/FHA insured loan on your home located in your project.
  
  The first possible sign of bad news would be if the project had been withdrawn. This means that the project had been submitted to HUD and then ran into roadblocks for some reason and ultimately the submitting entity withdrew the request. It could be that the project would not meet HUD requirements or that a lender was doing a loan and the borrower cancelled so they gave up or any other number of reasons but you won't know if it can be approved until you try.
  A rejected status means that the project was rejected by HUD. This could be for a number of reasons and it doesn't mean that the project won't be approved if submitted now. But it does mean that the only way to find out is to resubmit all the documentation to HUD to request approval. And finally, the next status that would mean you don't know where it stands with HUD and what the outcome would be is no status at all (meaning the project is not listed on the chart). This means that HUD has not received the project for review so you don't know if it meets their requirements or not.
  
  I would tell you that you can talk to a number of condo approval companies who specialize in project approvals, they are all over the internet, and most will not charge for their services if they cannot get the project approved. They do this for a living and can tell you very quickly if your project meets HUD's requirements so there really isn't a downside to talk to them upfront.
  We are not affiliated with any companies so I cannot tell you their costs but have had some customers who used fhacondosapproval.com with good results so you may want to start with them. Never hurts to shop around though! They can tell you if your project will meet the HUD requirements after they receive your documents and I believe there is no charge unless and until they get it approved (but that is something you would need to verify with them).
  
  If the project can be approved, that is the first step. You would still need to qualify under the HUD financial assessment guidelines which include an underwrite for income and credit. The HUD requirements are not overly restrictive and if you have paid your debts, especially your property charges (taxes, insurance and condo HOA fees) on time for the past 24 months you would only need to meet a minimum residual income requirement that is very modest. If you are concerned about qualification, the best thing to do would be to speak with a reverse mortgage loan officer to discuss your qualifications.
  Reply to Michael
DW
June 10th, 2022

My sister bought a freestanding condo single unit in a community. She had intentions of a reverse mortgage as the previous owner said it was a Vilia.

Come to find out it was classified as a condo. She was told that she could not do a reverse mortgage because the HOA by-laws will not allow them to rent the unit. (She is not planning to rent it).

But because of this by-law she was told the house would not qualify. This is in Indiana. Is this correct? Any advice on how to proceed?
Reply to DW
- Michael Branson
  June 10th, 2022
  
  I am not so sure this would be the case but it would also depend on the classification of the project/unit under HUD's rules. Obviously if it is on HUD's list, that would make things so much easier but it might still be acceptable.
  My suggestion would be to contact another lender or possibly even a condo project specialist to see if they will advise on her project after reviewing the legal documents and the legal description.
  We have had great success with The FHA Condos Approval Company FHACondosApproval.com but there are many listed on the internet so I would tell you to check with any competent company to get an opinion on the project if you are unable to find a lender who is willing to work with the project.
  Reply to Michael
GENE S.
April 21st, 2022

HI ARLO,

DO CONDO/TOWNHOMES QUALIFY FOR REVERSE MORTGAGES?
Reply to GENE
- Michael Branson
  April 21st, 2022
  
  Hello Gene,
  
  Yes, they do but the required documents/approvals change with the property type. A condominium requires HUD approval of the project while most Townhomes are considered Planned Unit Developments where the borrower owns their own lot, even though they sometimes also may consist of common wall construction.
  You really need to speak to your lender and let they have your address so that they can look up your legal description to see whether your property will need to be on HUD's approved project list or not. If it is definitely a condominium, your lender will first look it up on HUD's website at https://entp.hud.gov/idapp/html/condlook.cfm.
  It's easiest to just put the zip code of your project in and look at all projects in your zip code that are on the HUD list. Remember to look at the status and the expiration date. The status must be in an unexpired approved status or the project must be reapproved in order for HUD/FHA to insure a loan in that project.
  Reply to Michael
Melinde
July 10th, 2021

In January I began working with a company again for a reverse mortgage. Had turned in all my info previously but it was all delayed due to a new roof project and my HOA did not renew the FHA certification. We were recertified and the roof project was completed. It is now into July, and I still do not even have a closing date for my reverse. They are asking for documents again because in THEIR words, it has been so long. This is definitely not right! Should I cancel the reverse? Any thoughts?
Reply to Melinde
- Michael Branson
  July 10th, 2021
  
  Hello Melinde,
  
  Some documents have a stale date and would need to be updated after a certain period of time. I'm not sure what they are requesting so it is difficult for me to tell you if the requests are reasonable but if the original documents they received are all over 6 months old and have an expiration date that has come and gone (like a driver's license) or information that is subject to change (like bank statements where the balances would obviously be different by now), then every lender would also need to update the information.
  Lenders hate to have to request information a second time as much as you dislike having to give it but sometimes it's necessary when there are delays like this.
  
  If you go to a new lender now, you are only going to need to get all the documentation together and start from scratch all over. You need to ask if this is almost at the end of the process and if so, is it worth it to you to start all over? If you aren't getting any definitive answers, maybe you should check around and see if you have the best deal you could possibly be getting.
  If it turns out that your rate and fees are competitive with other lenders, it seems that a move may not be in your best interests. If your current deal is worse that you can get elsewhere and you are starting with all new documentation anyway, you may decide differently. Just remember, this loan is all about you and your needs so make sure that you make the decision to move or stay with your current lender based on what works best for you.
  Reply to Michael
Greg L.
April 27th, 2021

Hi Arlo- My Mom just died, and she had a reverse mortgage for a Condo in Florida. If I decide to walk away and Condo goes to foreclosure, am I responsible for the electric bills, monthly condo fees, home insurance and taxes till foreclosure is settled? Lender said foreclosure can take a long time. They told me to turn off the electric and leave keys under the door mat. I won't do that as it is too hot in Florida and someone may take the keys. Also, if I walk away, do I need or should I do a deed in lieu of foreclosure or do I need to deed home to lender? Do I need an attorney if I just walk away? Thanks in advance.
Reply to Greg
- Michael Branson
  April 27th, 2021
  
  Hi Greg,
  
  I can tell you what the lender can and cannot do, I cannot tell you what rights any other third parties may have or what liability the estate may have as a result of any actions you choose. For example, the lender can only seek repayment from the property for the loan. If you do not want to worry about repayment of the loan, the lender can foreclose and that is all they can do to repay the obligation.
  They cannot look to heirs for repayment, nor can they seek repayment from other assets of the borrower. However, you really should speak with an attorney to determine any recourse the HOA may have or any liability the estate may have if someone were to get hurt on the property while it is still owned by your mom or her estate and the insurance has lapsed. Maybe that is not a concern either if the estate is insolvent, but I don't think it would hurt just to run it past an attorney to verify that there is no liability anyway.
  The lender may not be able to take a Deed in Lieu of Foreclosure because if they do, they inherit any liens or issues with the property. If they foreclose, junior liens are wiped away with the foreclosure so unless the lender has had a chance to do the title work and the home is clean of all personal property, the lender will not accept a Deed in Lieu of Foreclosure anyway. If they would accept it, it would shorten the time to finalize things though so it certainly doesn't hurt to offer it and see if they will accept it.
  You don't need an attorney to complete this, but I don't think it hurts to have them let you know what exposure you might have based on any state laws so my advice would be to call a real estate attorney and just get their direction on things. I agree with you, I would not leave the keys under the mat and would send them in by way of registered mail or fed ex with a receipt, but the attorney may advise you differently.
  Reply to Michael
Diana H.
February 15th, 2021

Do you require Homeowners securing a Reverse Mortgage to access and pay $175 for Homewise Docs? This is after the counseling and notary etc. plus the Appraisal to come... Our HOA gave very little help. We have the CC&R's plus Complex's Insurance Co and yearly amount. FYI: the Lender we are working with said they cannot do this. It is illegal? Please Advise. The time spent is nuts.
Reply to Diana
- Michael Branson
  February 15th, 2021
  
  Hello Diana,
  
  The reverse mortgage does not require you to use any company to secure HOA documents for project evaluation. If you live in a condominium project though and you do not have access to all the documents required to assess the project for approval, your own association or board may have made the decision to turn the function of document procurement and delivery over to a third-party company rather than making them available to you and lenders, especially if they do not have full time staff available to handle these requests.
  If they do use a third-party service, they probably charge for various services such as document delivery. As far as legality is concerned, I honestly cannot advise you in that area and before I would ever make a flat statement that it is illegal, I would check with the association and see what the terms were that were agreed to by the association.
  I would find it hard to believe that it would be illegal for the association to contract out certain functions and that the providers of those services would not be able to charge a fee for providing those services in an amount specified in the agreements with the board of the Home Owner's Association (in which you have a voting interest).
  
  There are requirements for condominium projects to supply information to become approved with HUD if they are not currently approved or to complete a Homeowner's certification regarding owner occupancy, budget information and pending or existing litigation in the project as well as insurance coverage.
  I don't know if this is part of the information being provided or if HomeWise is solely providing copies of the legal docs (CC&R's, By-Laws, Recorded Plat Map, Articles of Incorporation, Condo Site Plan, Current Budget, Previous Year End Budget Results, Current Balance Sheet, insurance, etc.) for a new project approval. You can find a full list of everything HUD requires for a new project approval on their website here.
  So it is very difficult for me to even express an opinion as to the fee being charged. If it is a full approval package, the documents required by HUD are extensive.
  
  But to be clear, it is not the lender who is requiring you to use HomeWise - that has been chosen by your HOA as the method by which the association documents are available to lenders. I
  f you can get them to deliver them by another method, I am pretty sure your lender will not have an issue with it.
  Reply to Michael
  - Lee F.
    April 7th, 2022
    
    Hello Arlo,
    
    If my townhome is not HUD approved. Would proprietary reverse be an option?
    Thank you!
    Reply to Lee
    - Michael Branson
      April 12th, 2022
      
      Hello Lee,
      
      If your home is a true Townhome or Planned Unit Development (PUD) and not a condominium, it may not need to go through special approval and there is no list for these types of properties for HUD.
      You really need to speak to a lender because some condominiums are called "Townhouse Style" condominiums and are still condo's while an actual Townhouse which is considered a PUD (planned unit development) is not considered a condo and does not require project approval.
      Now, having said that, if you do own a condominium by definition and it is not on the HUD list and cannot be approved (many times the project has not been approved yet but can be), if the property is worth $450,000 or more, you can try a proprietary reverse mortgage program.
      The rates are typically higher and there are not as many options for lines of credit, but if there is absolutely no way to get the project approved and it does meet the program parameters, it is a consideration.
      Reply to Michael
Steven
January 23rd, 2021

My wife and I are looking at a new +55 senior condo valued around $400,000 our current home is paid for and valued at $300,000. I am 64 and my wife is 61, can we use a Reverse Mortgage to buy the new condo?
Reply to Steven
- Michael Branson
  January 23rd, 2021
  
  Hello Steven,
  
  Yes, you can use the reverse mortgage to purchase if your state allows it and if you do so before your wife is 62, she would be considered an eligible non-borrowing spouse. States like Texas do not allow for non-borrowing spouses.
  But the one thing I caution you is that you would want to be sure that the project was already HUD approved and on the approved list found on their website.
  If the project is not approved, I do not know how you would be able to put an offer on a unit and get the project approval completed as well as the loan closed in the timeframe that a typical seller would accept.
  It could be 90 days or longer just to find out that HUD approves or declines the project, and then the loan along with the appraisal would need to be completed after that. Most sellers are not willing to wait that long just to find out if the project can even be approved.
  Reply to Michael
Donna B.
September 14th, 2020

I own a three-bedroom condo in Florida with no mortgage. I belong to a condo association. Am I eligible for a reverse mortgage?
Reply to Donna
- Michael Branson
  September 14th, 2020
  
  Hi Donna,
  
  HUD allows condos that are on their approved list or can be approved based on their required criteria.
  You can check their website to see if your project is already approved. If your project is already approved, your lender can begin processing your loan immediately but if not, they will need to determine if the project even meets the requirements first.
  You would need to speak with a lender to determine the next steps if your project is not approved to determine what documentation is needed to submit for review.
  Reply to Michael
Terry Bisogno
September 14th, 2020

Can a California Condo, not FHA-approved for reverse mortgage financing be eligible for an FHA approval if it is not eligible for earthquake insurance?
Reply to Terry
- Michael Branson
  September 14th, 2020
  
  Hello Terry,
  
  You really answered your own question in that a California condominium in a project that is not FHA approved is not eligible for an FHA reverse mortgage regardless of earthquake insurance eligibility.
  To be able to qualify for the FHA Home Equity Conversion Mortgage (HECM or "Heck-um") reverse mortgage, the project must meet HUD approval requirements.
  HUD does not require earthquake insurance so I guess the real question there would be why is the project not eligible for the coverage?
  HUD will not deny the project due to the lack of earthquake insurance but if the reason the project cannot be insured is one of the things HUD does look at then there is a possibility that it could be denied for the same reasons.
  But if the project is not approved by HUD and does not meet their eligibility criteria, the insurance is a moot point.
  Reply to Michael
Ron
August 19th, 2020

The condominium I am living in has been under foreclosure from a reverse mortgage for a while. I have managed to stay here and moving in a couple of months. I could not afford the HOA fees anymore so now I'm faced with a lien on the house and they want their money back and I can't afford to pay them, nor do I want to pay them.

I always thought that I was not responsible for it because it was a reverse mortgage and I am not in the original deed or title. There was a quick claim deed but that is all. I have very little money that I must live on that I do not want them to garnish from my bank account.

Can the association's lawyer obtain a judgement and come after and garnish my bank account?

If they do how will I know before they do it so I can take the money out to protect it and does this go on my credit report?
Reply to Ron
- Michael Branson
  August 19th, 2020
  
  Hi Ron,
  I am sorry, I cannot answer your questions. They are of a legal nature pertaining to the rights and obligations of a homeowner and a homeowner's association and I am not licensed to give legal advice.
  I can tell you that reverse mortgage borrowers are responsible for paying the taxes, insurance and any other property charges (such as HOA fees) so if you received a home via deed from another individual, those expenses would have become your obligation as the new legal homeowner.
  The association dues are not determined by whose name is on the mortgage but by the homeowner who gains the benefit of the association.
  To determine what rights the association now has and what rights you have though, you would need to contact an attorney in your area to discuss.
  Reply to Michael
Roz M.
July 17th, 2020

Is my condominium eligible for reverse mortgage it is worth $230,000. I owe $140,000. on a mortgage can I refi as a reverse mortgage?
Reply to Roz
- Michael Branson
  July 17th, 2020
  
  Hello Roz,
  
  Your project would need to be on the HUD project approval list. You would need to check our calculator to see if you would receive enough money for the loan to work for you based on your age due to the fact that it would definitely be tight if you are not in the upper age bracket. By checking the project first, you can determine if the property would qualify but even if so, you still need to be sure the numbers would work for you.
  Reply to Michael
Phoebus
May 4th, 2020

Does the FHA maintain a national public database of condominium projects that have been certified by the FHA to meet its reverse mortgage standards?
Reply to Phoebus
- Michael Branson
  May 4th, 2020
  
  Hello Phoebus,
  
  FHA is a division of HUD and HUD absolutely does maintain a resource for individuals to determine if a project is already approved, has been submitted for approval, was approved at one time and that approval has expired or if the project was declined by HUD. You can go to the HUD website and check the approved list for condominiums here.
  
  When you go onto the page, you will note that there is no list showing, but rather a search screen. If you want to check a specific project, I suggest you enter just the zip code in the search criteria and press the "send" button at the bottom of the white screen. This will bring up all projects that have been submitted in that zip code.
  The reason I say to do this is because sometimes the project name may be slightly different than you input or may be managed by a different Home Owner's Association and if you do not enter it exactly as HUD has it and you are searching by name, it will not come up.
  Once you have all the projects in the zip code, you can check them by name and address to be certain you have verified the correct project. Be sure to look to the right three boxes to check the states, the status date and the expiration date.
  
  You can widen your search if you are not looking for a specific project in a specific zip code. The more specific the information, the more it will pinpoint your search. If you put in a single state, it would give you all the projects located in the state.
  Add a county, and all the projects in the state and that county will appear. Add a city, and you have further narrowed the search to the state, county and city. A single zip code in not very large and if you search by zip code, you do not even need to add the state, county or city.
  Reply to Michael
Lise P.
March 30th, 2020

Does a condo have to be approved by HUD to get a reverse mortgage ?
Reply to Lise
- Michael Branson
  March 30th, 2020
  
  Hello Lise,
  
  A condo project does need to be on HUD's approved list or the condo has to be eligible for a single unit approval in order to have it be eligible for a HECM reverse mortgage. If the unit value is over the HUD limits though $765,600), then it would qualify as a jumbo or proprietary product and although the approval criteria is very similar, it would not need to be on HUD's list.
  Reply to Michael
Rose
March 19th, 2020

My partner and I, who are both 70, co-own a condo that is my partners primary residence (I live separately in my own home). This living arrangement has worked quite well for both of us so far, but my partners plan is to self-insure for long term health care by taking out a reverse mortgage on this condo without exceeding the value of his 50% share of ownership on the condo. Not only do I have reservations around how such an arrangement might work, but I wonder if any lending institution would even enter into a contract with him (or with us since I am also on the title) for a reverse mortgage With those stipulations? If there are indeed such reverse mortgages, please can you tell me what limitations we might run into, or need to be particularly vigilant about? Thank you for taking my question, Rose
Reply to Rose
- Michael Branson
  March 19th, 2020
  
  Hello Rose,
  
  Assuming the condo project meets HUD requirements, the two of you could obtain the loan on the property but only if both of you agreed to the financing. You would be required to attend the counseling so you understood the loan but would be considered an "ineligible non-occupant co-borrower".
  This means that the entire unit is used for collateral (not just your partner's half) and if something were to happen to him, the loan would become due and payable. The ramification is that you would be forced to either refinance the loan at that time or pay the loan off with other funds available to you or the loan could be placed into foreclosure.
  The loan would also accrue negative amortization and there would be no cap at 50% of the value, that would be up to the two of you to determine how you would cap his share of the value of the ownership versus the funds available to him at any given time considering fluctuations in value, etc.
  In addition, I don't know how the property title reverts upon death (if you each inherit the other's ownership interest with right of survivorship or if that is set up to go to other family members), but if there are other family members involved as well, that could further complicate the issue.
  My biggest piece of advice if this is the way you choose to go would be to visit an estate attorney first and be certain that you have all provisions set up in advance for the disposition of the property as well as contact the lender when the loan is first closed and give them authorization to discuss the loan with you even though you are not on the loan so that you will not have trouble later with financial privacy laws since you are not a borrower on the loan.
  You may want to discuss a trust situation with Powers of Attorney in advance for the loan with your attorney but that would be up to the two of you and your attorney. Whatever you do, be sure to send copies to your lender in advance so that there is no question about your right to discuss the loan with them later if that is what you choose to do.
  Reply to Michael
Michael Branson
January 2nd, 2020

Thinking of buying a condo in a Condo development in Riverhead NY. The development is Willow Ponds is it approved for reverse mortgage
Reply to Michael
- Michael Branson
  January 2nd, 2020
  
  Hello Michael,
  
  I see that there are only two condo projects located in Riverhead, NY that were once approved and both have expired (but neither were the project that is named "Willow Ponds"). However, both do have "Pond" in their name, so I have no way of knowing if they are in any way associated with the project you are considering.
  
  I will tell you that HUD has recently changed their requirements for single unit approval though so if the unit you are considering is not in a project that was previously approved, there may still be a chance of obtaining a single unit approval without having to get the entire project approved.
  I will caution you though, the approval still requires all the project documentation and even though it doesn't take as long as a full project approval, it will take the lender more than just a few days to obtain.
  If you must agree to a loan approval or removing all contingencies within a short time as is the case for most purchase transactions, it may be very difficult to use the purchase reverse for an unapproved condo project.
  
  It has been out experience that all project documentation is not usually readily available, it takes a while to have the HOA fill out their necessary portion of the forms required by HUD and most contract are written so that sellers want to know that the buyers will and can perform before everything can be put together for a project approval or even a single unit approval.
  If you are really set on a unit in this project and the only way to complete the transaction is with the reverse mortgage, my suggestion is to see if the sellers are willing to give your lender adequate time to obtain the necessary HUD approvals before your deposit is at risk.
  I believe honesty and full disclosure are important and if the seller is willing to work with you knowing that the project may not meet the HUD requirements, then at least everyone goes into the deal with their eyes open.
  If not, I would honestly suggest you consider other alternatives, whether that is in the way of financing or properties. Just remember, if the project cannot be approved, you cannot refinance any other loans into a reverse mortgage later, either.
  If the reverse mortgage is a critical element of your planning, keep that in mind if you decide to close the purchase with a standard or forward loan with plans to refi later.
  Reply to Michael
Michael G.
August 25th, 2019

I own a condominium worth approximately $220,000 based on recent sales of the same model as mine, and my current mortgage has a balance of $98,000. My 1,500-unit 55+ development in Ridge, NY is not FHA-approved. Is there any non-FHA reverse mortgage for which I can currently apply, and if so, how can I obtain an information kit and have the available loan value calculated?
Reply to Michael
- Michael Branson
  August 25th, 2019
  
  Not right this moment, but on October 15th HUD will again offer a spot type or single unit approval that does not require the entire project to be approved. You can find all the information here (put link to the program here) and so you only have a very short time before the program is out (less than 2 months).
  Reply to Michael
Cynthia B.
July 29th, 2019

If I have a reverse mortgage on a condo with a detached garage, can I sell just the garage to someone else in the complex?
Reply to Cynthia
- Michael Branson
  July 29th, 2019
  
  Hi Cynthia,
  
  I very much doubt that this would be possible, but it would depend entirely on your title. If the garage is included with and part of the legal parcel of the condominium unit, it is also encumbered by the loan and cannot be separated unless the loan is paid in full.
  However, if the garage is a separate parcel (it has its own legal description) and is not included in your unit legal description, then it also is not included in the loan and you would be able to do anything you want with it. I would be very surprised if the garage is a separate parcel though and would suggest that you review your title documents.
  If you aren't sure, you could contact a title company, or a title attorney and they would be able to advise you.
  Reply to Michael
Maureen T.
July 2nd, 2019

Are there any condo properties in Prince George's and Montgomery County, MD that are eligible for reverse mortgages?
Reply to Maureen
- Michael Branson
  July 2nd, 2019
  
  Hello Maureen,
  
  You can search online at the HUD website to see what projects are approved by particular project or by state, zip code or even city. This way you can see if a project you have seen is approved or just a list of all projects located in the area that already have HUD's approval.
  Be sure that you note the date of the expiration and that the project is approved because HUD also keeps projects that were denied and those on which the approval has since expired on the list. You need to have a project that is currently approved for it to be eligible.
  Reply to Michael
hank jeffries
March 30th, 2019

MIL passed with a reverse mortgage on her condominium. Lender of course wants payoff, and so is demanding that condo be listed for sale and threatening foreclosure. In order to put unit on market, structural failures prevent its sale (nobody would lend on it). HOA Board has not responded in over a month to contractor's proposal for repairs. We cannot sell it as is so we cannot meet lender's demand to sell it. What is our defense? Balance due approx. $111,000 while comps are in the $325,000 range. A foreclosure of this structurally unsound residence would probably not cover the balance due. No cash has been taken out against the reverse mortgage.
Reply to hank
- Michael Branson
  April 1st, 2019
  
  Hello Hank,
  
  I think you need the help of a professional! You may very well need to have a court-ordered delay of any action and there may be needed to do some legal pushing so my only advice would be to consult with an attorney as soon as you can. The attorney may have to file injunctions and additional legal actions to get people moving but he or she will know what can and cannot legally be done to protect your position and equity in the home.
  Reply to Michael
Gail N.
March 27th, 2019

I understand that our condominium needs to be HUD certified in order to apply for a reverse mortgage. Is this true?
Reply to Gail
- Michael Branson
  March 27th, 2019
  
  The project must be on HUD's list as currently approved. Even if the project was approved at one time in the past, if that approval has expired, it would have to be reapproved. You can see if your project is currently approved by going to the HUD site.
  The easiest way to do the search is to just input the property state and the county in which the property is located. This will bring up a list of all properties located within your county that are currently approved, have been denied and were approved but on which those approvals have expired.
  
  When you go down the list of projects and find your project, you must go all the way to the right to see the status, the status date and the expiration date. Don't forget that if the project was never approved (cancelled or rejected), the status expiration date will be n/a. The status must be Approved and not beyond the expiration date all the way to the right.
  
  If your project is not approved and was not rejected, chances are good it was never submitted to HUD for approval. In that case, you can attempt to still get the project approved and there are some companies who will do this who do not charge a fee if HUD does not approve the project.
  They can usually tell you quickly after receipt of your documents if your project will meet the HUD requirements. Some borrowers have even gotten the HOA to get the approval for the project, but the HOA or management is usually not as motivated to get it done quickly as a company you employ just for this purpose so that will have to be your call.
  Reply to Michael
Al LoParrino
December 9th, 2018

I live in a condo that the Sponser still is in control of the board. Does that board have a right to take funds from our HOA funds for FDA reverse mortgage approved which benefits 5% of the unit owners without the owners voting on the issue
Reply to Al
- Michael Branson
  December 10th, 2018
  
  Hi Al,
  
  I'm afraid I can't tell you what your CC&R's authorize until the unit owners take control, that would be a legal question. But I think you may be wrong on a couple of counts here.
  Firstly, HUD doesn't charge anything to approve a project. Unless the person you reference is using a third-party company to prepare the documents for HUD, there is no charge for HID/FHA approval of the project. And even then, that charge would be nominal.
  
  Secondly, it's possible only 5% of the owners could use the reverse mortgage program, but 100% will benefit from the HUD approval. Having the project approved gives all owners greater access to financing options for both forward and reverse loans. It also gives unit owners a larger audience when they must sell their homes. Prospective owners would have the option of using FHA financing, giving unit owners more potential buyers. All owners benefit from the approval, not just reverse mortgage borrowers.
  Reply to Michael
Georgianne Brier
September 18th, 2018

I am 68 and I own a condo and want to get a reverse mortgage but my project has never filed for FHA approval. I talked to the management company and they said they had previously talked to the president of the board about applying but the president of the board did not want to so they told me to try and talk to him and to remember that the other board members usually follow what he says. I want to know what I'm talking about before talking to him so I can possible get my point across to him. I do not know why he does not want to do it other than mis-information about FHA. I have heard rumors but they are just that, rumors. The rumors are that they are afraid of the type of people that would buy into our condo community. I would also like to know if the board would have any liability should I lose my condo because I was not able to apply for and get a reverse mortgage because they refused to apply for FHA approval? I need the help right now due to illness.
Reply to Georgianne
- Michael Branson
  September 18th, 2018
  
  Hello Georgianne,
  
  Let me first address the possible liability you asked about. I cannot give you any direction here and would suggest that you contact a licensed attorney in your area for help with a question as it relates to liability. This would be a legal issue and we are not licensed to give legal advice or opinions and it may or may not depend on the laws in your area so you really need a local legal professional who can review the legal documents of the project and tell you what rights you have based on the parameters set up in the project in which you bought.
  
  Having said all that, I can tell you that there are companies who specialize in condo approvals and who can review all the legal docs and let you know if your project will even meet HUD guidelines. Your association doesn't have to apply for approval, you just have to get the HOA to complete a questionnaire and you need to supply the condo approval company with the CC&R's, By-Laws, budgets and a few other items that should be available to you, a unit owner.
  There is no application from the association per se to become approved, they just have to complete the questionnaire which I don't know why they would refuse. The last questionnaire I saw didn't say "for FHA approval" it only asked for the answers to some questions which I believe as a unit owner you have the right to request but they may charge you.
  
  There is a misconception that FHA approval brings the "wrong element" into the project. Most of the time unit owners have found that the ability for prospective buyers to use FHA financing opens the project up to more potential buyers and therefore more competition and higher prices when you have more people competing to purchase the available properties listed for sale. Some board members think of HUD approved projects as run down buildings that are deep in decay when usually projects that have HUD approval are the opposite.
  HUD will not insure a loan in a project that has inadequate reserves, more than 50% rentals, pending litigation if that litigation could endanger the soundness of the project, has inadequate insurance, etc. A HUD approval typically means that the project has been reviewed and been found sound in all ways. Also, HUD approvals must be renewed every 2 years ensuring the project does not deteriorate or that the financial soundness of the project does not erode or they will not continue to insure new loans in that project.
  
  You may find though that the president is set in his ways and unwilling to bend if he is not aware of benefits of the HUD approval for owners when they list their homes for sale (let alone your ability to get a reverse mortgage). We have seen this before. Some folks have a preconceived notion that they will not change and if this is the case, I do not know how you will get him to change his mind. If everyone else on the board follows him blindly, you may be in for an uphill battle so you may want to contact a company such as "The FHA Condos Approval Company" and ask them what they would need from you to get the project approved by yourself.
  If you can get the documentation together, you may not need their involvement. A little disclaimer, we are not affiliated with FHA Condos Approval and I do not know what their costs are, I only know that they state that there is no charge if they cannot get your project approved so there is no cost to ask. There are other companies who also provide this service and you can find them online. They may also be able to give you the ammunition you need to convince the board that this is in everyone's best interest.
  Reply to Michael
Joy K.
September 6th, 2018

I want to purchase a property in Sarasota FL that is classified as a condo (ID A4407323) but in fact is the only detached unit in the HOA (4444 Long Common, 34235). I'm told this property does not qualify for a RM/HECM. I am prequalified for a conventional mortgage now but want to know that I could get a RM4-5 yrs from now as a refinance if I needed it. I am 67 yr old.
Reply to Joy
- Michael Branson
  September 6th, 2018
  
  Hello Joy,
  
  Unfortunately, there is no way to give you any assurance that the loan program would accept any particular property at some point in the future. HUD sets the program rules for the federally insured Home Equity Conversion Mortgage reverse mortgage loan and that includes eligible properties. Only HUD can determine if there would be a change in the program parameters that would affect any particular properties or class of properties.
  
  And then with regard to your home specifically, I could not begin to comment why your project is not currently approved. It could be something like the fact that it is not on the current approved list which would only be a matter of submitting the documents to get it approved under the current parameters. It could be that the current occupancy percentage is not high enough to meet HUD requirements but that might be something that changes in the future. Or your project could have issues which prevent it from being approved at this time which would be more problematic. For example, if the project had serious issues with the construction, with insurance or lawsuits, it could still be rectified, but might take a lot more to resolve the issues and might never meet HUD parameters. And finally, the project could be one that had both residential and commercial usage that does not meet HUD eligibility guidelines and in that case, would never be eligible for the reverse mortgage loan.
  
  HUD's treatment of condominiums was completely different in 2010 than it is today. There are whispers of coming rule changes that will make loans on units in condo projects easier but we have no information on what that might look like at this time. Even if those changes come out still this year though, you need to realize that just as they have done in the past, even if HUD changes the program requirements for condo projects, they can always make future changes that could make it yet easier or even harder than it is now -we just have no way of knowing what the future will bring.
  Reply to Michael
Diana Elston
July 2nd, 2016

My homeowner's insurance is included in the monthly dues. Am I required to have a certain amount of personal property insurance as well for a reverse mortgage?
Reply to Diana
- Michael Branson
  July 5th, 2016
  
  Hello Dianna,
  
  The reverse mortgage, like all loans, does have minimum coverage amounts based on the amount of the cost to replace the dwelling or the loan amount, but coverage of personal property is entirely up to you. The loan does not require that you maintain coverage on your personal contents in the dwelling, just adequate coverage to replace the home should it be destroyed entirely or the loan amount, whichever is less (keep in mind that your loan amount grows so the calculation based on replacement is usually lower).
  Reply to Michael
Jorge Lazaro
April 18th, 2016

Is the incorporation of the HOA a requirement for HUD/FHA approval for reverse mortgage for a condominiums?
Reply to Jorge
- Michael Branson
  April 18th, 2016
  
  Hello Jorge,
  One of the first things that HUD requires when approving a condominium project is a copy of the articles of incorporation. I do not know a way to get a project approved that has a homeowners association that is not incorporated.
  However, we do work with some companies whose only function is to obtain approvals from HUD for condominium projects. They are staffed by former HUD employees and if there is any way to get a project approved they would know. If you'd like to contact us we would be more than happy to put you in touch with one of the specialists.
  Reply to Michael
Arnold
March 24th, 2016

does my condo building need to be FHA approved
Reply to Arnold
- Michael Branson
  March 24th, 2016
  
  Hello Armond,
  
  Yes, all condominium projects must be HUD/FHA approved before a lender can take an application for a reverse mortgage on the Home Equity Conversion Mortgage (HECM or "Heck-um") reverse mortgage program. HUD used to allow lenders to do a "spot approval" and they could lend on units in projects that had not been approved with limitations, but the rules changed over 5 years ago and now the project must be approved for the very first loan.
  
  The reason I make the distinction though is that there are a couple of proprietary or private programs that might work for you depending on the value of your unit even if the project is not HD approved. Typically, if the value of the home falls within the HUD lending limits (up to $625,500), those programs also require the project to be HUD approved but for units located in higher valued areas for which the HUD program just doesn't make sense and for which unit owners would not seek HUD approval (typically million dollar plus condominium units), the HUD approval is not a requirement but they will still review the project with similar criteria requirements.
  Reply to Michael
frank galasso
March 20th, 2016

Please tell me what the association's application fee is to apply for HUD approval for member's reverse mortgage application.
Reply to frank
- Michael Branson
  March 21st, 2016
  
  Hi Frank,
  There is no fee to the HOA. The entity seeking approval has to file the necessary paperwork with HUD for the request and there may be costs required to obtain and submit the paperwork but that is not a cost to the HOA. In fact, the HOA is usually one of the entities charging for services to supply necessary documentation for the lender, borrower or third party company seeking the approval on the borrower's behalf.
  Reply to Michael
David C.
January 5th, 2016

I have a townhouse unit on the project "Key Largo Yacht Club" located at Key Largo, Florida. This is an ocean front condo project of 24 units with Marina, etc. What has to be done in order to qualify this project so that then I can apply for a reverse mortgage on my unit?

David C.
Reply to David
- Michael Branson
  January 5th, 2016
  
  Hi David,
  
  By looking on the HUD Website, I see only one project in Key Largo (zip code 33037) that is currently approved and that is Buttonwood Bay, #14. To be able to do a reverse mortgage on any condominium, HUD has to approve the project first. To do so, they have to review quite a few of the legal documents which include such things as the CC&R's, Articles of Incorporation, Bylaws, Budgets, Insurance, a certification by the HOA which answers questions about everything from current shortfalls to any legal activity and the number of rentals in the project.
  
  As a lender under the HUD reverse mortgage rules, we cannot charge a fee for the collection, review and submission of the often 5 inch or thicker stack of documentation that is required to be submitted to HUD. And since HUD does not approve all the projects that they receive, submitting projects for approval has become economically unfeasible for many lenders (I do not know the current approval percentage, but we have seen less than 50% approval ratio after HUD changed the condo approval requirements in 2009).
  
  Just as with anything else though, once a need is identified, there are those who move to fill the need! There are now companies that will work with your association to get the project approved, sometimes with the cost borne by the association since the HUD approval helps not only the reverse mortgage borrower but also anyone who wishes to sell their unit and wants the new buyers to also have the ability to utilize FHA financing.
  Two such companies with whom we have worked are:
  
  fhacondosapproval.com
  tattersallconsulting.com
  
  We are not affiliated with either company nor do we quote their fees or have any control over them. You may also still be able to find a lender willing to assist with the condo project approval. The companies listed above are often staffed by ex-HUD employees and are excellent at letting you know with just a small amount of information if your project has some issue/issues that would preclude approval in the first place and whether or not there are things you can do to correct those issues.
  If you are trying to ascertain whether or not your project has a serious issue that would prevent HUD approval, I would say that a specialty company would be much more capable of getting you that response and then you can still get the best deal on your reverse mortgage from any lender afterward if they can get it approved!
  Reply to Michael
Rudy
December 29th, 2014

If one has a property which is NOT fha approved?...do I have any other options for a reverse mtg??
Reply to Rudy
- Michael Branson
  December 29th, 2014
  
  Hi Rudy,
  The answer to this question really depends on exactly what you're asking me. I'm sorry, but the way this is written, there could be a lot of different scenarios and not all of them have the same outcome so bear with me a bit and I'll try to answer your question to your satisfaction.
  Firstly, when you say, "not FHA approved", are you saying that it has not been FHA approved as of this time (as in a condominium project that requires FHA approval that has never been submitted and is not on the HUD/FHA Approved Condominium List), or is located in a condominium project that has been declined by HUD, or the property has been declined by a lender due to some element that they state does not meet FHA guidelines?
  The distinctions are important because if you live in a condominium that is not on HUD's approved list, you may be able to work with the HOA to get the project approved. HUD has a very detailed list of documentation that they will require and if your project meets their standards, they will approve the project and then you can get the HUD HECM reverse mortgage loan on units in the project.
  This is also beneficial to not only reverse mortgage borrowers but also ALL buyers and sellers in the project as it gives them another avenue for financing and therefore, condo association boards and HOA's are really missing the boat if they do not cooperate to get the project HUD approved as it can improve sales in the project.
  If you are saying that there is something about your particular project or property that does not meet HUD guidelines (in other words, you have tried and your loan request was denied due to the condominium project or the property), then the possibility would really depend on a few things. Proprietary or private programs are very few and far between at this time but they are expected to re-emerge.
  Once they do, they will set their own property standards and the property or projects will not necessarily have to meet HUD requirements. Having said that though, it will really depend on the reason the property did not meet HUD's requirements in the first place. HUD does have some requirements that tend to make people scratch their heads in wonder when they hear them at times, but by and large, they are not outlandish by nature and many of the private programs carried the same type of property requirements.
  I would tell you that if you have some specific concerns, I would be happy to discuss them with you and let you know if there are any remedies of which I am aware that might make the property acceptable though that might not have been considered. There are some things we just can't remedy but there may be others that with a little thought, we may be able to think of a work around that just might result in a closed loan but without the particulars, I really can't say.
  Reply to Michael
  - Ray P.
    June 27th, 2022
    
    Hi Arlo,
    
    My condo association is not on the HUD list. When I went to a bank, they studied the documents. They said it would not be approved. No problem.
    I went to a Proprietary loan company. I own the condo outright. No mortgage. All condo fees paid. Can the HOA deny me the loan?
    Reply to Ray
    - Michael Branson
      June 30th, 2022
      
      Hello Ray,
      I am not an attorney and cannot answer this question for you. I honestly do not know if a condominium association has the legal right to dictate to the unit owners what types of financing is acceptable within the project. That does not sound reasonable to me but that is certainly not legal advice.
      I do know that over the years, we have run into several situations where associations or more specifically, board members on the associations have determined for some reason that FHA approval was not advantageous for their project and did everything they could to thwart the process from failing to provide documentation when requested to in one case, falsely filling out an HOA certification request.
      Those individuals seemed to believe that there was some stigma around FHA approval and once they realized it helped their owners by opening them to additional possible buyers when they needed to sell and gave them greater access to mortgage programs (like the reverse mortgage), many were persuaded to change their view.
      Perhaps if your association tries to block your access to reverse mortgages you can show them how it can benefit other owners as well. If not, you would need to consult with an attorney in your area to determine your rights as a unit owner and the obligations of the HOA under the terms of the CC&R's as well as the other legal project documents (by-laws, etc.).
      Reply to Michael
Mary Ann
November 8th, 2013

I have been wanting to get a reverse mortgage but my association will not cooperate in getting an FHA certification. What can I do to encourage them to do so. They say there is some litigation in one of our Phases but not the one I live in. It does not say that your condo is excluded if you have a litigation but HUD would look into it. We are 52% owner occupied the last time I checked which was about 6 months ago. Where do I go to get help. I have a serious health issue and do not qualify for a refi as I am unable to work at this time. A reverse mortgage would be great for me.
Reply to Mary
- Michael Branson
  November 8th, 2013
  
  Hi Mary Ann,
  Litigation does not necessarily mean that the project will not be approved - it would depend on the reason for the action, the potential liability, whether or not HUD felt that the project had adequate measures so that the project would not be adversely impacted if they lost the litigation (i.e. adequate insurance) and whether or not the issue adversely affected the marketability of the property at this time.
  The association's only real "cooperation" is filling out the HOA certification and then if you don't have all the condominium project documentation, supplying the lender with that documentation (CC&R's, bylaws, articles of incorporation, budgets, etc). If the HOA won't even give this documentation to your lender, then I would suggest you personally visit their office with the request and ask to complete the request for you. You never know if HUD will approve the project or not until you get all the supporting documentation.
  Reply to Michael
  - Michele
    March 24th, 2020
    
    ARLO,
    I am helping my 82 yr old father. He owns his condo in Philadelphia, Pa 19106 "Society Hill Towers". He wants to reverse mortgage. What's the best way I can guide him. I'm a little lost. Looking for some solid guidance. Please and thank you
    Reply to Michele
    - Michael Branson
      March 30th, 2020
      
      Hello Michelle,
      
      If I go to the HUD condominium look up page and type in dad's zip code, I see that there are quite a few condos in this area that HUD has looked at and that is actually good news.
      The projects are listed alphabetically and as I scroll down the page, I see the project has previously been approved, but that approval expired in 2015. This means that the project would need to be reapproved or the unit would need to be eligible for a single unit approval for dad to be able to get a reverse mortgage on his unit.
      
      There is a list of items that you would need to get from the HOA in order to get either the project approved or a single unit approval and they are both basically the same items with the major difference being on a single unit approval the information does not have to go into HUD for them to also approve in advance.
      There are two ways to go about this. You can contact a condo approval company who will do all of this for you or you can obtain the list of items needed from a lender and check with your HOA to see if they will supply you with the information.
      We had hoped that the single unit approval would be more like the old "Spot Approval" program that HUD had prior to 2009 that was much easier and quicker but when they reintroduced the single unit approval process just last year, it was somewhat of a disappointment to lenders and borrowers in that it is not a huge paper saver but it is beneficial from a time standpoint.
      Your best bet would be to contact a reverse mortgage specialist and make sure they are working with the single unit approvals (not all are) and then determine if you are able to supply the needed information.
      If not, check out the services of companies like The FHA Approval Company (FHACondosApproval.Com), Tattersall Consulting (tattersallconsulting.com/fha-condo-approval-program.html) or others on the internet to see if you would rather work with them.
      These companies do charge for their services but are usually staffed by ex-HUD employees, know the ins and outs of project approvals and typically do not charge unless they can get the project approved.
      Reply to Michael

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