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Home / Questions / What are the requirements for reverse mortgages and accessory dwelling units?

Hello Arlo, California State law as of 1/1/2020 will allow ADUs to be added to a multifamily home without regard to zoning. I have a reverse mortgage on a duplex and need to use a portion of my unit for a personal caregiver who will have her own separate space with a kitchen and bath, conversion of existing space in my team. I will need to permit this and get a cert of occupancy from the city to have the caregiver ADU legally. (I would use the other part of the duplex for the caregiver, but it is not a legal reason to evict in California.) Is this ok under HUD guidelines, and if not, do you have any suggestions? (Because of the lack of affordable housing, I note that many States and municipalities have added multifamily ADUs (or multiple ADUs to single-family homes), which erases former single-family zones, among other things.). I would also mention that the stated and original purpose of a reverse mortgage was to allow the mortgagee the wherewithal and means to continue to live in their homes until death or extreme disability made that impossible. Thank you for any information you may have on a way forward with this question.

By Val D. on 12.04.2019

Hello Val,

HUD’s guidelines currently do not allow multiple family units with added Accessory Dwelling Units (ADUs). 

I realize that California and other states have laws that allow for many different situations in their codes that HUD deems ineligible. Still, it doesn’t change the eligibility for the loan under the HUD parameters. 

Many circumstances in the HUD eligibility parameters are legal under the state laws and building codes but still are not allowed based on HUD rules. 

Unfortunately, a change in state laws allowing for a building style or situation alone is insufficient to persuade HUD to insure loans on that property.  They would have to look at the circumstances and determine their perceived risk.

Having said all that, HUD changes its rules periodically due to changes to its stance on subjects and pressure from lawmakers. 

My best advice to you would be to begin a correspondence campaign to your Congressperson and your Senator to request that they lobby HUD to allow such a change in their requirements. 

There is always a chance that HUD will change the requirements on its own because of its own perceived need for change, but it certainly doesn’t hurt to help push for changes you would like to see.

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