Hello ARLO, I've had an FHA reverse mortgage, sold the house, and paid off the loan. I bought another home and was in the process of getting another reverse mortgage. Midway through the loan process, the appraiser alerted the lender (before appraising the house) that my home was next to an Ameren substation with power lines above it. I live in a small town. I was unaware this would be an issue since the substation is fenced and sits 30 feet above the fence line. The appraiser said there was no point in doing the appraisal. I was turned down! I had already paid for the certification and everything. Would a non-FHA reverse mortgage be an option? I currently have a conventional loan on the home.
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Michael G. Branson, CEO of All Reverse Mortgage, Inc., and moderator of ARLO™, has 45 years of experience in the mortgage banking industry. He has devoted the past 20 years to reverse mortgages exclusively. (License: NMLS# 14040) |
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All Reverse Mortgage's editing process includes rigorous fact-checking led by industry experts to ensure all content is accurate and current. This article has been reviewed, edited, and fact-checked by Cliff Auerswald, President and co-creator of ARLO™. (License: NMLS# 14041) |
Michael G. Branson
Edited by 
Cliff Auerswald
Hello Karen,
HUD has specific requirements regarding properties affected by external hazards and nuisances. I’d like to share the relevant comments from the HUD manual concerning high-voltage lines.
There is no direct statement indicating that a home near a substation is ineligible. However, if power lines extend over your property, it would be ineligible under HUD guidelines (and proprietary programs), regardless of the substation’s proximity.
I am not aware of any program that allows reverse mortgages on properties with power lines extending over them. HUD’s primary concern is whether your property falls within the designated fall zone of the power lines in case of failure.
If you contact the utility company and obtain a letter confirming that your property is outside the fall zone, you should meet HUD’s eligibility requirements. The appraiser will still need to assess the property's marketability based on its proximity to the substation.
There is also a possibility that an appraiser or underwriter could determine the substation to be a significant visual nuisance. If there are no comparable home sales to support the property’s marketability, it could impact loan approval.
Since the appraiser declined to proceed, I recommend requesting that your lender assign a different appraiser. While you cannot select the appraiser yourself, you do have the right to decline one based on prior experience. It’s possible the initial appraiser formed a premature opinion about the property’s eligibility before conducting a full evaluation.
Also See:
Here are the Property Requirements for a Reverse Mortgage
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