Although condos have qualified for reverse mortgages for some time, the Department of Housing and Urban Development issued Mortgagee letter 2009-19 on June 12th that changed guidelines in the approval process. This new letter makes changes to the approval process for not only condominium mortgages but other home equity conversion mortgages (reverse mortgages) that are insured by the FHA. These new amendments were developed as a result of the new 2009 Housing and Economic Recovery Act. It is important to understand that none of the provisions of the previous legislation or the new revisions are intended to pertain to time share condominiums even if the owner spends 50 weeks out of the year in any time share or combination thereof. The provision of any reverse mortgage program state the homeowner must live in the housing unit full time which disqualifies any time share condominium.
The new approval process of condominiums is expected to become effective on October 1st after which all new condominium projects will require approval before any new mortgages will be insured. The lender must wait until after the project has been approved before he can underwrite a loan for any condo unit. The HUD mortgagee letter also states that once a condominium has been added to HUD’s list of approved projects the approval automatically expires in two years. In order for that particular condominium project to remain on the list of approved HUD projects it will need to undergo recertification. The two year term applies not just to new projects that are placed on the list but for all of the projects currently on the list. It is believed there are currently about 40,000 condominium projects on the list nationwide.
Under the new provisions direct endorsement lenders will be able to approve condominium projects for the first time. These particular lenders have been given the authority by HUD to approve condominium projects based upon the availability of their staff as well of the necessary expertise that is required for the approval of condominium projects. Those lenders that had been unconditionally endorsed by HUD to approve condominium project would be allowed to evaluate the project’s eligibility, review all documentation connected to the project and provide the necessary certification to show that the project was in compliance with all of the HUD regulations.
Under the same HUD letter beginning immediately there is no requirement for single family homes to obtain project approval. Previously manufactured homes that were part of condo projects were eligible for FHA mortgages but beginning on May 21st with the release of mortgagee letter 2009-19 their approval is limited to HUD only and they cannot be processed within the scope of site condominiums. Though many people tried to rush and obtain new reverse mortgages before the implementation of the new approval process, it is likely that some existing condominium projects may need re-certification in order to be in compliance with the new regulations. The new regulations will also stop the loan processing for any projects that have not already been approved.
A thirteen-year veteran of the mortgage industry, Robert Griffin specializes in reverse mortgages and has helped over 3000 Americans find financial security with a reverse mortgage. The owner of Griffin Financial Mortgage LLC, based in Fort Worth, Texas, his memberships include the National Association of Mortgage Brokers (NAMB), the Mortgage Bankers Association (MBA), the National Reverse Mortgage Lenders Association (NMRLA) and the Better Business Bureau (BBB). Robert Griffin is also co-author of “62 Senior Moments.” If you would like more information, please call (866) 683-3690 or visit our Reverse Mortgage website.
Tags: Reverse Mortgage
