A reader asks, “I have been trying for a few years now to obtain a FHA reverse mortgage for my condo in Staten Island…We were told that “spot” reverse mortgages are no longer available. Since our condo association will not consider having our entire complex become an FHA approved complex..and it seems every other complex in Staten Island feels the same way, we cannot access our equity which we need to augment our retirement income. Do the recent changes in FHA policy offer us any hope?”
The FHA changed the rules for HECM loans in 2014 to include sweeping alterations of the requirements–there are new rules for payments depending on the nature of the loan (fixed or adjustable rate HECM loans), mandatory financial obligations and mortgage insurance.
However, the changes to the FHA Home Equity Conversion Mortgage Loan program involve basic features of the program such as those mentioned above. Based on a reading of the changes we could find nothing that would apply in the case of this reader question.
It’s very important to know that lenders are not required to offer all FHA loan programs such as HECMs. FHA lenders offer loan products at their discretion, and the lender is also free to require higher FICO scores and other qualifications than FHA loan minimums, so long as those higher standards are applied consistently and in accordance with federal laws.
The borrower in cases like these should consider other lenders to see if there’s a financial institution willing to work with them; in the cases where a borrower wants to do something that is not permitted by FHA loan rules, no lender will be able to help–at least with an FHA loan product.
In situations where a borrower may be up against a certain lender’s standards rather than an FHA loan rule that doesn’t permit a certain type of loan, some lenders may have more flexibility than others.
FHA HECM loans are more complex now than they were a year ago, but these loans are still a good option for the right type of home owner. Discuss your HECM needs with a loan officer to see what might be possible in your circumstances.
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