If you are a condominium owner thinking about doing a Home Equity Conversion Mortgage (HECM) but have not yet applied for the program you might be out of luck.  You might have waited too long!

New rules go into effect February 1st eliminating the old “spot approval” process. If your complex is not already FHA approved, there is little probability that your project could/would earn necessary FHA approval.  The process is far too costly for most associations to initiate.  While a very savvy lender just might be able to navigate the process to win spot approval for you under the new rules, that lender would assume liability for your loan and any other reverse mortgage loan completed in your project… even if other loans were done by another lender. Seems unlikely anyone would take the risk.

Many projects that are presently FHA approved will be subject to review because conditions have changed and much time has passed since these projects were initially approved.

So many changes are coming down with respect to the Home Equity Conversion Mortgage program that it is difficult even for the professionals to keep abreast of them.  If you even think that a reverse mortgage is in your future over the next six to twelve months, you should be talking to an experienced professional. Waiting is probably a poor strategy given the numerous changes to the program.

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Author – Robert H. Irving, CSA®
Senior Reverse Mortgage Consultant