If you live in a condominium (or know someone who does) and are looking for an FHA reverse mortgage, you know the most difficult part of the loan process may be getting your complex approved by HUD (Housing and Urban Development). However, beginning on October 15, 2019, that process will be dramatically easier.
The FHA published final regulation and policy implementation guidance last week establishing a new process for condominium approvals aimed at first time homebuyers and seniors looking to age in place.
They are now allowing a new single-unit approval procedure that allows for individual condominium units to become eligible for FHA-insured financing without getting the entire complex approved. It also extends the recertification time for approved condominium projects from two years to three.
I don’t know the exact numbers, but it has been my experience that only about one-third of all condominium complexes in the Denver-Metro area are currently FHA approved. While not every condo unit will be approved, this new single-unit approval process opens the door for people living in projects that are not currently FHA approved.
Below are a couple of the conditions from HUD’s press release: HUD No. 19-121
“As of October 15, FHA will insure mortgages for selected condominium units in projects that are not currently approved. An individual unit may be eligible for Single-Unit Approval (SUA) under the following conditions:
- The individual condominium unit is located in a completed project that is not approved;
- For condominium projects with 10 or more units, no more that 10 percent of individual condo units can be FHA-insured; and projects with fewer that 10 units may have no more than two FHA-insured units.”
As you can see, one of the biggest challenges to getting approved through the Single-Unit Approval process will be the number of other owners in the complex who have an FHA insured loan, forward or reverse.
In the next few weeks, I will have a form that the homeowners association or management company will have to complete in order to obtain the approval, but it will be much simpler than the process required for complete project approval.
Of course, if we cannot get you approved through this process, the proprietary program works very well for non-FHA approved condominiums. These are non-FHA insured loans that are a good alternative to the FHA insured reverse mortgage program.
Please feel free to call me with any questions at 303-513-2748.