Can There Be HECMs for Co-ops?
On June 30, 2011, a letter put together by Rep. Edolphus Towns (D-NY) and signed by eight lawmakers, was submitted to Housing Secretary Shaun Donovan. This letter was a formal request that the Department of Housing and Urban Development (HUD) expedite its research into permitting HECMs on cooperative housing units.
The letter stated that "with over one million housing cooperative units in the United States today, thousands of these home owners are impacted by not being able to access HECMs." It goes on to say that allowing HECMs on cooperative housing "would be invaluable to the economic and physical health of older Americans struggling to stay afloat in this economy. We urge you to issue home equity conversion guidelines, giving our seniors who own shares in housing cooperatives the same opportunity to access HECMs as all other home owners."
Rep. Towns is a congressman from Brooklyn, which has a relatively high number of cooperative projects, and he regularly receives pleas from constituents to address the issue. New York, New Jersey, Florida, and California are the states with the most cooperative housing units.
Unlike condominiums, where there is often at least a chance to receive FHA approval if the condo project is not already approved, home owners in cooperative housing are simply denied when they inquire about a reverse mortgage (HECM). The National Reverse Mortgage Lenders Association (NRMLA) and other groups are keeping tabs on this issue.