It has been a tough past seven years since the requirement that a condominium must get HUD approval was implemented. No one was affected more so than senior citizens seeking a reverse Mortgage. There are less than ten thousand associations in which seniors can obtain a reverse mortgage out of a whopping 170,000 HOA’s nationwide.
Single Unit Approval is going to be a huge boost to seniors seeking to obtain this very important retirement tool. No longer will they have to wait for the board to meet (sometimes taking months) and give their blessing for FHA approval. No longer will they have to deal with a passive or indifferent property manager who is too busy to help them. Additionally, no longer will they have to shell out the $1,000 it costs to process and submit a HUD application!
I have spoken to hundreds of seniors over the past seven years regarding their need for both a reverse mortgage and the approval of their condominium, and their stories are heartbreaking. Many had to sell their home and move because of their inability to make HUD approval happen, leaving them no other option to reasonably tap into their equity to obtain necessary cash flow. With needs like hip replacements, cancer treatment, and money for their grandkids’ college fund, these seniors battled against laziness, various biases, and ineptitude, while also losing valuable time. When they sold those properties, and purchased again with a reverse mortgage, 10% of their hard earned equity was wiped out.
Thirty-one percent of the persons living in a condominium are 62 or older, which indicates that a high concentration of seniors will benefit from Single Unit Approval. This is why the reverse mortgage industry was behind HR 3700, the federal law that mandates Single Unit Approval.
HUD has done a nice job balancing their need to protect the insurance fund with the needs of seniors to estate plan with the new condo rule. It also just might lead condominium associations to conduct themselves with more fiscal and operational savvy, so as to enable more seniors to avail themselves of one of the greatest retirement tools ever.