The Decades Long Battle to Bring Reverse Mortgages to NYC Co-Ops

Many seniors living in housing cooperatives are largely shutout of the ability to tap into their housing wealth using a reverse mortgage. But while there has been little movement from regulators to expand reverse mortgage access to co-ops, there are several organizations who—even after 16 years—are not giving up the fight just yet.
Housing co-ops offer residents the unique ability to control a shareholder stake in the corporation that owns the property. In areas where the cost of living is high, such as New York City, co-ops could be a less expensive option than buying a condo or renting an apartment, especially for older homeowners.
Co-Ops, a description
About half of all co-ops are “limited equity” cooperatives, according to NAHC. In order to buy into the complex, many limited equity co-ops require residents to be below a certain income level. Buyers are also required to make a cash payment and provide acceptable credit history as well as a good rental history with previous landlords.
“Market rate” developments comprise the other half of co-ops. In these complexes, the prices of shares are determined in a free market between buyers and sellers. Similar to limited equity co-ops, market rate facilities require prospective residents to provide sufficient credit history that demonstrates their ability to cover monthly charges to pay the blanket mortgage, as well as real estate taxes and utilities.
Approximately 30% of all housing in New York City is cooperative, according to the National Association of Housing Cooperatives (NAHC). Compared to the rest of the U.S., New York State is home to virtually half of all of the housing co-ops in the nation, according to the Council of New York Cooperatives & Condominiums (CNYC).
For the past 16 years, the CNYC and NAHC have been lobbying for legislation that would allow reverse mortgages for New York seniors living in co-ops. Thus far, their efforts have affected little change in the current policies of the Department of Housing and Urban Development (HUD).
Eligibility issues
At the root of the issue is the fact that co-ops are considered personal property, not “real” property in the sense that shareholders own shares in the corporation that owns the building, said Mary Ann Rothman, executive director at the CNYC.
“There isn’t real estate to collateralize reverse mortgages in a co-op,” Rothman told RMD.
This distinction in the ownership of the property restricts co-ops from being eligible for HUD-approved Home Equity Conversion Mortgages. Co-ops also prohibitive when it comes to allowing residents to take on mortgage debt in general.
Housing co-ops set strict limits on the level of borrowing they permit their shareholders, so there are built-in consumer protections that don’t exist with loans to individual home owners nor to condo unit owners, Rothman said.
As such, any loan in a housing cooperative receives “double scrutiny,” she added, since the co-op Board reviews any loan request before signing the recognition agreement the bank will require.
Legislative efforts
Aside from not meeting HUD requirements for reverse mortgage eligibility, co-ops are also stunted by a 1994 New York State regulation, which prohibits these loans in housing cooperatives. Under current state law, only one- to four-family residences and condos are eligible for reverse mortgages in New York.
At the request of constituents, New York State Senator (D) Jeff Klein introduced legislation (S. 07844) in May that aims to amend the state’s real property law, to authorize proprietary reverse mortgages in New York for seniors age 70 or older.
Following its unanimous passage in the Senate by a vote of 59-0, the legislation, which is co-sponsored by State Assembly member Jeff Dinowitz, was delivered to the Assembly on June 2, where it has sat until the Albany legislative session ended on June 17.
A change in New York law, as proposed by A. 10246 (the same as S. 07844), would help facilitate the ability of co-op owners to tap their home equity through reverse mortgages, said Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association, in a letter to New York State Assembly Housing Committee Chairman Keith L.T. Wright.
“Unfortunately, older owners of units in cooperatives in NY State are currently precluded from utilizing this important tool which is quickly being recognized as an important resource for covering the costs of maintaining a home, including cooperative fees and assessments, or to pay for home health care, personal care or other expenses incurred as people age, often a period of life in which they have diminished income and cash flow,” Bell wrote. “We strongly encourage you [Wright] and your colleagues to pass this simple, yet important, legislation.”
Although the New York State Legislature has already adjourned without taking any further action on the reverse mortgage legislation, groups like the CNYC are still hopeful they can educate lawmakers to make make meaningful progress towards expanding reverse mortgages to co-ops.
“Our outreach efforts have brought much more attention to this issue and so, undaunted, we shall continue our efforts,” Rothman said.
An untapped opportunity
With the highest concentration of housing cooperatives in the U.S., New York presents a vast, untapped opportunity to expand the reverse mortgage market, that is, if the day ever comes when such products will be made available to co-op dwellers.
New York is already one of the largest volume states for HECMs. At the end of Fiscal Year 2015, the state accounted for roughly 6% of all HECM endorsements, according to HUD data.
While at times it seemed like HUD would provide guidelines on reverse mortgages and co-op eligibility, no significant changes have been delivered just yet.
In 2000 and again in 2008, the NAHC secured federal legislation authorizing reverse mortgages for housing cooperatives and mandating HUD to develop guidelines for these loans.
The American Homeownership and Economic Opportunity Act of 2000, passed by the 106th Congress and enacted into law in 2000, allows HECMs for housing cooperatives.
In 2008, HUD issued a notice of a proposed rulemaking that would amend the National Housing Act to expand HECMs to include “approved” cooperative housing developments.
“The expansion of the HECM program, in the Department’s view, would contribute to the effort to broaden reverse mortgage financing opportunities for elderly homeowners,” HUD wrote in the 2008 proposed rulemaking.
Despite these actions, HUD has never promulgated guidelines to make reverse mortgage access in co-ops a definitive reality. In a meeting between CNYC, NAHC and HUD officials during the first week of May, Rothman said HUD made it clear that the agency does not plan to make reverse mortgage loans to housing co-ops and therefore will not produce such guidelines.
“The door is open for further discussions for how standards could be tested, but they [HUD] were firm in saying there wouldn’t be guidelines for HECM reverse mortgages in co-ops, Rothman said.
The loss of the possibility of HECMs is far more “devastating” for other parts of the U.S. than it is for New York, said Rothman, who is confident that once the state obtains the needed legislation, this will open the gates for lenders to begin offering proprietary products in the area.
“We will ask our lawmakers to amend their legislation to spell out a panoply of consumer protections, such as those in the HUD guidelines for reverse mortgages for condominiums,” Rothman said. “And we will encourage our members to continue their grassroots messages to lawmakers of the need for reasonable reverse mortgages to enable seniors whose homes are in housing cooperatives to be able to live in those homes.”
Written by Jason Oliva

CBS News: Utilizing a Reverse Mortgage in Retirement

Many financial roadblocks exist when it comes to saving for retirement in the U.S., however, there are certain actions workers can take to address these obstacles, according to a recent article from CBS News.
Using home equity for retirement consumption could be one possible solution for retirees who are “home rich and cash poor,” the CBS News article explains, but the reality is Americans are underutilizing this resource.
Exploring ways to leverage home equity to help with mortgage payments in retirement, more specifically, looking into a reverse mortgage may be an option for someone who has a sufficient amount of equity in their home.
The importance of leveraging home equity in retirement was highlighted in a report issued earlier this month by the Bipartisan Policy Center (BPC). The comprehensive, 152-page report outlined several recommendations that the U.S. government, as well as employers and financial institutions, could adopt to address the most prevalent issues currently facing American workers.
“The BPC report noted that half of all Americans age 62 and older are “home rich, cash poor”, meaning at least half of their net worth is in their home equity,” the article writes.
In addition to home equity being underutilized in retirement, the lack of basic knowledge on how to manage personal finances and the fact that social security is at a crossroads are two other challenges that American are facing.
Read the full CBS News article here
Written by Alana Stramowski

Friday Round-Up: Reverse Mortgages, Righteous Bros and Retirees’ Jumbo Loans

You’ve made it to yet another Friday, the weekend is in sight, but in case you missed it, here’s what happened in Reverse Mortgage news this week.
Why High Net Worth Retirees Are Using Jumbo Reverse Mortgages —In the last few years both American Advisors Group and Finance of America Reverse have launched jumbo reverse mortgage loan products, but there’s a unique way nigher net worth retirees are using them.
Righteous Brothers Co-Founder Named Newest Reverse Mortgage Spokesman —A new reverse mortgage company based in Orange County, Calif. came right out of the gates with the announcement of Righteous Brothers co-founder Bill Medley as their spokesman. Ameriverse Mortgage is launching a full-blown campaign that will include Medley.
Riding the Dip: Reverse Mortgage Volume Slides Further Below 2015 Levels —Home Equity Conversion Mortgage (HECM) endorsements continue to remain at a lower level than they did a year ago. So far this year, the reverse mortgage volume has had consecutive declining months of endorsements, aside from a brief climb from January to February of this year.
How One Former Loan Officer Handles Reverse Mortgage Eligibility Obstacles —Former reverse mortgage loan officer and owner of Fidelity Homestead Associates, David Michael, discusses how he handles tough situations when dealing with clients who are in need of renovations to their homes to make them eligible for a reverse mortgage. The issue here is that most often, these homeowners don’t have the funds to pay or the upgrade, but that’s where Michael steps in.
Deadline Nears to Submit Comments on FHA Reverse Mortgage Proposals —The deadline for comments on the recent Federal Housing Administration (FHA) proposals for the Home Equity Conversion Mortgage (HECM) is quickly approaching. The comment due date is July 18, 2016.
Written by Alana Stramowski

How One Former Loan Officer Handles Reverse Mortgage Eligibility Obstacles

It is well-known that certain upgrades may be required by the Federal Housing Administration for someone to be eligible for a reverse mortgage, but there is a side of these types of situations that is often overlooked.
In many cases, the driving force behind applying for a reverse mortgage in the first place is to gain extra funds, so the chance of a reverse mortgage applicant having extra money sitting around for renovations they didn’t think they needed is slim to none.
A business in Westlake, Ohio has made handling these types of situations their speciality. David Michael, owner of Fidelity Homestead Associates used to be a reverse mortgage loan officer himself, but kept running into situations with his own clients in which they needed several renovations done to their home in order to be approved for a reverse mortgage, but couldn’t afford it.
Michael then started his own business to help these types of clients. He has built up a network of contractors all over the country in the last four years since starting the business and makes sure that all of his clients get the necessary renovations done, regardless if the client can pay for it at the beginning. They take the chance on the client receiving the loan that once the renovations are finished they will be accepted and be able to pay back Fidelity Homestead Associates with some of the loan proceeds.
“Sometimes the jobs are small and only cost about five or six grand, but other times we have to do a whole gut rehab,” says Michael.
One area in particular that makes certain situations extremely unique is when a homeowner has trouble with hoarding, Michael explains.
It is not uncommon for adults age 65 and older with previous hoarding issues to increase these tendencies as they age, according to a qualitative study by Monika Eckfield, PhD, associate specialist in the University of California, San Francisco Department of Psychiatry.
When Fidelity Homestead Associates encounters a person in need of renovations to become eligible for a reverse mortgage, and this person happens to be a hoarder, there are certain steps they take to make sure the situation goes smoothly, explains Michael.
“First of all, the contractor has to have the right demeanor and needs to be able to actually talk to the homeowner and be able to show compassion,” he says.
One homeowner who required this attention was living by himself in California in a very nice area, surrounded by homes that were worth millions of dollars, Michael shares.
“We had to do a whole gut rehab, he says. “The homeowner was wheelchair bound and a hoarder. The home had no running water and was infested with rats. There were holes the size of a small child in the floors that the rats had made, but he was very attached to his belongings and didn’t want to leave.”
In most cases of hoarding, it usually takes a number of phone calls and comes down to giving the homeowner options on how they prefer to handle going through all of their belongings. Many times, Fidelity rents a storage unit to put the remaining items after all of the trash has been removed.
“When we clear these types of homes out, we usually end up taking out about six 40-yard dumpsters full of trash from the homes,” he says.
In addition to having a customer agree to allow someone in their home, in most cases, a gut rehab is necessary, so they have to move out of the house completely for a few weeks. “Most of the time we put the homeowner in a hotel and pay for it,” Michael explains.
These types of projects are common for Michael and his network of contractors at Fidelity Homestead Associates, and though they do end up taking a large amount of time, it all becomes worth it in the end to be able to see homeowners stay in the home they never wanted to leave in the first place, he shares.
“A couple weeks after the the rehab was finished, it was Christmas and one of the contractors and his wife went over to visit the homeowner and sent me a picture. He was all cleaned up and had just the biggest smile on his face,” Michael says. “That’s why I do what I do, to make people happy.”
The majority of Michael’s business at Fidelity Homestead Associates is working with homeowners who are in need of renovations that the FHA has required of them in order to get a reverse mortgage.
“We do provide a valuable service to the reverse mortgage industry,” says Michael. “If we didn’t exist all of those homes would fall through and people could potentially lose their homes altogether.”
Written by Alana Stramowski

Gallup: Most Americans Still Lack Confidence in Banks

While the U.S. economy has recovered in the years following the worst of the financial crisis, this time has not yet healed Americans’ confidence in banks, which continues to languish below 30% for the eight straight year following the 2007-2009 recession, according to a recent Gallup poll.
Just 27% of U.S. adults now say they have “a great deal” or “quite a lot” of confidence in banks, accord to the sample of 1,027 adults aged 18 and older surveyed by Gallup. In addition to those expressing high confidence in banks, nearly half say they have “some” confidence in them, while 26% have “very little” or no confidence.
Despite less than one-third of Americans lacking confidence, this percentage is slightly higher than the lows during the Great Recession and its aftermath.
“Low confidence in banks is not unprecedented, and Americans’ views of the institution have recovered in the past from severe dips,” Gallup writes.
The current share of adults who say they have confidence in banks is just half of what it was in 2004, when 53% expressed confidence in the institution. In 1979, confidence was a record high of 60%, according to Gallup.
Confidence in banks began to fall in 2005 and 2006, Gallup noted. By 2007, with home prices starting to decline after peaking in 2006, banking confidence dipped to 41% before falling further to 32% in June 2008 after the recession began. By June 2009, just 22% of Americans expressed confidence in banks, just slightly worse than today’s level.
Income also factored into the confidence levels of survey respondents and how they feel towards banks. Adults from households earning less than $30,000 annually (33%) were more likely than those in the middle (24%) and higher (22%) income brackets to express high confidence in banks.
Based on the survey results, it is clear that the aftermath of the 2008 financial crisis continues to affect Americans’ perceptions of the banking industry. Despite signs of recovery over the years, Gallup notes that views of the U.S. economy’s overall health remain negative, and Americans are not more willing to feel confident about banks.
“Regaining Americans’ trust in recent years, then, appears to be a heavier lift for the banking industry,” Gallup writes. “And it is unclear when—or if—Americans’ confidence in banks will be restored to what it was a decade ago.”
View the Gallup poll.
Written by Jason Oliva

Take Advantage of These New Reverse Mortgage Job Opportunities

Many reverse mortgage lenders are now hiring skilled professionals to fill a number of available positions for underwriters, loan officers and more.
In this week’s listing, companies like Finance of America Reverse, The Federal Savings Bank and Liberty Home Equity Solutions are just some of the lenders who are seeking out new talent as the summer heats up.
Click the following opportunities that are now open to find out more. Or for a complete list of jobs, visit the new Reverse Mortgage Jobs Online.

DE Underwriter-Remote– Finance of America Reverse
Reverse Mortgage Loan Processor– On Q Financial, Inc.
Reverse Mortgage Loan Officer/Certified Instructor – Professional Mortgage Alliance, LLC
Reverse Mortgage Originator – M&T Bank
Reverse Mortgage Loan Processor – The Federal Savings Bank
Senior Vice President of Operations – Reverse Mortgage Division -The Federal Savings Bank
In-House Underwriter – Reverse, Inc.
Inside Sales Advisor – Reverse Mortgage Loan Officer – Liberty Home Equity Solutions
Reverse Mortgage Loan Officer/Field Advisor – Liberty Home Equity Solutions
Reverse Mortgage Loan Officer – Open Mortgage, LLC
DE Underwriter – Nationwide Equities Corp.
National Retail Sales Manager – Nationwide Equities Corp.
Reverse Processor – Home Point Financial

Visit our website for additional opportunities in the reverse mortgage industry.
The best and the brightest read RMD. Want them to join your team? Post your jobs to Reverse Mortgage Jobs Online today!
Written by Alana Stramowski

Riding the Dip: Reverse Mortgage Volume Slides Further Below 2015 Levels

Thus far, the trend line for reverse mortgage volume in 2016 has been mostly marked by consecutive months of declining endorsements. As monthly volume has struggled to reach new heights this year, it’s only fitting that Home Equity Conversion Mortgage (HECM) endorsements continue to remain lower than year-ago levels.
On the roller coaster ride that is reverse mortgage volume this year, the trajectory of the first few months began with a brief climb from January to February, before arcing into a prolonged descent through May, according to industry data tracked by Reverse Market Insight (RMI).
Year-to-date (YTD) through April 2016, HECM endorsements total 17,232 units, a decrease of 8.2% from the comparable period last year, when endorsements totaled 18,778 units, as indicated by the most recent HECM Trends report from RMI.
Riding the Dip: Reverse Mortgage Volume Slides Further Below 2015 Levels
(Source: Reverse Market Insight)
Despite the fact that HECM endorsements are more than 8% lower through April than where they were last year, there were several major metros that are seeing substantial volume increases.
Denver, which ranks as the eighth-largest city in terms of unit volume with 98 loans YTD through April 2016, reported an increase of 32.4% from its year-ago endorsement total—the highest growth among the top-10 largest cities for volume.
While seven of the top-10 volume producing cities experienced declines compared to last year’s numbers, Houston and San Diego grew 12.4% and 7.1%, with 145 and 136 units, respectively.
At the state level, Colorado reported the largest growth, with its YTD volume of 634 loans through April up 46.8% from its year-ago level. Meanwhile, Washington state also reported some notable growth with 488 loans through April, a gain of 26.4% from last year.
See where other markets stacked up through April 2016.
Written by Jason Oliva

How Aging Adults Will Impact America’s Future Housing Market

America’s housing market is finally starting to pick up some momentum to provide a little growth for the nation’s economy, and the aging population stands to have a profound impact on the future of this recovery, according to The State of The Nation’s Housing report 2016, by the Joint Center for Housing Studies at Harvard University.
Some areas that will continue to drive the housing market are high rental demands, housing sales and prices, the rise of new construction of single-family homes and the aging adult population.
In the adult aging population, and more specifically, in the retirement-aged population, the number of households with residents age 70 and older is predicted to increase by over 8 million, or 40%.
“The increases will lift the share of older households from 16% in 2015 to about 21% in 2025,” the report said.
There are many ways the increase in older households will impact the housing demand, one being, a further decline in residential mobility and housing turnover because many older people now wish to age in place.
The demand for remodeling and other types of accessibility improvement projects will also increase as older Americans stay in their homes as they age. There is also the prediction of an increase in older adults living alone in the coming years, which will increase the need for in-home health care and other supportive services.
The report took an in-depth look at performance and trends in the U.S housing market. Even though things are looking up compared to the years immediately following the crash, there are still challenges in affordability among homeowners and renters.
“Tight mortgage credit, the decade-long falloff in incomes that is only now ending, and a limited supply of homes for sale area ll keeping households—especially first-time homebuyers—on the sidelines,” said Chris Herbert, managing director of Harvard’s Joint Center for Housing Studies. “And even though a rebound in home prices has helped to reduce the number of underwater owners, the large backlog of foreclosures is still a serious drag on homeownership.”
Find the full report here.
Written by Alana Stramowski

NerdWallet: ‘Standby’ Reverse Mortgage Good for Tapping Home Equity

In the past, the general consensus among financial planners was that a reverse mortgage was a horrible option, but now with reverse mortgages being safer and cheaper than ever, people are changing their viewpoint and being more creative with the ways in which the product can be used, according to a recent article on NerdWallet.
For many people, their investment portfolio is one way they can secure their retirement funds, and protecting it is one of their top priorities. If someone is over 62, a standby reverse mortgage strategy may be one option to help protect their portfolio and help make sure that it lasts throughout retirement.
“Recent research indicated that reverse mortgage lines of credit offer an important safety valve in retirement,” writes personal finance columnist Liz Weston for NerdWallet. “When the stock market plummets, retirees can tap credit lines instead of their portfolios.”
This method also can help give a portfolio some time to recover when the market rises.
There are numerous ways tapping into home equity can benefit anyone getting near, or in retirement. Funding home improvements with home equity is also a way to help keep someone in their home as they age and significantly cut down on how much of their nest egg they would need to tap into, the article explains.
These are the times when borrowing against home equity can be a smart decision, but those who do need to be aware of all of the rates and terms of reverse mortgages before jumping in headfirst.
Read the full article on NerdWallet.

Seniors’ Home Equity Grows to $6 Trillion Reverse Mortgage Opportunity

The amount of home equity being held by potential age-qualified reverse mortgage borrowers now totals more than $6 trillion, an increase of $164.9 billion in equity in the fourth quarter of 2015, according to the latest Reverse Mortgage Market Index (RMMI) from the National Reverse Mortgage Lenders Association and RiskSpan.
The increase in home equity was largely driven by an estimated $169.7 billion gain in the aggregate value of homes owned by adults aged 62 and older, though this was offset by a $4.9 billion increase in mortgage debt held by this age group.
As a result, the gains in equity pushed the NRMLA/RiskSpan RMMI to a new all-time high of 209.12 in the first quarter of 2016—up from the previous high of 203.37 at the end of 2015.Seniors’ Home Equity Grows to $6 Trillion Reverse Mortgage Opportunity
(Source: NRMLA/RiskSpan)
“Until recently, it seemed unthinkable that anyone would carry a mortgage into retirement, but today millions of homeowners are still making monthly payments after leaving the workforce,” said NRMLA President and CEO Peter Bell in a written statement.
While this phenomenon is not necessarily a bad thing, Bell suggests that seniors who are looking to accelerate the payoff date may want to consider using the proceeds from a reverse mortgage to satisfy their existing mortgage debt.
But there are still some misunderstandings that remain regarding mortgage debt and reverse mortgage eligibility.
“There are some misconceptions that an applicant would need to own their home ‘free and clear’ to qualify for a home equity conversion mortgage, but this is not the case,” Bell said.
Written by Jason Oliva