There has been a recent push by federal, state and local legislators to get reverse mortgages or Home Equity Conversion Mortgages (HECM) approved for residential cooperatives.
The federal Department of Housing and Urban Development (HUD) has not as of yet acted to expand the reverse mortgage program to co-ops, even after 16 years of efforts by the National Association of Housing Cooperatives (NAHC) and the Council of New York Cooperatives & Condominiums (CNYC), both organizations which have been lobbying for legislation in this regard.
In May, New York State Sen. Jeffrey Klein (D-34) introduced S. 07844 and Assemblyman Jeffrey Dinowitz (D-81) proposed A.10246 as its companion bill. Klein’s and Dinowitz’s legislation seek to amend the state’s real property law in order to authorize proprietary reverse mortgages in New York for seniors age 70 and older.
One of the problems in gaining approval for co-ops, according to CNYC executive director Mary Ann Rothman, is that unlike condo units, co-ops are not real property. Shareholders own shares in a corporation that owns the building; ownership of shares entitles the shareholder to residence within the corporation’s physical address, and as such there is nothing to collateralize for the real estate in a co-op, she explained.
According to Reverse Mortgage Daily, a blog for the reverse mortgage industry, Congressman Eliot Engel (D-NY), a senior member of the House Energy and Commerce Committee, recently met with HUD Secretary Julián Castro to ask about the federal agency taking steps to allow co-op owners to participate in the HECM program. He called on HUD to pass regulations to expand access to seniors living in cooperative housing.