Engel to HUD: Extend “reverse mortgage” option to co-op owners
Washington, D.C. – July 6, 2016 – (RealEstateRama) — Congressman Eliot Engel, a senior member of the House Energy and Commerce Committee, called on Housing and Urban Development (HUD) Secretary Julián Castro to issue regulations swiftly to allow co-op owners to take part in HUD’s Home Equity Conversion Mortgage (HECM) program.
“While Congress extended the reverse mortgage option to co-op owners through the Housing and Economic Recovery Act of 2008, HUD has not issued the regulations needed to execute this section of housing law,” Engel said. “I spoke to Secretary Castro last week, and followed up with a letter, urging him to issue regulations so that co-op owners can also take advantage of this program.”
If you are 62 or older and own a private home or approved condominium, you may qualify for a “reverse mortgage” though the HECM program. This option permits homeowners to convert a percentage of the equity in their home into cash. That sum, along with interest and other necessary payments, does not need to be repaid until the home is sold or the owner passes away.
“Reverse mortgages are a valuable tool for older Americans,” Engel said. “Through the HECM program, homeowners can put the equity in their home towards medical care and other major living expenses. It just makes sense that those who own co-op units ought to be afforded this option. I hope that HUD will act quickly to carry out this section of the law, as Congress intended, and allow co-op owners to realize this significant benefit.”
The full text of Congressman Engel’s letter to Secretary Castro is below.
July 1, 2016
U.S. Department of Housing and Urban Development
451 7th Street SW
Washington, DC 20410
Dear Secretary Castro,
Thank you for taking the time to speak with me on June 27th. I am writing to follow up on our conversation regarding reverse mortgages.
As you know, if you are 62 or older and own a private home or approved condominium, you may qualify for a “reverse mortgage” though the Department of Housing and Urban Development’s (HUD) Home Equity Conversion Mortgage (HECM) program. This program allows homeowners to convert a portion of the equity in their home into cash.
Congress has allowed those who own units in a residential cooperative housing corporation – or “co-op” – to participate in this valuable program through language in P.L. 106-569 and P.L. 110-289. Specifically, the HECM statute states:
The term “mortgage” means a first mortgage or first lien on real estate, in fee simple, a first or subordinate mortgage or lien on all stock allocated to a dwelling unit in a residential co-operative housing corporation, or a first mortgage or first lien on a leasehold…
Despite Congressional action on this issue, and the considerable benefits that this program could bring to older co-op owners, HUD has not yet issued regulations to implement this portion of the statute. I am writing to request that HUD expedite this process and issue these needed regulations as soon as possible.
Again, thank you for taking the time to discuss this issue. I look forward to your reply.
Eliot L. Engel
Member of Congress