If you are reading this article, you are most likely interested in obtaining a reverse mortgage for a condominium and have been told it is not possible due to the condo project being non “FHA approved”, or “Fannie Mae ineligible”.
Most reverse mortgages are insured by a government agency known as the Federal Housing Administration (FHA) and are available only to borrowers 62 years of age are older. They are called HECM’s (home equity conversion mortgages) and come with many restrictions, one of which the condo project must not be on Fannie Mae’s “ineligible list”.
Condo projects can be Fannie Mae ineligible for many reasons. Pending litigation, ongoing critical repairs, special assessments, and inadequate insurance can all contribute to the project being ineligible.
The solution? A “Proprietary Reverse Mortgage” (PRM)
A PRM is an FHA “look alike” loan, offering the same benefits as a normal HECM, but with far less restrictions. The main benefit of a PRM is that condo projects are not required to be FHA approved, or Fannie Mae eligible. Below are some other advantages of PRM’s vs HECM’s
- NO 2% Upfront mortgage insurance premium at close
- NO monthly mortgage payment like HECM’s
- Minimum age is 55 vs 62 for HECM’s
- Maximum loan amount is $4MIL, well about the FHA limit in the low $1Mil
- Underwriting is much more sensible than standardized FHA underwriting
- Lower month “residual income requirement”
- Can pay off debt to qualify
- Loan proceeds can be used as income
The above benefits also provide a buyer more “buying power” than a standard HECM, meaning a buyer can qualify for a larger mortgage than a HECM for a purchase.
To find out more about a Universal Capital Mortgage Proprietary Reverse Mortgage, please fill out the information to the right. A representative will reach out to you shortly to discuss your options.
