With Odd Reasoning, HUD Won't Let Co-op Owners Have Reverse Mortgages

Sept. 17, 2014 — Single-family houses can get reverse mortgages. Two- to four-family houses can get reverse mortgages. Even condominium apartments can get reverse mortgages — but not co-op apartments. Why? According to a report by The New York Times, it's because most reverse mortgages are insured by the Federal Housing Administration (FHA), part of the Department of Housing and Urban Development (HUD) — and HUD has chosen not to let co-op owners tap into their home equity. As a spokesperson told the Times, “FHA’s single-family programs are based on loans being secured by real property and the co-op structure does not meet this basic requirement.” That's true: In co-ops, owners own shares in the building corporation, which obviously means the apartment can just get up and walk away! Why, co-ops are so undependable and dangerous, banks won't even lend you money to buy them, except that they do. After all, you know those undependable prewar / midcentury buildings in New York City — why you just can't count on their market value ... to do anything except go up. HUD? More like DUD.