Reverse mortgage with FHA approval

Question from our Reader:


How long does take now to get FHA project approval on a condo project that was built in the late 1960′s and has been FHA approved many times before? The current approval was allowed to expire because so few buyers were using FHA loans.

Why is it more difficult to get a Reverse Mortgage loan approval for a purchase loan? I plan on renting out my current home and using funds from my SEP/IRA for the down payment on a condo in a retirement community. I’ve been told this will not be allowed because I do not yet have a history of rental income on my current residence. I will have sufficient reserves after close to cover HOA dues and property taxes on the new condo, as well as reserves to handle any unexpected expenses once my current home becomes a rental. This is a very common transaction for forward mortgages, so why is it such a big issue for a Reverse Mortgage?

I’ve had major problems on these two issues with two different reverse mortgage lenders.

Hi Janna,

“How long” depends on a number of things. HUD requires quite a bit of documentation and some borrowers and HOA’s have all the documentation readily available so that the package can be submitted for approval in a matter of days or weeks. Some fight with you all the way and never make all the information available and I’ve seen it take up to 12 months! It takes so much longer now than it did in the past because HUD changed the way they insure loans in condominium projects in 2010.

They no longer allow what was called a “spot approval” which was a limited review if they did not have over 10% of the units insured in any project. Now, HUD requires that the project be fully reviewed and approved from the very first loan done in any project and the plain and simple truth is that for one reason for another, many projects do not meet the HUD requirements.

Many times after spending seeks or months gathering the information that the HOA was not willing to give you from the beginning, it turns out the project does not meet HUD parameters anyway and the project is declined. Prior approvals may have been spot approvals, they may have been full approvals but HUD still requires that every project be re-reviewed every 2 years to be certain that it still meets their requirements.

With regard to the question on the purchase reverse loan, I’m not sure I would agree with your statement. We close quite a few purchase reverse mortgages and have found that as long as the title company and closing agent involved are experienced with the loans, we can have them closed just as quickly as the refinance loans. Your circumstances regarding retaining your current home, renting it and moving into the condominium are more likely the issue.

Even forward lenders have had a difficult time throughout the years with establishing occupancy for borrowers who are retaining a home and claiming to move into another, newly purchased home. This often leads to lenders discovering occupancy fraud.

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FHA refinance question...

2010-10-31 14:55:18 by Withthenastydunk

I know this is something to ask my lender but still maybe somebody has Sunday insight.
So we purchased a home last year at about 5.75% on an FHA loan and I have seen that FHAs are now around 4% in Oregon.
So if we chose to refin would we have to go through all the paperwork, applications, appraisels and hassles even if we go through our existing lender, or is it much easier and actually worth it? We are not looking to do anymore than take advantage of the lower rates.
Thanks for any applicable insight.

FHA refinance questions

2008-06-17 10:31:53 by maggie_moo

So, I'm trying to get my FHA mortgage refinanced. The current situation is my aunt and uncle co-signed with me.
My lendor is telling me he's having problems refinancing because of my current credit situation (it stinks - it's in the 500's).
My aunt and uncle MUST get off the loan so that they can purchase a second home.
I thought that I could do a simple streamline re-fi.
Anyone have any suggestions?

You have to have a FHA loan currently to qualify

2009-01-06 20:31:23 by reodiva

This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.
In order to qualify for a Streamlined Refinance your original home loan must be an FHA loan in good standing and the refinance must lower your monthly interest payments. This type of refinancing option reduces your monthly expenses by lowering your payments but there is no option to receive cash back

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