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Reverse mortgages could become reality for co-ops

Supporters urge residents to lobby for legislation

By Ann Peterson

Managing editor

An effort to make reverse mortgages available for cooperative owners in Rossmoor has a chance at success, and supporters are calling residents to action.

The U.S. Senate Review Committee is working on a 2023 Department of Housing and Urban Development (HUD) report that could require HUD to finally write guidelines for federally insured reverse mortgages for co-ops. Unlike single-family homes and condos, co-ops are multi-family dwellings in which a nonprofit corporation holds the property title and residents buy shares in the corporation and are allowed to live in the residence.

In 2000 and 2008, Congress passed laws permitting HUD to write guidelines for Home Equity Conversion Mortgages (HECM), but the department has yet to actually write them. That means Federal Housing Authority (FHA)-approved lenders are unable to offer this financing to co-op owners.

Under a reverse mortgage, a property owner relinquishes equity in their home in exchange for regular payments, typically to supplement retirement income.

“HUD was told they were permitted to administer HECMs for co-ops, but HUD didn’t want to do because the co-op isn’t considered real property,” said Martha Echols, a reverse mortgage adviser and Rossmoor specialist. “The law needs to be changed to tell them they must write the guidelines.”

To help make that happen, Echols and other local advocates for reverse mortgages are asking Rossmoor residents to send an email to Sen. Diane Feinstein’s office. (See sidebar for statement to include in the email.)

“We need all the residents to help us lobby for this, to help their neighbors who need it and to make Rossmoor more attractive to an older generation who might one day need it,” said Sue Adams, a Realtor and former First Mutual president and GRF Board director.

As Adams noted, condo owners in Rossmoor already have access and have applied for reverse mortgages, which offer financial means to those who are 62 years and older.

“When I was president of Mutual One, I met many residents who had plenty of money when they moved here, but now they are outliving that money, while they’re sitting mortgage-free in a home with all that equity,” Adams said.

Building support for reverse mortgages hasn’t always been easy for Echols and Adams. They have to spend considerable time explaining that unlike the original reverse mortgages of the 1980s, most of today’s reverse mortgages are tightly regulated and federally insured to protect owners from losing their homes.

“An 80- or 90-year-old person may remember what happened 30 years ago, before the HECM reverse mortgages were created by Congress,” Echols said. “Before FHA became involved, there was an equity share feature, which was very problematic. The FHA changes don’t allow equity sharing, but some seniors aren’t aware of the changes, and that’s a major obstacle we have to overcome.”

In 1989, Congress authorized HUD to create the Home Equity Conversion Mortgage (HECM) to help senior homeowners meet the financial demands of retirement while aging in their homes. HECM is a mortgage loan based on home value, the age of the youngest homeowner and the current interest rates.

“The FHA-insured HECM is unique because it requires no monthly mortgage payments,” Echols explained. “This program gives people 62 years and older access to funds without the financial burden of a mortgage payment during retirement.”

The FHA requires that all HECM borrowers first obtain HECM housing counseling to discuss eligibility requirements, financial implications and alternatives to obtaining a HECM and repaying the loan. To be connected with a counselor, call 1-800-569-4287. More information about the HECM program can be found at

Owners can make payments at any time and for any amount but aren’t required to repay the loan until they sell their home or permanently move out. If homeowners don’t make payments, interest accrues on the outstanding balance of the mortgage – hence the name, reverse mortgage.

Echols also noted that some Rossmoor residents fear leaving their children with debt because of a reverse mortgage, but that’s where insurance from the FHA-insured mortgage steps in to pay any shortfall if the loan balance exceeds the home’s value.

“No deficit is passed on to the borrower or their heirs,” Echols said. “When the borrower or their estate sells the home, the mortgage is repaid and any remaining equity belongs to them.”

Rossmoor condo owners have been able to utilize the HECM for many years.

How to write a support letter for reverse mortgages

Local supporters of reverse mortgages have asked Rossmoor residents to email Sen. Diane Feinstein’s office through Brent Palmer at (For those who need help emailing, residents can drop a hard copy of a letter off with Martha Echols, Mutual of Omaha Mortgage, at 1800 Tice Valley Blvd., Suite A.)

They are asked to share a bit about their situation, how a reverse mortgage might be helpful in the future and how important it is for cooperative owners to have access to their equity.

Along with those details, they ask residents to copy and email the following statement:

Senator Feinstein, please consider offering the following language to the HUD Appropriations report:

Congress recognizes the importance of homeownership through cooperatives, particularly among older adults, and acknowledges the challenges housing cooperative residents face in equitably accessing REVERSE MORTGAGE LOANS, INCLUDING HUD’S Home Equity Conversion Mortgages. Congress encourages HUD to use its authority under P.L. 106-569, Sec. 201(k), to EXPEDITIOUSLY WRITE GUIDELINES FOR REVERSE MORTGAGES FOR SENIORS IN HOUSING COOPERATIVES and issue Home Equity Conversion Mortgages for housing cooperative seniors.