The reverse mortgage process still hasn't been streamlined to the point where getting approved is a simpler process. For some families, there are still obscurities in Federal Housing Administration rules that are preventing them from getting approved, according to recent reports.
"For the last two and a half years, John and Deena Baird have been trying to secure a reverse mortgage on their home in Sun City, Ariz., a 55-and-over retirement community northwest of Phoenix," according to Reverse Mortgage Daily.
Unfortunately a FHA rule has prevented them from closing the deal. The report claims that the struggles for the Bairds comes due to the "free assumability" restrictions that come up in the transfer of titles.
"In communities such as Sun City, this is a major issue for homeowners who want to purchase or refinance using FHA-backed products," according to RMD.
"That’s because all buyers in these communities are required to pay a fee, generally $3,000 or $3,500, to the private recreation company that oversees shared recreation facilities, such as pools, golf courses, and communal activity centers. The fee usually applies even if children inherit the home from a parent, or if a lender takes control of the property through foreclosure."
The report stated that the FHA does not insure properties with recreational facilities in order to prevent the government from fielding any responsibility for maintaining the facilities that aren't connected to the homes.
It does pose quite a difficult problem and it seems as if local residents, lenders and real estate agents are taking on the challenge of helping remedy this situation.
To learn more about the "free assumability" restrictions and ways that lenders, real estate agents and locals are helping to solve them, click on the image above.