Re: Petition for FHA & Other FHA refusals
From: David L. Mandel (
Date: Sat, 29 Mar 2014 17:40:24 -0700 (PDT)
Patricia, your note reflects a common misconception about reverse mortgages. 
The lender comes to own the house after the borrower's death only if the heirs 
fail to take responsibility for it by paying off the loan and either moving in 
or selling the unit. But that's no different from what happens when a co-houser 
with a regular mortgage dies. In fact it's less likely to happen because with a 
reverse mortgage, the most heirs owe is 95 percent of the current value of the 
property, while in the case of an underwater regular mortgage, heirs would be 
more likely to simply walk away, leaving the lender to deal with it.

There are some other special provisions to be aware of with reverse mortgages: 
For instance they come due if the borrower moves out permanently, including for 
health reasons. But if s/he's a conscientious cohouser, the community should be 
able to work with her/him to make sure the unit is sold to an appropriate buyer.


 From: Patricia Lautner <lautnerp [at]>
To: Cohousing-L <cohousing-l [at]> 
Sent: Saturday, March 29, 2014 9:01 AM
Subject: Re: [C-L]_ Petition for FHA & Other FHA refusals

I signed the petition because we need to stop blatant discrimination
against the word 'cohousing'.  A few years back, several members here at JP
Cohousing (Boston) refinanced.  Eventually we learned that Chase no longer
refinances "cohousing" units.  No further explanation was provided despite
several attempts.  I think FHA - as a federal agency, should be forced to
be more transparent in how they discriminate.

That said, I'm concerned about the reverse mortgage program (the subject of
the petition).  With a reverse mortgage, what would happen to the unit at
the end of the member's life when the bank owns the home?  Would the bank
give the community the right of first refusal?  I want FHA programs to be
available to coho members, but I'm not sure our community would be ok with
the reverse mortgage program.

JP Cohousing

On Fri, Mar 28, 2014 at 10:45 AM, R Philip Dowds <rpdowds [at]>wrote:

> Seems like the FHA is a little out of touch with the concept of public
> service.  This is what gives government a bad name.
> On Mar 28, 2014, at 7:58 AM, Diana Carroll <dianaecarroll [at]>
> wrote:
> > I'm one of the main folks in our community that deals with getting
> > mortgages for our buyers.  Unfortunately, we have never succeeded in
> > getting an FHA mortgage for any of them.  Most Mosaic Commons purchases
> > fail their "test" in many regards -- some of our units are deeded
> > restricted/affordable, which FHA won't do.  (which is its own aggravating
> > issue, since the charter of their loan program is to make housing
> > affordable to the exact people that our affordable homes are built for).
> > And many of our units over the cost FHA allows, or the buyers are over
> the
> > income limits.
> >
> > But we have had a couple buyers who in theory would have qualified, so we
> > did look into it.
> >
> > In order to get an FHA loan, your association needs to be approved.  It
> > used to be you could get a one-off "spot approval" but they removed that
> > option a few years ago, so now you need to go through a certification
> > process.  FHA approval is not guaranteed, and they aren't required to
> tell
> > you the reason for non-approval.
> >
> > I had several illuminating conversations with the Mass Housing Authority
> > and other agencies in our area that help with financing for low/moderate
> > income buyers -- and a couple indicated "off the record" that FHA had a
> > policy of denying applications on which the word "cohousing" appeared.
> >
> > We did try to contact FHA directly to ask, but I was never able to
> actually
> > get in contact with someone above the level of "grunt" who just said
> "Apply
> > for approval and let's see what happens". (Downside being: process is
> > expensive and time consuming!)
> >
> > So...we never went through the expense/trouble of applying.
> >
> > So I'm not sure you are going to get certain verification that FHA has a
> > policy against cohousing. It might be more instructive to ask on this
> list
> > if anyone HAS gotten FHA approval for their association.
> >
> > Diana
> R Philip Dowds
> Cornerstone Village Cohousing
> Cambridge, MA
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