Question: I own one of 64 units in my development and the board president refuses to cooperate with my bank in completing my reverse-mortgage paperwork.
She wrote to owners that we are a condominium development, "which means the entire development would have to be approved in order for any individual unit owner to obtain an FHA loan.... We believe that because some people may get in because of the low interest rates (3%), and with little or no down payment required, we could be exposing ourselves to liability if these owners cannot make their mortgage payments and are ultimately foreclosed.
"At this time we believe it's not in the association's best interest to apply for the approval. We realize that this affects people who wish to obtain an FHA loan for either refinancing or obtaining a reverse-mortgage loan. We have to do what's right for the majority of all homeowners."
The bank was willing to absorb the cost of obtaining Federal Housing Administration approval, but it's been more than 30 days since my application. Isn't this discrimination?
Answer: The president's interpretation and reasoning are wrong. She cannot predict who will or will not make mortgage payments or know what's "right" for the association.
Actions such as these deprive all titleholders of their individual property rights and also prevent owners requiring refinancing or reverse mortgages from keeping their property. Those decisions also deprive titleholders from making the best possible estate planning choices. That failure by the board is negligent, subjecting the president and the association to a possible lawsuit for damages should an owner lose title to his or her property but for the approval of a reverse mortgage.
The FHA website states: "As authorized with the passage of the Housing and Economic Recovery Act of 2008 (HERA), the Federal Housing Administration (FHA) implemented an approval process for condominium projects and insurance requirements for mortgages on individual units, under Section 203(b) of the National Housing Act."
It also states, "The program insures a loan for as many as 30 years to purchase a unit in a condominium building — which must contain at least two dwelling units and can be detached or semi-detached, a rowhouse, a walk-up or an elevator structure. The loan is made by a lending institution, such as a mortgage company or bank, and is insured by HUD's Federal Housing Administration."
The FHA Resource Center phone number is (800) 225-5342; e-mail: email@example.com. Find the FHA's frequently asked questions at http://www.fhaoutreach.gov/FHAFAQ/.
No board director has the unilateral authority to control the assets of others, to decide what families can and cannot purchase in a development and what mortgages are acceptable. A proven allegation of discrimination or negligence will subject board directors and the association to damages, and if you miss the loan cutoff, the president and the association may be held liable for paying any fees incurred.
If you believe you have been discriminated against because of race, religion, color, sex, national origin, disability or family status, file a complaint with the U.S. Department of Housing and Urban Development, Housing Discrimination Hotline at (800) 669-9777. Or go online to http://www.hud.gov/offices/fheo/online-complaint.cfm.
Send questions to Box 10490, Marina del Rey, CA 90295 or e-mail firstname.lastname@example.org.