Legislation introduced last year by New York State lawmakers seeks to make seniors living in cooperative housing eligible for reverse mortgages, but the proposal is already running into its share of hurdles.
Senior co-op dwellers have long been ineligible to obtain reverse mortgages on their properties, since they do not own the housing units in which they live. Rather, they own a shareholder stake in the corporation that owns the property.
Because co-ops are not real property, there is not real estate to collateralize the reverse mortgage loan, hence why the Department of Housing and Urban Development does not allow co-ops to participate in the Home Equity Conversion Mortgage program.
Addressing a growing need for aging in place solutions for co-op dwellers, New York State Senator Jeffrey D. Klein (D), who serves parts of Bronx and Westchester Counties, introduced a bill last year that aims to amend the state’s real property law to authorize the use of reverse mortgages for New York seniors age 70 and older who are living in a co-op.
Last year, Klein teamed up with fellow state senator from Queens, Tony Avella, to develop projects that could benefit co-op and condo owners in their districts, reports local publication The Riverdale Press in a recent article.
The reason for this choice of locale is that people who live in co-ops and condos in the northwest Bronx and in Queens face difference concerns than their Manhattan counterparts, Sen. Klein said in an interview with The Press.
These areas also “have more middle-income-type co-ops,” Sen. Klein told The Press. “They are not as expensive as the Manhattan luxury co-ops and condos. So, [their owners] are more focusing on saving money.”
The efforts of the two lawmakers led to several roundtable discussions with “the Bronx and Queens together, coming up with some ideas,” Sen. Klein said.
These discussions led to the proposed legislation that was introduced and eventually passed in the New York State Assembly last May, but has since been in limbo with the adjournment of the Assembly’s last legislative session.
Because the state Legislature operates on a two-year cycle and a new one begins in 2017, any bill that did not pass both houses would have to be re-introduced before it has a chance to become law, according to The Press.
The new year, however, brings a new legislative session and new opportunities for state lawmakers to consider the reverse mortgage legislation.
“In other words, if it passed the Senate last year, it didn’t count,” Sen. Klein told The Press. But “we’re gonna continue this, we’re gonna continue to work on these issues.”
Written by Jason Oliva