October 30, 2023 – Media Mention
Real Estate partner, Andrew Freedland, who focuses his practice on condominium and cooperative law, was interviewed by Brick Underground discussing how reverse mortgages function in a cooperative. The article notes that, "In most cases, shareholders do have to ask their co-op board for permission to get a reverse mortgage, a type of loan aimed at seniors who want to tap the equity in their property. The process for receiving board approval for a reverse mortgage is very similar to when a shareholder refinances an existing loan."
"Reverse mortgages only became available for co-op shareholders in May last year and are still fairly uncommon," says Andrew. Continuing, "They do need approval from the board and it's really the same process as if you were getting a standard mortgage," Andrew says. "It’s treated the same way."
The article continues, "A shareholder will likely submit documents listing their finances, any other debts they hold, and their monthly maintenance fees, so the board can determine whether they can carry the loan," Freedland says. Adding, "Your board could also establish a policy on the allowed loan-to-value ratio, which measures the amount of the mortgage compared with the appraised value of your property. Because there are no payments on a reverse mortgage, the amount you owe will grow over time as interest compounds", Freedland says.