Looking at three special situations
“Off-grid” homes, “shared wells,” and manufactured homes all pose special issues with FHA-insured reverse mortgages. Let’s talk about living “off the grid.” Some properties are not easily reached by conventional electric service. Until recently, FHA required that houses with alternative sources of power, such as photovoltaic or wind, also have a conventional source of heat to keep the house at a temperature of at least 50 degrees. A little over a year ago, FHA relaxed this requirement. I provided a reverse mortgage to a Los Cerrillos property owner whose main power came from photovoltaic panels, with battery storage. There was propane for cooking, but not for heat. The appraiser was able to find comparable sales that were also off-grid. Prior to this change in FHA’s guidelines, this property would not have met FHA’s Minimum Property Standards.
Another common issue is the “shared well.” FHA has no problem with an individual well or public water, but when the appraiser says there is a “shared well,” there is an additional set of requirements. The shared well cannot serve more than four properties, it has to have a separate shut-off valve at the well for each property, and it has to have a separate source of power (and a separate meter). FHA doesn’t allow the power to come from one of the houses served by the well, because if that person didn’t pay the electric bill, all the properties served by that well would lose their water. The shared well agreement also has to have specific language required by FHA. Talk to your reverse mortgage specialist about the required language.
Lastly, I want to talk about manufactured homes. While becoming a little more difficult, FHA does allow reverse mortgages on properties with manufactured homes. The home has to be a double-wide manufactured after June 15, 1976. That is when FHA mandated a number of safety requirements for manufactured housing. The HUD seal numbers need to be visible on the exterior of the home.
The manufactured home has to be on a foundation that meets FHA guidelines and has to be inspected by a professional engineer. One of the requirements is that the perimeter have concrete at a depth of at least 18 inches. This is where the “skirting” typically touches the ground. Often manufactured home are on blocks on a slab or blocks on concrete ribbons under the home. It is the latter that usually does not have the concrete around the perimeter. Sufficient tie-downs and venting are also required.
All of these guidelines are available at www.hud.gov. Search for HUD Guidebook 4930.3G.
John Ruybalid is a reverse mortgage specialist withMortgage Partners – Santa Fe. He has been originating residential mortgages in Santa Fe since 1985. John may be reached at (505)690-1029. His website is www.nmreversemortgage.com.