Lawmakers passed legislation last week to allow seniors living in cooperative apartment buildings to apply for a reverse mortgage, which is a type of loan available to homeowners that transfers built-up home equity into cash.
The legislation, which was sponsored by Assemblyman Jeffrey Dinowitz and Senator Alessandra Biaggi, is supported by the National Association of Housing Cooperatives as well as the Council of New York Cooperatives and Condominiums, and comes amid nearly two decades of unsuccessful efforts lobbying the US Department of Housing and Urban Development to allow seniors in cooperative apartments access to this type of loan.
Many people living in cooperative apartment units are elderly and are of low to middle income, and have fixed incomes derived solely from social security and pension checks. Although cooperative apartments are not considered to be “real property” and thus are not traditionally eligible for reverse mortgages, coop owners have invested a substantial amount of their lifetime earnings into this home equity. Often, these seniors face financial demands that they cannot afford through their recurring income sources and are forced to sell their homes so that they can have access to cash.
The legislation previously passed in 2019, but was vetoed by the Governor Andrew Cuomo on the basis that “borrowers would still be exposed to unnecessary risk that could lead to foreclosure.” This is despite numerous consumer protections included in the legislation, such as restrictions on how solicitors are allowed to describe their reverse mortgage offer, requirements to include information about loan counseling and other helpful decision-making materials, guidelines on the foreclosure and/or sale process and its impact on the reverse mortgage and more.
“Cooperative apartments are a very common way for New Yorkers to achieve the goals of home ownership and seniors who live in these coops deserve to have access to the same resources as traditional homeowners so that they are not forced to sell their homes in order to get access to cash,” Dinowitz said. “Our goal should be to help seniors age in place, in the homes that they have often lived in for decades, and this legislation does just that. I hope that Governor Cuomo has reconsidered his opposition to this policy and I urge him to sign it into law once it is delivered to his desk.”