A cooperative apartment generally cannot secure a HECM. 24 CFR 206.45(a) requires a mortgage on real estate held in fee simple or on a qualifying long leasehold, plus a title policy. Co-op owners hold shares in a corporation and a proprietary lease, not a deed to a unit FHA can take as that mortgage. Jay Zayer, a CRMP licensed in California and Arizona, will say that in the first five minutes rather than run a principal-limit illustration that cannot close.
A condominium is different. See condo HOA approval and condo unit eligibility. The marketing brochure’s “condo-style living” does not rewrite title.
Why don’t co-op shares fit 24 CFR 206.45?
The HECM security instrument has to encumber real property. A UCC filing against shares is not an FHA first mortgage on a dwelling. 24 CFR 206.45(b) allows a one-family dwelling or a condominium unit designed for one-family occupancy. It does not list cooperative share interests.
Proprietary leases often restrict encumbrances, sublets, and occupancy. Even if a private lender wanted the shares, the co-op board can refuse. That board vote is not HUD counseling.
California stock cooperatives and Arizona cooperative housing, where they exist, still have to pass the same real-estate test. San Francisco and some older Los Angeles buildings are where this call actually happens. Arizona co-ops are rarer; the fail is the same.
Do not use the calculator as proof the building “should” qualify. The calculator assumes an eligible property.
What can a co-op shareholder do instead of a HECM?
Sell the shares if the board and the market allow, then buy a fee-simple or FHA-approved condo with cash or with HECM for Purchase (24 CFR 206.44) if age and occupancy fit. A personal installment loan only works if income supports it — which is the problem that brought many callers. Ask the board whether a conversion to condominium is actually underway, with recorded documents, not a rumor.
A reverse second does not fix share ownership. A jumbo proprietary loan does not fix it unless that lender’s attorneys have a share-pledge product, which is not a HECM and not something to assume. HomeSafe and similar menus are still real-property programs in ordinary origination.
Counseling under 24 CFR 206.41 is not required to sell co-op shares. Paying $125–$175 to a HECM counselor to hear that the property is ineligible is optional education, not a prerequisite to listing.
Who is this page turning away, and what goes wrong if you push anyway?
Jay will not originate a HECM on co-op shares. He will not collect an application fee to “see if HUD changed its mind.” He will discuss a sale-and-buy path if the household will occupy a different eligible house.
What can go wrong: an unlicensed advisor quotes a HECM principal limit on “equity in the building,” takes a retainer, and disappears. That is a scam pattern, not a near-miss. Another failure: the family confuses a loft condo (deeded unit) with a stock cooperative on the same street.
Some older California stock cooperatives sit next to deeded condominiums in the same neighborhood. Title is the filter. A grant deed to a unit is a condo conversation. A stock certificate is this conversation. Do not send the HOA budget as if it were FHA project approval. There is no unit for FHA to approve.
Who this does not help: an heir who inherited co-op shares and wants to “continue Mom’s reverse mortgage.” There was no HECM on those shares if this page is the reason you called. If a different eligible house had the HECM, that loan is a payoff on that house. Shares are a separate asset.
A follow-up: if you already have a HECM and later move into a co-op, what happens to the old loan? The HECM on the eligible house becomes due when that house is no longer your principal residence or is sold (24 CFR 206.27). Buying co-op shares with leftover cash does not transfer the HECM onto the co-op. Pay off or sell the collateral. Do not treat share purchase as a collateral swap.
Board interview rules, flip taxes, and share-loan banks are co-op mechanics. They are not FHA case-number mechanics. Paying a HECM application fee to learn that is optional. Asking the co-op attorney whether a conversion is recorded is the cheaper first call.
New York-style co-op share loans are a different market. California and Arizona originators who do not make those loans should say so. Referring you to a share-loan bank is honesty. Quoting a HECM principal limit on the shares is not.
If the building later converts to condominiums, FHA project approval and 24 CFR 206.45(b) become the next conversation. Conversion rumors are not a case number. Wait for recorded deeds. Then ask whether the new regime is on FHA’s list. See condo HOA approval.