The Obama administration is asking taxpayers to subsidize the Federal Housing Administration’s program for reverse mortgages for the first time. The administration has requested that Congress appropriate $798 million for the Home Equity Conversion Mortgage (HECM), according to budget documents released today.According to the budget documents:
The decline in house prices has adversely affected the projected credit performance of Home Equity Conversion Mortgages. As a result, the program has a positive subsidy rate. The Budget provides both fixed and variable appropriations of credit subsidy to support continuous operation of the program even if actual loan activity exceeds projections. The Budget projects insurance of $300 billion in single-family forward mortgages and $30 billion in Home Equity Conversion Mortgages with an additional $70 billion in commitment limitation available in case these amounts are exceeded during execution.
There has been lots of debate about how the HECM program is performing and it’s clear that HUD is paying attention. NRMLA’s President Peter Bell provides RMD readers some more information here or just scroll down for his comment.White House Requests Taxpayer Subsidy For Reverse Mortgages