HUD Official: FHA Still Working on Critical Reverse Mortgage Changes

February 7th, 2013 | by Elizabeth Ecker Published in FHA, News, Reverse Mortgage | 3 Comments

The Department of Housing and Urban Development is continuing to work on “critical” reverse mortgage program changes following a restriction to the program’s fixed rate reverse mortgage option, announced last week.

In a statement to U.S. News and World Report‘s Phil Moeller, in an article published this week, HUD Deputy Assistant Secretary Charles Coulter told the publication there are four fundamental changes needed, including restricting the upfront draw that is available to borrowers; implementing a financial assessment; establishing a required set-aside for tax and insurance payments and “addressing complications resulting from non-borrowing spouses.”

Following the initial changes announced, which eliminate the fixed-rate standard option, Coulter told U.S. News the agency is working with Congress to get all of the changes in place in a timely manner.

“HUD is actively developing policy to address these issues administratively and is also working with Congress to enable faster implementation of these critical changes,” Coulter told U.S. News. “If we are unable to make these changes in a timely manner, HUD may be forced to take, sub-optimal, short term measures to improve the economics of the program.”

U.S. News points to a recent study by Ameriprise finding that nearly half of older Americans say home equity falls into their retirement plans, with the new restriction on the reverse mortgage program making it harder to borrow against home equity in light of that trend.

Read the full US News story.

Written by Elizabeth Ecker

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wstrycker

It would be good to read the positive side of reverse mortgages, leaving out the need for all of us to suffer through the judgment of our competitors, standing properly and humble while we are demeaned in the marketplace. Where are the people who write from an objective “how to fix retirement” point of view? Who is willing to pin the spendthrift government to the wall and make them balance their budgets on the backs of senior home equity. Which of these offer a guarantee that seniors can survive retirement? The government is broke; the Wall Street Casinos are busy scalping the seniors, and none of them guarantee retirement solvency. While it’s good to review the issues of our competitors, enough is enough, don’t you think? Surely, we can feel proud of ourselves some of the time for going through the terrors of getting a reverse mortgage through to close without being accused of skewing the facts, or making too much money that others want for themselves. A little respect is in order for those who make this happen for our seniors who own the equity in their homes until we take it away from them. This industry is not guilty of anything except for the passion we need these days to see that seniors get what they deserve from their own home equity.
The_Cynic

With financial assessment and mandatory set asides, what is the need for any restrictions on the upfront draw? That seems like overkill.

Much of the problem with the negative net position of the HECM program in the MMI Fund has more to do with HUD not wanting to disappoint than sound fiscal decision making. The social program attitude in the governmental as well as industry ranks needs a strong overhaul. If it takes these measures to accomplish that goal, so be it.

I hope I am not reading that HUD believes these measures will mitigate the net loss position of the endorsed HECMs reflected in the MMI Fund at the end of last fiscal year. Only home values of the related collateral and estimated periods of how long the loans will be active can have any significant impact on those particular endorsed HECMs can have any significant impact on those particular endorsed HECMs. But to save a further hit on the losses related to those HECMs, HUD needs a bullet proof position on excluding the non-borrowing spouse from the definition of homeowner in the law; so far HUD has done a dreadfully poor and ridiculous job of trying to achieve that objective by opining its economic position on that subject.

If HUD believes it can successfully address the non-borrowing spouse issue without a change to the law, they are once again overreaching the extent of their regulatory powers. HUD must get a law change before trying a new angle to their previously unsuccessful approaches.
The_Cynic

wstrycker,

No one is attacking the industry.

What is being attacked are irresponsible insurance decisions. Someone else has pointed out if the HECM part of the MMI Fund were a privately owned insurance company it would have been placed into receivership by state insurance commissioners.

Somehow you want to make the HECM program a social welfare program it is not. It is supposed to be self-sustaining. It is already subsidized by appropriations which pay all costs other than losses along with a great deal of the counseling cost.

If you want to read about the positive side of reverse mortgages, write about it. We do not need to be playing the victim.