While federally-insured reverse mortgage volume is expected to drop next year in response to extensive program changes, endorsements are expected to grow in subsequent years as the United States population ages, according to actuarial projections.
Volume of Federal Housing Administration-guaranteed Home Equity Conversion Mortgage (HECM) endorsements grew from fiscal year 2012 to 2013, but is projected to drop nearly 11% next year.
The HECM Fund’s economic value as of the end of fiscal year 2013 was an estimated $6.54 billion, with insurance-in-force of nearly $87.7 billion, according to the most recent independent actuarial analysis of the economic net worth and soundness of the Federal Housing Administration’s Mutual Mortgage Insurance Fund, conducted by Integrated Financial Engineering, Inc.
At the end of fiscal year 2014, the HECM Fund’s economic value will have grown to a projected $15.38 billion, with insurance-in-force of nearly $161.5 billion.
“The initial disbursement limitation and reduction of [principal limit factors] for the FY 2014 introduced new program are likely to decrease HECM demand compared with future volume projected in 2012 Review,” says the 2013 actuarial review of the HECM Fund completed by Integrated Financial Engineering.
The 2012 data are based on actual endorsement volume, while 2013 numbers are based on data as of June 30, 2013. Projections from fiscal year 2014 through 2020 are based on the reviewer’s updated HECM demand model.
Access the FY 2013 Actuarial Review of HECMs.
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