A request for $250 million to support the Home Equity Conversion Mortgage (HECM) program will not likely be approved for the federal government’s fiscal 2011 budget, according to Vicki Bott, HUD’s deputy assistant secretary for single family housing.
“We don’t expect an appropriation to happen,” Bott told RMD in a recent, wide-ranging interview, timed to the departure of long-time HUD figure, Meg Burns, who has left her position as director, FHA Office of Single Family Program Development, after 19 years, to join the Federal Housing Finance Agency.
As she headed out the door, Burns said the HECM program is “in a difficult place right now,” a view shared by Bott. “Meg is right,” she said, noting that the reverse mortgage program “was designed to be self-sustaining without additional congressional appropriations,” and that is proving untenable.
Without the aforementioned appropriation, Bott said the federal agency will have to look at ways to make HECM a self-sustaining program, at the same time exploring ways to solve some longstanding problems such as tax-and-insurance defaults and seniors’ financial qualification for reverse mortgages.
On T&I, “I think there’s a balance [needed] to give seniors enough time to figure out how to pay or sell the property and find alternative living arrangements,” said Bott, adding that “hopefully within 30 days we can talk more specifically” about the government’s intent. “Some finite amount of time will be set [after which] someone has to take the financial risk.”
On financial assessments, Bott said HUD is “looking at rules changes that would require a review of seniors’ financial capacity before they can be put into a reverse mortgage “where they might not have the financial capability for it.” Details of proposed changes will be made public in the Federal Register, in “not too long a time,” she said, adding that “right now, we don’t necessarily counsel [seniors] on the financial payment piece, so maybe a different level of counseling is needed.”
Written by Neil Morse