US News is reporting that a “delinquency crisis hits reverse mortgages” and is refering to the number of HECM loans in default from a failure to pay taxes and insurance.
The Department of Housing and Urban Development issued guidance last week to help formalize the process of working with HECM borrowers in this situation. A spokesperson for HUD told US News that it doesn’t know how many loans are currently delinquent or the severity of delinquencies, but has ordered reverse mortgage lenders to provide the agency with detailed delinquency reports by February 7.
Citing an unconfirmed industry report, an executive at one of the counseling agencies working to help delinquent borrowers says that up to 20 percent of HECM loans may be in some stage of non-compliance. That “estimate” is much higher than anything we’ve heard from our sources and a report published last year by the HUD Office of Inspector General said there are approximately 20,000 HECM borrowers who are delinquent on their taxes and or hazard insurance payments. Nowhere near 20 percent of all HECM loans.
Phil Moeller, the author of the article gives some background on the story over at his personal website too.