US News says Crisis Hits Reverse Mortgages

NewImage.jpgUS 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.

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Phil Moeller, the author of the article gives some background on the story over at his personal website too.

Delinquency Crisis Hits Reverse Mortgages

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  • This article is highly inflammatory and filled with unsubstantiated allegations. However, this just jumped off the screen at me: “Peter Bell, President of the National Reverse Mortgage Lenders Association, did not respond to repeated requests for comment.”

    Are you kidding me? What the heck is going on? Our Association should be going to war with these ridiculous and outrageous articles that do nothing but bring undue attention, and potentially great harm, to all of us.

    C’mon Peter, no comment? What were you thinking?

    • What is odd to me is that after a decade of discussing the problem with HUD, the industry has not gathered the necessary statistics to respond to such speculation. You would think they would have been at the center of the discussions with HUD. Oh well, that is what I get for being “one of those financial types” and a former bean counter.

  • It was only a matter of time til the press took up this story. Who knows what certain elected officials will do with it? Then there are those who will find this fodder for their attacks on the program.

  • “Yellow Journalism at its best”The industry should take a proactive roll,not a reactive roll as usual.The big players should come forward and show their results as to how many are actually in default to bring a stop to all this hype.Waiting for HUD or Congress to mandate action is keeping your head in the sand.

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