Estimates Put HECM T&I Defaults at 4%, Moving Toward Resolution

NewImageMortgage Orb is reporting that the taxes and insurance default situation facing the reverse mortgage industry is moving towards resolution.

Writing for the Publication, Marc Helm, president of Reverse Mortgage Solutions writes:

Home equity conversion mortgage (HECM) borrowers may have forgotten that T&I was part of their old forward mortgage, included in their escrow accounts. Or, they simply may have been unable to pay T&I in today’s economy, with their investments having lost value, other sources of income down and no increases in their Social Security payments (all the while seeing their living costs go up).


Although it is never a popular move to put borrowers – especially seniors – out on the street, the reality is that borrowers are responsible for T&I, and if they have not made those payments, a foreclosure may have to be pursued. Seeking to avoid such undesirable results, many HECM servicers have taken steps to try to assist seniors.

According to the article, most estimates project T&I defaults at about 4% of all outstanding HECM loans.  An analysis by Reverse Market Insight indicates that a significant percentage of those loans are in repayment plans. HUD has had no overall default or foreclosure figures, which is one reason for the mortgagee letter’s new reporting requirement, according to the department.

The T&I Problem Moves Toward Resolution



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  • First we had Sue Hunt from CredAbility telling a Florida newspaper that the amount in default because of taxes and insurance was 30,000. Then Peter Bell estimated it at 28,000. Now we have a 4% estimate.

    Other than an unnamed alleged executive at a counseling agency, quoted in a US News report, who claimed that at least 20% of all HECMs were out of compliance, the T & I defaults seem to be estimated by all at less than 6%. It is now up to HUD to tell us what the actual number is.

    It is still hard to swallow that after 2 full decades no one had a better handle on the T & I default issue than to say as late as last summer, the amount was less than 2% and in all likelihood much closer to 1%. One has to wonder if industry leaders know how likely it is anyone will trust their estimates in the future. After all this is not the first time we have been led down the primrose lane.

    It will be a miracle if there are more than 80,000 HECM endorsements during the current fiscal year despite HUD estimates of 75,000 at least one industry leader was proclaiming in November that endorsements would be over 100,000. It is time leaders realize that we hear them and they are accountable for what they proclaim.

    Just look at 2006 and 2007 with the wild estimates of where proprietary products were headed despite the clear indications of a major housing crisis just over the horizon. And yet in the midst of current ongoing crisis, we are hearing talk about a resurgence of proprietary products. Leaders might be wiser to keep such estimates and opinions to themselves for the near term — until there are clearer signs of recovery.

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