Despite major exits by large reverse mortgage lenders, the Department of Housing and Urban Development believes it is important that the HECM program remain a viable option for seniors, Karin Hill, director of the Office of Single Family Program Development at HUD, told RMD.
“The department believes that this is a really important financial option for borrowers,” Hill said in an interview last week.
Led by the exits of Bank of America, Financial Freedom and Wells Fargo from the reverse mortgage business, the number of active lenders has continued to fall this year, according to data from Reverse Market Insight. But even with those high profile departures, the majority of the remaining top-10 lenders have seen volume rise steadily, showing no signs of slowing.
“There have been concerns about large lenders leaving, but many other lenders have confirmed they are interested in continuing,” Hill said. “We’re working very closely with industry groups with a focus on strengthening the program.”
The most immediate focus is implementing some type of financial assessment for HECM borrowers, the lack of which Wells Fargo cited as a reason it exited the industry earlier this year.
The hope is that a financial assessment will help prevent the growing number of borrowers in default from failure to pay taxes and insurance on their loans, which stems from the down economy.
The downturn’s effects on the mortgage industry are not limited to the HECM program, however. Hill noted that the economy has taken a toll on the forward market as well and that policy changes have taken place in recent years to ensure FHA’s programs remain sustainable.
“We’re very supportive [of the HECM program], but as we have done in forward mortgages, we have been introducing some policy changes in the last year or two and will continue to focus on it.”
Written by Elizabeth Ecker