The Home Equity Conversion Mortgage Program is critically important and requires ongoing attention, the acting Federal Housing Administration commissioner told reverse mortgage lenders during a presentation on Tuesday. Stressing the need to prevent tax and insurance default and regain housing counseling funding, Acting Commissioner Carol Galante presented a very supportive outlook for the HECM program.
“It’s still a very robust program for [the Department of Housing and Urban Development],” Galante told attendees of the National Reverse Mortgage Lenders Association convention in Boston this week, stressing the need for attention to the product. “Because it started as a sleepy little pilot program, frankly, it hasn’t had a lot of attention paid to it inside the HUD building.”
Noting the importance of sustaining HECMs during uncharted economic times relative to the program’s 20-year existence, Hill pointed to two critical points in the effort toward moving the program forward.
The first: a financial assessment of borrowers.
“We don’t yet have the magic solution for exactly how we think the borrower should be assessed for capability and willingness, but we think it’s critically important to work with you to figure out all the steps to that,” Galante said. HUD is entering into a rule-making process on the topic, which Galante said will take time, but is essential to move along as quickly as possible. She noted an October 5 letter she sent through a HECM Program Update, which stated lenders are not prohibited from doing a financial assessment.
“It is an important thing to be doing in this environment,” she said, “and I know you are thinking of ways to do this.”
The second crucial topic is that of housing counseling funding, which Galante noted was zeroed out in the budget for the coming year.
“Housing counseling agencies have been out there running on fumes and are desperate to have some counseling dollars restored,” she said. “I have been up to the Hill in conversations with congressmen on this topic more than anything else in the three months I have been in this post.”
The FHA is looking at the program to ensure it remains sustainable from a credit subsidy standpoint, Galante said, underlining that in order to continue, it must remain neutral.
“This program is very important to HUD,” she said. “We think it’s very important for seniors as a tool and we are trying to improve it, to make it the best it can be, and stabilize it so we can continue to offer this very vital product.”
Written by Elizabeth Ecker