In case you missed it… here’s what happened in reverse mortgage news this week.
The FHA might need a taxpayer bailout if the housing market keeps declining. Acting Commissioner Carol Galante acknowledged in a letter to Congress that the agency’s MMI Fund may need support from the Treasury if “significant declines happen to occur” in home prices in fiscal year 2012. However, she also pointed to the actuarial report expecting the MMI Fund to return to an appropriate level by 2014, quicker than previous projections.
…and in response, HUD Secretary Shaun Donovan said FHA might raise its insurance premiums—again. The House Financial Services Committee blasted Donovan and the FHA at a Thursday hearing on the fiscal health of the agency for letting the MMI Fund capital reserve ratio, at 0.24%, fall so far beneath the Congressionally mandated 2%. The HUD secretary said the agency is considering implementing some policy changes, including insurance premium increases, “to provide further support to the [MMI] Fund.” Premiums for the HECM program were raised from 0.50% to 1.25% in 2010.
At the same hearing, the MBA voiced support for changes FHA made to the HECM program. An Mortgage Bankers Association representative mentioned changes to the HECM program in his testimony, including the introduction of the Saver and underwriting guidance, and said the “MBA strongly supports the HECM program and applauds the FHA” for making changes to preserve the program, especially as it’s becoming an increasingly important financial option for the nation’s seniors. Secretary Donovan also said in his testimony that these policy measure “significantly strengthened” the program.
Reverse mortgage counseling finally, officially got some funding. HUD announced on Thursday that $40.05 million of housing counseling funds were available for fiscal year 2012, $4 million of which is earmarked for reverse mortgage pre-application counseling and default counseling. The official announcement comes after months of funding uncertainty during which funds were completely cut out of budgets, partially reinstated, and overall remain significantly lower than in previous years.
Financial reform spearhead Barney Frank announced his retirement. The congressman, who co-authored the Dodd-Frank financial reform bill that spawned the Consumer Financial Protection Bureau, announced on Monday that he will not seek reelection in 2012 after 30 years of being a representative for Massachusetts. Some in the industry view his retirement as the loss of an influential politician with considerable knowledge—and support—of the reverse mortgage program.
Written by Alyssa Gerace