Along with its downward revision of all reverse mortgage projections for the coming fiscal year, the Federal Housing Administration presented an outlook for the Home Equity Conversion Mortgage (HECM) Saver that is much more conservative than its early projections for the new product.
The Saver, which launched in October and was initially touted as having the capacity to take 20% of the HECM market, actually saw a yearly average of 5% in its first year—2011. However, the later months in fiscal year 2011 showed the Saver gaining traction at a rate of near 10%—although still a far cry from the initial projections.
Now, FHA, which presented its latest projections in its annual actuarial review of the Mutual Mortgage Insurance Fund and HECM program, sees the Saver not reaching 20% of the market until 2017 (and beyond). The administration projects the Saver will maintain 10% of market share through the coming fiscal year, with roughly 2% gains each year.
Written by Elizabeth Ecker