Obama: Health of FHA Reverse Mortgage Program Improving

The White House budget for 2013 announced by President Obama projected today that the Federal Housing Administration’s Home Equity Conversion Mortgage program will not require a government subsidy in the coming year.

The budget reported on FHA’s Mutual Mortgage Insurance Fund, which insures all FHA mortgages. The MMI fund will not require any subsidy for HECM mortgages in 2013, according to the budget, with the projections indicating a .92% negative subsidy rate—meaning the program is expected to generate positive cash flow over the course of the year.

The subsidy rate is a decrease from the estimated -1.52% subsidy rate in 2012, but is more than the actual rate recorded for 2011 at -.01%


“This budget request reflects the President’s vision, but also reflects the reality that robust growth requires tough choices – doing more with less and holding ourselves accountable for results,” said HUD Secretary Shaun Donovan in response to the budget proposal.

The budget also includes an allocation of $55 million for housing counseling programs; an increase from the $45 million for housing counseling that was included in the 2012 HUD appropriations passed in late 2011. The Department of Housing and Urban Development has yet to announce how much of the counseling funding will go directly toward HECM reverse mortgage counseling.

HUD representatives are scheduled to the budget proposal further on Monday.

Written by Elizabeth Ecker

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  • (Elizabeth, thanks for the quick release of the initial results)

    Per a NRMLA release, there has been no announced changes to the MIP rate on HECMs related to the two month payroll tax holiday but news on that front could change due to announcements tomorrow.

    Right now, it is just great to know we do not have to worry about Congressional appropriations for next fiscal year (ending 9/30/2013).  It will, however, be interesting to see if the lending limit used in that computation was $625,500 throughout.

    The fiscal year ended September 30, 2011 was an unusual year in many ways.  Since both “actual” and budget numbers for the cohort of HECMs endorsed last fiscal year are estimates until they are fully terminated decades from now, all results reflect educated and calculated “guesses.”  It is generally a lot more accurate to use actual endorsement results in calculating those estimates than using estimated endorsement results to calculate estimated “losses” or “net increases to the MMI fund from operations.”

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