In mid-December, the Wall Street Journal published an article asserting the Federal Housing Administration should pare down its reverse mortgage support. In response, the WSJ last week published an op-ed by National Reverse Mortgage Lenders Association President and CEO Peter Bell pointing to the disservice done by the publication in its assessment.
In the original article, “Mortgages in Reverse,” the WSJ stressed the role of FHA’s reverse mortgage program in the overall financial position of the agency. Yet in the response, titled “Owners Should have Access to Their Housing Wealth,” Bell argues reverse mortgages may be the best viable option for some of the 77 million baby boomers entering retirement.
“You did a disservice to older homeowners in your Dec. 15 editorial “Mortgages in Reverse” by suggesting that FHA’s support for reverse mortgages should be curtailed. With 77 million boomers entering retirement, many with savings under $50,000, their accumulated home equity is an essential resource that must be able to be converted to cash to fund living expenses, home maintenance and health care needs. The repercussions of denying homeowners access to their housing wealth would have great costs to individual households and to our society as a whole. Where else are they going to find the money they need?
You framed the argument as, “The government has no business subsidizing senior homeowners so they can blow through their life savings before they die.” I beg to differ with that insensitive and inaccurate point of view of the recently released Actuarial Review of the FHA Home Equity Conversion Mortgage (HECM) program. You argue that “HUD’s independent actuary estimated last month that the FHA will lose $2.8 billion this fiscal year on reverse mortgages,” but that is an incomplete representation of the review’s findings….
Further, Bell notes the ability of FHA to make program changes that can help improve the soundness of its insurance fund, which could be expedited through congressional support the agency has yet to receive.
Written by Elizabeth Ecker