Easter Round-Up: Reverse Mortgage Time is Now, Pressure Mounts for FHA Reform

In case you missed it…here’s what happened in reverse mortgage news this week:

The time is “now” to get a reverse mortgage. At today’s interest rates, borrowers are likely to receive more from their reverse mortgage proceeds than if they hold off taking out the loan, writes the Mortgage Professor Jack Guttentag.

CFPB to study compliance costs. After hearing ongoing concerns from reverse mortgage lenders, the Consumer Financial Protection Bureau says it will dig deeper into how compliance costs affect certain businesses


NBC puts reverse mortgages under fire. Commentators from MSNBC’s Morning Joe show talked reverse mortgages, debating whether they are “scams,” since TV ads do not disclose all the specifics surrounding them.

Think tank outlines reforms for FHA. As home prices rebound, pressure mounts on the Federal Housing Administration to make reverse mortgage reforms.

Current policies are hindering seniors’ savings. Senior advocacy groups identify challenges faced by older Americans in saving enough for retirement. 

RMD will be observing the holiday on Friday. Wishing readers a happy holiday weekend and we will see you back here on Monday, April 1. 

Written by Jason Oliva

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  • Per the last actuary report, the actuaries see the net position of the overall MMI Fund turning positive by fiscal 2014 and meeting the statutory 2% capital reserve requirement no later than 2017. From that point forward the actuaries predict the net position of the overall MMI Fund will only get stronger being over twice the minimum 2% capital reverse requirement by 2019.

    The story with the HECM portion of the MMI Fund is much more sobering. It will be a negative net position for all of the seven years projected. Worse, the HECM portion will be short of 2% of its portion of the 2% capital reserve requirement by over $3.95 billion for all seven years projected. The peak of the problem they project will be next fiscal year. It will start down reaching $3.952 billion by 2017 and then taking a turn for the worse reaching over $4.2 billion by 2019.

    With over $2.2 billion taken out of other MMI Fund programs to bolster the HECM portion of that fund, the HECM program has not been self-sustaining since at least fiscal 2010.

    The actuarial study reflects the program as if the fixed rate Standard will not be consolidated into the fixed rate Saver so that there is some hope that the actuarial report for fiscal 2013 will show better results for fiscal years 2015-2019 than the actuarial report for fiscal 2012.

    Before making further changes, HUD needs to see how the current changes will impact the program.

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