NPR Talks FHA Bailout, Reverse Mortgage Program Woes

On the heels of President Obama’s budget proposal published Wednesday indicating the Federal Housing Administration could require $943 million to cover reverse mortgage program losses, NPR spoke with housing policy experts about the news. 

From the way reverse mortgage losses have played out during the housing crisis to the surprise of FHA’s financial turnaround on its forward business, NPR spoke with the American Enterprise Institute’s Ed Pinto and Center for American Progress’s Julie Gordon about the state of FHA. 

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The segment reveals the the ongoing plea FHA has made of Congress for the authority to more better and more flexibly manage the Home Equity Conversion Mortgage program. 

In a press conference following the budget announcement, Housing Secretary Shaun Donovan echoed the request, stressing the need for sensible change in an effort to provide senior homeowners access to their equity. 

Listen to the segment on NPR.

Written by Elizabeth Ecker

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  • Yesterday, an industry friend, Mr. Burgess Kegan, and I were discussing the announcement. While I am very concerned about the lack of knowledge within the industry about the impact of HECM endorsement activity on the MMI Fund, he was just as concerned about the lack of information on how HECMs are helping the budget and how little is said about it.

    While the HECM problem is theoretically harming HUD, it is also mitigating health, housing, and other costs which if it were not for HECMs would be harming the budget in other areas. Yet our industry does not seem to have a strong grasp of the categories and annual numeric value of these savings.

    If the positive offset is substantial in relation to the harm HECMs could do to American taxpayers, this argument should be used as a reason in Congress as to why HECMs should be viewed in a different way than many other FHA programs. It should also be used to defend the program when the contingent losses from the program are used to condemn it. (But then no one can say I am not biased when it comes to this great program.)

    Quantifying the amount of help the program provides in reducing budget costs should be a high priority for the industry. While we should be more familiar with the negative side of the equation, we need information to be able to make a cogent, substantial, and reasoned argument about the HECM benefits which offset the harm HECMs might bring to American taxpayers.

    The opinions expressed are not necessarily those of Security One Lending or its affiliates.

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