Reverse Mortgages Need to Catch Up: American Banker

In light of potential losses to the Federal Housing Administration’s insurance fund due in large part to its reverse mortgage portfolio, the administration’s participation in the program needs to change, writes an American Banker article by University of Maryland teaching fellow Clifford Rossi.

During a time when lawmakers are targeting and eliminating a number of mortgage products that were formerly available in the market that have since been deemed “unsuitable,” the FHA should consider its participation in reverse mortgages, Rossi argues.

“It is time that policymakers reconsider the social value in subsidizing a mortgage program that appears inconsistent with the direction of mortgage policy for the vast majority of the population,” Rossi writes.


A shift toward younger borrowers taking out lump sums steers away from the program’s mission, and during an economic time when taxpayers are  susceptible to losses via FHA, the article argues.

“In recent years, a number of troubling trends in borrower preferences, product evolution and market composition exposed taxpayers to losses and seniors to potentially higher costs and a bewildering array of options that can adversely affect their financial condition years later.”

While more attention has been granted to mortgage products most responsible for the housing crisis, Rossi writes, the time is now for FHA to pay attention to reverse mortgages and consider reversing course.

Read the American Banker article.

Written by Elizabeth Ecker

Join the Conversation (3)

see all

This is a professional community. Please use discretion when posting a comment.

  • Are we really helping to “…lure the financial advisory community…” and as a result increase endorsements as some industry leaders have stated when the industry falsely promotes the claim that we have recently seen an abnormal decrease in the age of borrowers in recent years or merely giving fodder to our detractors?

    The issue is not a mere point in the arguments of detractors but rather one they seem to react to like an acceleratant fueling their outrage. If the industry believes the issue will help our situation more than harm it, it has done the right thing. It seems to at least Mr. Rossi that the alleged abnormal shift in the age in borrowers as a great reason to end the entire HECM program now.

  • Apparently our recovery process from the financial crisis has moved from “kick the can” to “kick those less able to kick you back.” Maybe that’s progress?

  • While dated, the article is very well written. As to the ABA including it in its magazine, one has to ask why? With none of its major supporters currently in our industry, did the ABA feel free to include this article in its publications?

    While some get upset with our detractors, few of our detractors have called for an end to the program. Most detractors want additional overlay requirements for things like suitability for borrowers.

    Perhaps the article would have been left to less prestigious magazines to publish had the ABA not accepted it for publication (although ). So now the question arises, has the ABA taken the position that the HECM program should be terminated or is it merely publishing a controversial article on a very current subject?

    Does it look like the ABA will come out in opposition to the HECM program? One article in its flagship publication is not enough to make that determination. But no matter what, our industry has been put on notice that “the times they are a changin.'”

    (The opinions expressed are not necessarily those of RMS or any of its affiliates.)

string(112) ""

Share your opinion

[wpli_login_link redirect=""]