Upon testifying before a Senate subcommittee in June, AARP Public Policy Institute Senior Strategic Policy Advisor Lori Trawinski noted several considerations and concerns regarding the Federal Housing Administration’s reverse mortgage program.
In a blog post today, Trawinski outlined six potential changes to the program that would improve it, from regular evaluation of the program to support for modifications proposed by the Department of Housing and Urban Development that would make the program safer both for borrowers as well as FHA’s insurance fund.
The recommendations include: implementing change to strengthen the program such as financial assessments, tax and insurance set asides and limitation of upfront draws; requiring HUD to evaluate the program every two years; implementing a suitability standard; requiring lenders to present all loan products; conducting a study of HECM for purchase fraud; and urging the CFPB to conduct a study on the appropriate use of reverse mortgages.
“Care must be taken to ensure that the HECM program remains true to its original mission—to provide older homeowners with access to home equity through FHA-insured reverse mortgages so they can age in place,” Trawinski writes.
Written by Elizabeth Ecker