Reverse Mortgage Program Shows Growth Under FHA in Q2

The count of reverse mortgage loans insured by the Federal Housing Administration is rising throughout the fiscal year, leading to positive recovery for the FHA’s mutual mortgage insurance fund, according to a quarterly report to Congress released this week.  

The subsidy rate for the Home Equity Conversion Mortgage program is unchanged at -.92, signaling positive cash flow being generated by the program. 

Forward loan endorsements fell one percent to 350,356 loans endorsed in the second quarter for a total of $63.7 billion. The HECM endorsement count, in contrast, showed a 35% uptick to 15,831 loans during the quarter, or a 40% dollar volume increase to $3.8 billion. 

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The second quarter included a shift in the HECM program away from the standard fixed rate reverse mortgage program offered prior to April 1. 

Following a the Obama Administration’s budget proposal for the coming fiscal year indicating FHA’s capital position was negative in the measure of nearly $1 billion, the capital reserve position improved for FHA during the quarter. 

Capital resources declined by $1 billion to $36.1 billion, but the capital reserve account rose by $3.9 billion. 

View the report.

Written by Elizabeth Ecker

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  • There should always be a cash surplus from operations since the dollars collected from newer endorsements should be for reserves to pay for losses on endorsements during the related fiscal year as those endorsements terminate sometime in the future.

    Taxpayers already subsidize all FHA costs related to the HECM program (except realized losses at termination) of the HECM program including operating and general and administrative. Frequently, taxpayers also subsidize the costs of counseling.

    With the sequester and related furloughs, HUD is in overload mode. there seems little chance they will provide significant breakdowns of HECM endorsements and HECM case numbers issued, or characteristics reports until the sequester has been over for a significant period of time.

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