HUD Chief: Reverse Mortgages a Good Option ‘If Done Right’

As older Americans increasingly face retirement lacking adequate savings, Department of Housing and Urban Development Secretary Julian Castro says a reverse mortgage may provide the help they need. 

In response to an audience question during a fireside chat with Zillow Chief Economist Stan Humphries on Wednesday, Castro acknowledged that the Home Equity Conversion Mortgage (HECM) program has had challenges, but that it can provide a boost in retirement for aging Americans in certain situations.

“We believe that there are different ways that we can be helpful: One of them is something as straightforward as housing counseling. Another is, of course, the HECM program. [It] has had its challenges as well but I think, if done right, can work for older Americans,” he said. 

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While the loan “doesn’t fit for everyone,” it can be a good option for those in the “right circumstances” trying to make it through retirement, he said. 

Castro joined HUD in mid-2014 when the former mayor of San Antonio replaced Shaun Donovan as department chief. To date, these are the first public comments he has made about reverse mortgages.  

In discussing the loan with Castro, Humphries added that a reverse mortgage can also help older Americans age in place — a topic of concern for many, as the fastest growing segment of the population (those age 65-plus) faces the decision to downscale, renovate or move. 

“We’re also seeing an increased prevalence of folks aging in place, so a preference for that demographic to, rather than move into smaller accomodations or retirement living arrangements, actually stay in the place they’ve been in. [In that case] maybe tapping the equity in their home is something they’d be more interested in,” Humphries said. 

Along with reverse mortgages, Castro addressed a number of topics relating to the housing market. Among them were student debt, credit scores, renting challenges, the homeownership rate and government involvement.

Despite some challenges in the market and speed bumps to homeownership, Castro is optimistic for the year ahead. 

“I call 2015 a year of housing opportunity, because we see the housing market now turned around in terms of housing starts … [and] home prices have been going up 33 straight months now,” he said. “There’s been a lot of opportunity created and the president’s focus on ensuring that folks have an opportunity to own a home is right [in line with] what we’re focused on at HUD.”

To listen to the fireside chat, click here

Written by Emily Study

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  • While it is clear that the HUD Secretary supports limited use of HECMs, it would seem that he should be better informed about the endorsed use of HECMs by respected members of the financial planning industry. We need people of the caliber of the HUD Secretary, speaking out with a better command of how a HECM will provide even mass affluent seniors with a better and more secure retirement while providing the MMI Fund with much needed revenue at much less risk than our traditional market segment

    It also seems as if we are hearing the Democratic mantra of the last decade all over again. “A house for everyone who wants one.” That slogan was made popular by people like Barney Frank and it was strongly supported by former President Clinton. It led to SISA applications for most mortgages, subprime mortgages, and ridiculously low underwriting policies, standards, and practices.

  • It sounds like Mr. Castro got his understanding of reverse mortgages from Michelle Singletary. ha ha. Anyone who truly understands reverse mortgages would argue that there are a few instances when a reverse mortgage is not appropriate but in the majority of instances they are the best choice…..Just the opposite of the shallow, uninformed, tired old “saw” presented by Mr. Castro. Too bad.

  • i didn’t read any information regarding the removing of your spouse from your original mortgage note making your home fodder for foreclosure under reverse mortgages when one spouse it left after the borrower on the note passes away. the spouse is left trying to fend off lending institutions and foreclosure partners.

    • ron44,

      Really? Old News!!

      You need to read the rules under Mortgagee Letters 2014-07 and 2015-02 and then return to the thread with your thoughts. You will find links to those Mortgagee Letters at

      Yes, those borrowers (with non-borrowing spouses) who are not covered under either of these Mortgagee Letters are subject to a rule somewhat similar to what you present but with major differences such as there are no HECMs where both spouses were on title at the closing of a HECM but only one spouse is on the mortgage.

      The percentage of HECMs with the non-borrowing spouse situation is relatively low. Many in our industry just wanted to stop the problem altogether by simply eliminating the ability of those who will only borrow with one spouse to get a HECM. Yet when one considers how many married seniors own their home as separate property anyway, that policy seemed far too harsh.

      Yes, the situation still is not fully resolved but what we need are relevant suggestions for correcting the situation which embody the constraints of the federal Congressional appropriations rules and without putting the HECM portion of the MMI Fund at any further risk.

  • I read the article and read the comments from everyone and I have to agree 100% with The_ Cynic! I am surprised at the HUD Secretary’s lack of enthusiasm for the HECM.

    There are many opportunities in the years ahead and our senior’s will be depending more on HECM’s than they have in the past. Castro’s statement of ” A reverse mortgage may provide the help they need” was as negative as you can get!

    In months ahead the industry will be going through many changes. Seniors, loan officers, processors, underwriters and companies in general are going to have to change their mind sets. We need positive language coming from HUD executives, the industry needs encouragement and support. I can’t say Jumped up for joy over the HUD Secretaries presentation! I am not saying it was all bad but it had a lot to be desired.

    John A. Smaldone

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