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.
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