Calling the move “a welcome change of course from the Trump administration,” the editorial board at one of the nation’s most prominent newspapers applauded the new adjustments to the Home Equity Conversion Mortgage program — while also expressing deep concerns about its overall mission and usefulness.
The Washington Post lashed out at the HECM’s effects on the Mutual Mortgage Insurance Fund in an editorial published late Tuesday, framing reverse mortgage-related payouts as “a perverse redistribution of resources” that siphons government assistance away from those who need it more.
“There are many good reasons for the federal government to intervene in the economy, but diverting resources from less affluent first-time homebuyers to seniors who already own homes would not be at the top of our list,” the Post’s board wrote, accusing the HECM program of doing exactly that.
“Kudos to the Trump administration for deciding last week to rein in this dubious use of the federal balance sheet,” the piece continues.
The Post’s opinion comes as the industry continues to sort out the ramifications of updates to the HECM program, which the Department of Housing and Urban Development announced last week. In short, some borrowers will end up paying more upfront for mortgage insurance, while seniors of all ages and levels of home equity will generally be able to access less cash with a federally backed reverse mortgage loan.
HUD secretary Ben Carson and other officials positioned the move as a necessary step to protect the program, which they said is currently bleeding money: HECMs have cost the MMI Fund $12 billion since 2009, the department said, and the program would have required a bailout from Congress had changes not been implemented.
While HUD officials admitted that the new rules will do nothing to prevent losses related to existing HECMs — which will not be subject to the changes in draw limits and insurance premiums — the Post claimed that the reforms will help improve the program by ensuring “that reverse mortgages only go to homeowners who are actually capable, financially, of handling them.”
The editorial also references recent Post reporting about seniors struggling with tax-and-insurance defaults, and claims that the current FHA HECM portfolio is “more difficult to manage than anyone expected when the program began in 1990.”
“America’s seniors do indeed deserve to enjoy dignity and financial security — objective already furthered by a panoply of well-funded programs,” the piece concludes. “Better for government to help them openly than through nontransparent means such as federally insured speculation on home prices.”
Read the full editorial at the Washington Post.
Written by Alex Spanko