Washington Post Editorial Board Praises Reverse Mortgage Changes

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.

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“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

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  • Raise the costs of a reverse mortgage and reduce the cash they can access with the goal of saving the 20 something year old $10 on his mortgage payment. Yeah. Great plan. Maybe someone should do some research and see how many of these seniors are living below the poverty level before we decide on such a move. And let’s have a better objective than saving some young couple a few dollars on their mortgage.

  • What about the younger widow who just turned 65 and lost half her income due to her husbands death? Just sold my home and decided to buy a lower priced home, having it built. Going to have an immediate pay HECM mortgage and not have house payments just to survive. The law changes right in the middle of construction, and if I don’t come up with the extra money I lose my down payment and end up renting and living like a pauper. How fair is that? Always lived in a $300,000 plus home, going to a 1400 sq ft, $ 240,000 and now can’t even do that. There should at least be a benefit for single seniors.

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