Responding to a question about the general health of the Federal Housing Administration’s finances, Ben Carson pointed to recent improvements to the reverse mortgage program during a Congressional hearing this week.
“We’ve made tremendous progress in terms of reverse mortgages, in terms of PACE loans, and putting the taxpayer in the right position,” the Housing and Urban Development secretary said during a hearing before the House Financial Services Committee on Wednesday.
Carson lumped Home Equity Conversion Mortgages in with the PACE program, which provides financing for energy-friendly property upgrades; the FHA stopped insuring mortgages associated with those loans late last year, citing concerns about higher risks of default and strains on the Mutual Mortgage Insurance Fund.
The secretary trumpeted the fact that the MMIF exceeded its 2% capital reserve requirement for the last fiscal year, despite a bleak outlook for the HECM portion of the fund. The federally backed reverse mortgage program was responsible for a negative $14.5 billion strain on the MMIF, according to the most recent actuarial report on the health of the fund, and HUD officials have pointed to those results as a justification for the decision to lower principal limit factors and adjust the insurance premium structure for reverse mortgages.
“Reverse mortgages have been kind of a sore spot for you, have they not?” Rep. Blaine Luetkemeyer, a Missouri Republican, asked Carson during the exchange.
“It has been. Of course, when [the program] was put in place, people meant well, allowing seniors to age in place — but the appropriate standards were not set in terms of the amount of money that could be withdrawn, etc., and looking after surviving spouses,” Carson said in response. “All of those things have been addressed, and we continue to make excellent progress in that area.”
Carson also mentioned the recent confirmation of Brian Montgomery as FHA commissioner as a step forward for the department; Montgomery’s nomination had been held up for months before the Senate finally signed off with a 74-23 vote in May.
“We’re very grateful that we finally got [an] FHA commissioner,” Carson said. “He’s been in place for almost a month now, and that makes a very big difference.”
Written by Alex Spanko