The Department of Housing and Urban Development will be extending the time period for implementation of a financial assessment for reverse mortgage borrowers, Federal Housing Administration Assistant Secretary Carol Galante told attendees of an industry conference on Monday.
While the length of the extension, which will grant the industry some period of time beyond the initial implementation date of January 13 was not specified, the time will allow FHA to make sure the change is implemented precisely and with budgetary health in mind, Galante said during the National Reverse Mortgage Lenders Association annual conference in New Orleans.
“We have thrown a lot at you in a short period of time,” Galante said. “We threw a lot at ourselves. But this was necessary to get a program that will be stable from a budgetary perspective. We had to make these changes before the start of the fiscal year.”
Last week, Galante testified before members of Congress on the financial position of the FHA’s mutual mortgage insurance fund, as well as a recent mandatory appropriation of nearly $1.7 billion to shore up losses largely due to the Home Equity Conversion Mortgage program.
FHA has long touted the changes made under the Reverse Mortgage Stabilization Act of 2013, including recent restrictions to upfront draws, draws within the first 12 months of a reverse mortgage, and the upcoming financial assessment, as much-needed measures toward program stability. The first series of changes went into effect October 1, with the financial assessment initially slated for its January start date.
“There are nuanced changes we think will hit the mark,” Galante said. “They will improve performance of HECM business and will help keep MMI fund sound. We think these changes are going to better support seniors and make a better program for them. We’re committed to monitoring these impacts, and making sure were not overcorrecting.”
The financial assessment in particular has been proposed as a rule, and the Department is reviewing public comment on the rule, including a request for clarification from NRMLA. The government shutdown in October presented some setbacks, Galante said.
“We need to have some extension of time here to ensure the financial assessment piece can be implemented precisely and correctly,” Galantes said. “We will extend time period. I can’t yet tell you how long. We were on furlough for two weeks. We’ve just gotten the comments and are looking at the changes. Want to ensure you have a little more time—but not a lot.”
Galante stressed commitment to the program, in addition to a need for swift change.
“We need to ensure we get these changes in place rapidly,” she said.
Written by Elizabeth Ecker