Seniors who want to tap their home equity through a reverse mortgage might want to keep a close watch on the Federal Housing Administration (FHA).
The Home Equity Conversion Mortgage (HECM) program, a reverse mortgage backed by the FHA, is showing signs of substantial stress, and U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan has a plan to relieve the pressure. Read the rest of this entry »
There was a big commotion last week when HUD announced that the reserves “used to support FHA’s single family mortgage and reverse mortgage insurance programs fell below zero to -1.44 percent. This represents a negative economic value of $16.3 billion.”
In fiscal 2012, the government accounting calendar which just ended, the FHA insured 1,239,874 loans. Most of these were “forward” loans, the 15-year mortgages and 30-year mortgages that most of us consider when we buy or refinance real estate.
Earlier this month, Moody’s Investors Service downgraded $5 billion of Home Equity Conversion Mortgage (HECM) bonds, a ratings change which ought to catch the attention of someone at HUD.
While the FHA mortgage program has been doing better in general, the situation with reverse mortgages is very different–claims for HECMs are up 64.6 percent. Read the rest of this entry »
The FHA’s reverse mortgage program has undergone a number of changes in the past year, and now HUD says more are to be expected.
HUD is also telling reverse mortgage lenders they can add additional requirements above the FHA standard to help reduce program claims…or are they? Read the rest of this entry »
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