Re­verse mort­gage losses hit FHA

HUD to re­vise pre­mi­ums, limit draws to bol­ster agency.

Austin American-Statesman - - BUSINESS - By Jenifer McKim Wash­ing­ton Post Mort­gages

Con­cerned about fi­nan­cial losses in a fed­er­ally in­sured mort­gage pro­gram for se­niors, the Depart­ment of Hous­ing and Ur­ban De­vel­op­ment plans to ad­just pre­mi­ums and limit fi­nan­cial draws for el­derly home­own­ers tak­ing such loans.

HUD of­fi­cials said the eco­nomic value of the fed­eral re­verse-mort­gage pro­gram, es­ti­mated at neg­a­tive $7.7 bil­lion last year, is putting at risk the Fed­eral Hous­ing Ad­min­is­tra­tion’s en­tire in­sur­ance fund that sup­ports all sin­gle-fam­ily loan pro­grams, in­clud­ing tra­di­tional mort­gages.

The fed­eral re­verse-mort­gage pro­gram, of­fi­cially called a home eq­uity con­ver­sion mort­gage (HECM), has been marked by prob­lems, in­clud­ing a rise in fore­clo­sures. HUD of­fi­cials said Tues­day that if quick fixes aren’t made, the pro­gram will re­quire an ap­pro­pri­a­tion from Congress to en­sure that the en­tire in­sur­ance fund main­tains re­quired re­serves.

Home prices and in­ter­est rates, among other things, have made the re­verse-mort­gage pro­gram volatile, HUD of­fi­cials said.

“Fair­ness dic­tates that fu­ture HECM loans do not ad­versely im­pact the over­all health of FHA’s in­sur­ance fund, which sup­ports the fi­nanc­ing needs of younger, mostly first-time home­own­ers with tra­di­tional FHA mort­gages,’’ HUD Sec­re­tary Ben Car­son said in a state­ment. “We’re tak­ing needed and pru­dent steps to put the HECM

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