New Report Separates & Exposes HECM Liabilities
HUD’s most recent actuarial review and net value of the Home Equity Conversion Mortgage sent shockwaves through the reverse mortgage industry last week.
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The 2017 Fiscal Year actuarial review of the HECM portion of FHA’s MMI fund showed a present negative net worth of $14.2 billion and a standalone negative net worth of $14.5 billion. With the traditional or forward mortgage book of business generating a positive cash flow value of $1.89 billion, the rationale behind repeated calls by both lawmakers and even the support of HUD Secretary Ben Carson to remove the HECM from the MMI fund become increasingly clear.
One could safely assume that HUD was aware of these developments when it chose to enact further cutbacks to the HECM by decreasing lending ratios in the effort to prevent future losses. Referencing October 2nd changes HUD senior advisor Adolfo Marzol said, “The HECM program has been a substantial net economic drain on…