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Studies Detail HUD’s Risk for HECM Loans

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HUD's Risk for HECM Loans

Home Values, Loan Amounts, and Seniors

Home values, loan amounts, and the way seniors use home equity conversion mortgages impact the Federal Housing Administration’s potential liability for its reverse mortgage program, recent studies show.

If the Department of Housing and Urban Development had used the same home appreciation models for fiscal year 2010 as it did in prior years, there would be no need for a $798 million subsidy appropriation for the HECM program, HUD officials told the Government Accountability Office in a study mandated by Congress.

And reverse mortgages with term or tenure plans are much less likely to be assigned to the FHA than line-of-credit loans, a Federal Reserve Board economist found in her own research of the HECM program.

HUD made a number of improvements to its cash flow model in 2008, partly because of a HUD Office of the Inspector General’s audit that found material weaknesses, said the GAO in a July 30 report. That year HUD began to incorporate national house price appreciation and interest rate forecasts from IHS Global Insight, an independent source for economic and financial forecasts, the report said.

To read the rest of the story – visit Reverse Mortgage Alert

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2 Comments

  1. I would like to say, nice webpage. Im not sure if it has been addressed, however when using Firefox I can never get the entire page to load without refreshing alot of times. Could just be my modem.

    • Thank you for visiting the site. I will check on Firefox compatibility. Are you running Windows or Mac and which version of the OS?


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