It’s that time of year when we hold our collective breath in the hopes that HUD will be gentle when it comes to enacting further changes to the Home Equity Conversion Mortgage.

There have been reports that the Financial Assessment has reduced defaults significantly, yet even so continued HECM claims from earlier books of business (reverse mortgages written in previous years) are likely to continue. In other words, no product changes can erase future losses in pending HECM loan terminations.

Major HECM changes typically come every two years. What should we anticipate in the final months of 2019? October 2017 brought us PLF reductions, single-tiered upfront FHA insurance premiums and a reduced interest rate floor from five to three percent. 2018 being the interim year brought us the Collateral Risk Assessment or the second appraisal rule.

There are no clues as to what further changes HUD may enact for the federally-insured reverse mortgages. However, we are interested in what you see as the most likely changes we will see enacted beginning in October.

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