Budget Increased for FHA Servicing Contracts

Here’s why the government is granting a $50 million dollar boost to FHA’s Mutual Mortage Insurance Fund

The White House budget submitted to Congress in June signaled a strong performance of the Home Equity Conversion Mortgage program. HUD’s summary of loan levels predicted the HECM portion of FHA’s portfolio was expected to generate a negative credit subsidy of -2.54% in Fiscal year 2022. Translated that means it’s expected that incoming receipts will exceed claims paid that year. According to a June report in Reverse Mortgage Daily fiscal year 2021 which we just concluded is also expected to generate a negative subsidy of -2.39%.

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1 comment

Don Opeka October 11, 2021 at 11:50 am

While HUD as an individual agency may not have control over home prices (inflation) or interest rates, they are one of many agencies reporting to the President of the United States. POTUS through the other agencies has plenty of control over these factors. This makes POTUS ultimately responsible for managing HECM losses through other agencies.

As I read this, a consistent theme is that HUD looks at the HECM program in isolation without understanding either the borrower or the impact of other government programs such as Medicaid. Anyone remotely familiar with what really is happening with borrowers, their families, and Medicaid would know that many HECM foreclosures are driven by Medicaid rules. Medicaid and HUD both report to POTUS, so he has complete responsibility for coordinating the rules.


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