The unexpected news of the Congressional Budget Office’s report on reforming the HECM program created quite a splash among industry watchers. As the initial shock of the government watchdog’s recommendations sinks in, some are reading between the lines. One of the subtexts I missed are the political origins of the CBO report itself…
In August 2016 AARP recommended the elimination of the HECM ‘line of credit’
While FHA recent reports show a positive financial outlook for the fiscal year 2020, the CBO issued a report today proposing 4 major potential reforms to the HECM to reduce long term risks to the taxpayers. The Congressional Budget Office provides budget and economic data to Congress or the legislative branch which sets their priorities. In essence, they are the watchdog for the nation’s purse.
1-Make FHA a direct lender. Under this proposal, lenders would do the leg work or marketing and originating the loan, while FHA would make the disbursements directly to the homeowner. In addition, the government would service the loans. The CBO acknowledges significant drawbacks in scaling to manage a large number of loans…
