Good Intentions vs Original Intent

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Though Unwelcome Change was Crucial

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Reverse Industry Change

The Importance Of Intent In The Reverse Mortgage Industry

The saying goes “the road to hell is paved with good intentions”. The same could be said of the federally-insured reverse mortgage program’s recent predicament and HUD’s swift action to avoid disaster…the closure of the program. Much of the recent reverse mortgage news has focused on the announced overhaul of the Home Equity Conversion Mortgage Program, but few look at or understand it’s original intent. The words original intent are fitting when examine the origins of our program versus its evolution over the last 24 years. The Housing & Community Development Act which laid the groundwork for the reverse mortgage program says the purpose is “to meet the special needs of elderly homeowners by reducing the effect of the economic hardship caused by the increasing costs of meeting health, housing, and subsistence needs at a time of reduced income, through the insurance of home equity conversion mortgages to permit the conversion of a portion of accumulated home equity into liquid assets.”

Scalpel or an Axe? HECM Reforms.

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Without Congressional Authority FHA is Faced with Hard Choices

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Reverse Mortgage News

HUD would prefer to take the surgeon’s approach making fine tuned adjustments to the federally-insured reverse mortgage or HECM program. Presently it is left with the axe of harsh change unless Congress acts to give them the authority needed before the beginning of next fiscal year October 1st. The blunt approach was mentioned in a recent Senate Banking Committee hearing last week when Assistant Secretary of HUD Carol Galante reassured senators that they have no plans to bring back the standard fixed rate product.

Assistant Secretary Galante mentioned another option…more principal limit reductions across the board. “If we can’t make those nuanced changes, we are going to have to say the entire amount [that can be borrowed] is going to be just lowered for everybody across the board.”