On the same day the Secretary of the U.S. Department of Housing & Urban Development (HUD) announced that the Federal Housing Administration's (FHFA) Mutual Mortgage Insurance Fund is in the black for the first time since 2008, the official who oversees daily operations of FHA's federally insured Home Equity Conversion Mortgage program addressed members of the National Reverse Mortgage Lenders Association (NRMLA) at their Annual Meeting.
"Positive gains in the HECM program are a large part of the reason why the MMI is sufficiently capitalized at just over the two percent ratio mandated by Congress ahead of expectations," said Kathleen Zadareky, Deputy Assistant Secretary for Single Family Housing at HUD.
She cautioned the industry not to take the gains for granted though, because a pattern has emerged of HECM contributing or taking away from the positive performance of the fund.
"FHA is mindful of this and we'll continue to consider actions we can and should take to manage the volatility of the program," Zadareky said.
Zadareky also discussed how recently implemented changes such as financial assessment and new rules for non-borrowing spouses are making FHA-backed reverse mortgages more sustainable for borrowers without significantly limiting accessibility to these loans.
She expressed great appreciation to NRMLA for accepting the changes and working to implement them in a way that helps borrowers and makes sense for industry.
"DAS Zadareky has created an open channel of communication between NRMLA and HUD that enables us to share our concerns regarding the practical impacts of new rules and changes to the program. In this way, we are partners who are working together to tweak HECM as it grows and evolves to meet the needs of our aging population," said NRMLA President Peter Bell.
Zadareky also emphasized the importance of accountability by FHA and industry to use the HECM program as it was intended, as a way for senior homeowners to supplement their funds over time, and not as a short term fix that will eventually lead to default. This, she said, is critical to keeping the program on good solid footing.