Reverse Mortgage Jan-Feb 2021

Reports From HUD continued from page 29 improving, going from a negative capital ratio of 9.22 per- cent, down to a negative 0.78 percent. FHA Commissioner Dana Wade says that strong housing prices and the forbearance and eviction morato- rium initiatives have helped. “We’ve put in place some unprecedented policies,” Wade says. “There is always a cost-benefit decision, but given the nature of the COVID pandemic, we feel these are necessary policies despite the cost.” Wade made her comments in a separate news con- ference the day after NRMLA’s annual meeting. The for- ward mortgage program continues to provide a subsidy to the reverse program in the insurance fund, Wade adds. She advocates returning HECM to its own standalone insurance fund, and she says this year might be the time to do it. In fact, until 2009, HECM was placed within the General Insurance and Special Risk Insurance Fund. “I really hope [a standalone fund] is something Congress will consider,” she says. “I have hope, and it is time for Congress to act. There are some great reforms that are nonpartisan—just good fiscal policy.” For now, Wade says she is gen- erally pleased with the progress of HECMs in the MMIF. “We’re following the data very closely, and we’re seeing improvements,” she says. HECMs are extremely susceptible to modeling inputs, Wade also says. While the projection for home price appreciation is positive, she says they must prepare for market fluctuations. “As part of our stress testing, we look at a variety of scenarios,” she says. NRMLA’s Irwin agrees that current modeling doesn’t work well because HECM is not a 30-year mortgage. “I’m sure the evaluation of the program would be far more favorable if it was truly reflective of the actuality of HECM’s real situation and performance,” he says. Overall, Irwin says, the government agencies reacted quickly and responsibly during the pandemic. That stew- ardship should continue, he adds. “We trust they will continue to make accommoda- tions as we get through this pandemic,” Irwin says. “The policy changes HUD has put in place, including financial assessment, initial disbursement limitations and collateral risk assessment are having their intended impact. It is our hope that the department can resolve the servicing issues to strengthen the HECM program. We’re going in the right direction. If they do a few more tweaks, we’ll get there.” Dana Wade “These updates were designed to balance the burdens on homeowners and servicers but also to ensure that risks to FHA continued to be mitigated.” — Joseph M. Gormley, HUD Deputy Assistant Secretary for Single-Family Housing 30 REVERSE MORTGAGE / JANUARY-FEBRUARY 2021