Changes to FHA’s Reverse Mortgage Program Could Lead to Premium Cuts

HousingWire reported on recently announced changes to the Federal Housing Administration's (FHA) Home Equity Conversion Mortgage (HECM) program. The FHA will raise premiums and tighten loan limits for HECM reverse mortgages in an effort to reduce risk to the Mutual Mortgage Insurance Fund (MMIF) that backs the program. The program has come under scrutiny because of losses suffered on a relatively small number of HECM mortgages having a disproportionately large effect on the overall losses to the MMIF.

In making the changes, HUD secretary Dr. Ben Carson stated, "Given the losses we're seeing in the HECM program, we have a responsibility to make changes that balance our mission with our responsibility to protect taxpayers." HousingWire writes that even though the announced changes do not directly imply a cut to FHA premiums for traditional FHA borrowers, the changes to the HECM program will put the MMIF on more stable financial footing. According to HousingWire this improved standing could allow for the possibility of  implementing a previously suspended FHA premium rate cut

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