November 21, 2018

Reverse Mortgage Mess Redoux

Jack Kemp

I woke up early and found this pretty good analysis of messed up the federal govt. guaranteed (taxpayer guaranteed) Reverse Mortgage business is.

(See more on the meltdown here.

Real estate trouble: reverse mortgages deplete FHA insurance reserves

From the article:

"Reverse mortgages were supposed to offer seniors the ability to generate retirement fixed monthly cash or line of credit by borrowing money against their home equity. Unlike standard loans, no repayments are required during the borrower's lifetime and homeowner heirs could repay the loan or turn the home over to the lender. Seniors could only default by not making property repairs or by failing to pay property tax and insurance.

But Reuters reported that the California Reinvestment Coalition found that foreclosures on reverse loans that averaged 490 a month from January 2009 to March 2016, spiked by 646 percent during the last nine months of the Obama Administration to 3,664 per month. CRC added that HUD data revealed that defaults expected to lead to involuntary foreclosures doubled in fiscal 2016 to 89,064, from 45,381 in the prior year.

President Trump's Federal Housing Administration Commissioner Brian Montgomery, who was confirmed by the Senate in May, is moving quickly to investigate the HECM high-risk taxpayer guaranteed portfolio, according to the Wall Street Journal.

After an FHA staff review of 134,000 reverse mortgages found that at least 37 percent of reverse mortgage appraisals were overvalued by 3 percent or more, Montgomery announced that HECM reverse mortgage lenders provide a second property appraisal on loans flagged by FHA as potentially having an inflated property valuation.

Read the whole article.

Posted by: Timothy Birdnow at 07:25 AM | Comments (1) | Add Comment
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