FHA: Don’t Expect Reverse Mortgage Hybrid Product Any Time Soon

Among the industry conversation about an alternative to the full-draw fixed rate reverse mortgage product and the adjustable rate alternative, discussion of a hybrid reverse mortgage arose earlier this year among industry participants at the National Reverse Mortgage Lenders Association east coast conference in New York City. 

Despite overwhelming support from NRMLA as well as originators and secondary market participants, the industry should not expect to see a hybrid reverse mortgage any time soon, the Federal Housing Administration’s Deputy Assistant Secretary Charles Coulter told attendee’s of NRMLA’s annual convention in San Antonio last week.

Coulter spoke of changes coming to the reverse mortgage program, but the hybrid product discussed earlier, which would allow for some of the loan proceeds to be taken up front at a fixed rate, with the remainder taken as an adjustable line of credit, is not among them. 

“We’re committed to a strong, stable FHA,” Coulter said. “The Home Equity Conversion Mortgage is a unique product. We want to continue to work with you to make sure we are making changes that are consistent, reasonable, and create a program that has these characteristics. [Regarding] the fixed standard, financial assessment and tax and insurance defaults we will take a constructive and aggressive approach in addressing those areas. A hybrid would be ideal, but putting a product in place would not happen in a short enough time span. It’s not a near-term alternative.”

NRMLA previously brought the idea of a hybrid product to meetings with White House officials, and said at the time it would be better not only for the consumerbut also for FHA’s insurance fund. 

Written by Elizabeth Ecker

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