The media continues its coverage of the Federal Housing Administration’s HECM Saver, a low cost reverse mortgage that was released in October 2010.
The latest comes from Inman News, where Tom Kelly writes “the buzz among reverse mortgage professionals at the recent National Reverse Mortgage Lenders Association annual convention was that the new HECM Saver could soon be dubbed the HECM Savior.”
The bottom line was that the FHA had to sharpen its pencil to produce what it thought would be a sustainable reverse mortgage program, given the need to raise mortgage insurance.
The Office of Management and Budget concluded that since many homes had dropped in value, the industry needed to charge more to cover the risk of people outliving the value of their homes. Mortgage insurance premiums were raised on most federally insured programs, including “forward” mortgages.
The result was to retain one program (HECM Standard) where owners could take out more funds with a higher upfront fee, plus introduce a cheaper program where homeowners would pay less upfront yet have lower maximum borrowing limits.
FHA Commissioner David H. Stevens told conference attendees that while he was bullish on both the HECM Saver and HECM Standard, he indicated that the HECM Saver was critical to the overall success of federally insured reverse mortgages.
