Following an announcement indicating the Federal Housing Administration will on April 1 discontinue its fixed rate standard reverse mortgage product, Senator Bob Corker (R-Tenn.) said he is pleased with the change.
The reverse mortgage program changes accompany additional changes to FHA’s insurance programs including more restrictive insurance requirements for FHA loans. Sen. Corker raised concern among Congress members in late 2012 on the heels of an annual audit of FHA’s mutual mortgage insurance fund that indicated FHA was in the red by a measure of $16 billion.
The changes are a step, but there is more work needed, Corker said.
“I am pleased that the FHA is following through on the steps we discussed last year to strengthen its fund and to get itself back to solvency, but this is only a first step in fundamentally reforming our system of housing finance so that we are not completely reliant on the government – and on taxpayer losses – to support homeownership,” said Corker.
Corker penned a letter in December to then-Acting FHA Commissioner Carol Galante seeking improvements to the fund’s solvency. The requested changes were “in order to begin restoring financial stability at FHA after substantial losses, primarily from a flawed reverse mortgage program,” Corker’s office said.
Members of Congress have indicated there will be several upcoming hearings to discuss the FHA’s dismal financial position, calling the administration “broke.” Additional changes to the reverse mortgage program including a financial assessment for borrowers and mandatory set-aside for tax and insurance are expected in the coming months.
Written by Elizabeth Ecker
