The Department of Housing and Urban Development remains committed to operating the HECM program on a fiscally sound basis and to providing greater assistance for reverse mortgage borrowers who are facing default, General Deputy Assistant Secretary for Housing Dana Wade testified this week before the House Transportation, Housing and Urban Development, and Related Agencies Appropriations Subcommittee.
During his initial line of questioning, Subcommittee Chairman Mario Diaz-Balart (R-FL) referenced an AARP article from 2017 that stated the HECM default rate increased by 646 percent in 2016. Wade responded that “this number is largely misunderstood,” but she acknowledged that HECM “remains a financially and operationally challenged program.” HUD has taken steps to “put future loans on a fiscally sustainable path, but we still have a legacy book of old loans where we see some trouble and so we are continuing to monitor that situation.”
Diaz-Balart then asked why so many reverse mortgage borrowers were defaulting on their loans, when HECM was designed to help seniors. Wade responded that HECM borrowers “lack information [regarding their] commitments under the HECM program. But we are looking at housing counseling programs and trying to leverage resources that provide adequate information to borrowers so that they know what to do if they face a potential default.”
Wade ended the line of questioning by informing lawmakers that financial assessment and life expectancy set-asides have helped reduce HECM defaults, but “it’s still something that we are monitoring very closely. We have a commitment to make sure that obligations under HECM are as transparent as possible to the seniors who rely on this program to age in place. We will do everything we can to put forward solutions that will allow for a positive workout in these types of situations.” View the hearing at House.gov (scroll to the 40-minute mark.)
In a post-hearing interview with the Capitol Hill trade publication CQ, Diaz-Balart also noted the absence of a confirmed FHA Commissioner, telling the outlet that it was “not helpful” to have a vacancy at the top of the administration.