The financial health of the Home Equity Conversion Mortgage portfolio improved dramatically over the past year, ending Fiscal Year 2020 with a negative stand-alone capital ratio of negative 0.78 percent, compared to negative 9.22 percent in FY2019, according to the 2020 Annual Report to Congress that the Federal Housing Administration published last Friday.
Put another way, the economic net worth of the portfolio improved by $5.4 billion over the past year from a negative 5.9 billion in FY 2019 to a negative $0.5 billion in FY 2020.
“Over the last 3 years, FHA has taken several actions to improve the HECM portfolio’s outlook and will continue to take whatever steps are necessary to stabilize the HECM program for borrowers and taxpayers,” says the annual report.
“The success of these policies – financial assessment, initial disbursement limits and collateral risk assessment – underscores the strong leadership that Deputy HUD Secretary Brian Montgomery and FHA Commissioner Dana Wade have provided,” says NRMLA President Steve Irwin. “We fully support these policies and look forward to working with FHA in the new year on other initiatives that will further stabilize the MMI Fund.”