The Home Equity Conversion Mortgage portfolio saw a significant improvement in its net present value over the past year and is now positive for the first time since Fiscal Year 2015 thanks to strong home price appreciation, according to HUD’s 2021 Annual Report to Congress released this morning.
HUD reports the HECM portfolio has a stand-alone capital ratio of 6.08 percent as of September 30, 2021, compared to a negative 0.78 percent capital ratio from the previous year.
Put another way, the economic net worth of the portfolio improved by $4.3 billion over the past year from a negative $0.5 billion in FY2020 to a positive $3.8 billion in FY2021.
“We are very pleased that HUD’s programmatic changes, including Financial Assessment, continue to have the desired effect of improving the fiscal soundness of the HECM program,” says NRMLA President Steve Irwin. Read the full report.