The Biden Administration released a Fiscal Year 2023 proposed budget this week that predicted strong economic numbers for the Home Equity Conversion Mortgage program during the next federal fiscal year that begins on October 1, 2022.
The budget forecasted the HECM books of business for fiscal years 2023 and 2024 to operate at credit subsidy levels equal to negative 2.54 percent and negative 4.19 percent, respectively. This means the HECM program will generate substantially more receipts than it pays out in claims. Budget estimates also show HECMs made during the current federal fiscal year will perform at a negative credit subsidy rate of 2.39 percent.
The budgetary numbers are a further indication that FHA’s reforms over the past few years are having the desired impact.
Since the HECM program is self-sustaining and doesn’t require an annual appropriation from Congress, the President’s budgets provide a valuable bellwether on future HECM performance.
In addition to the HECM performance indicators, the President’s proposed FY23 budget continues the suspension of the cap on the number of HECMs that FHA can insure.