The Biden Administration released appendices to its Fiscal Year 2024 proposed budget this week that predicted strong economic numbers for the Home Equity Conversion Mortgage program for the next federal fiscal year that begins on October 1, 2023.
The budget forecasted the HECM books of business for fiscal years 2023 and 2024 to operate at credit subsidy levels equal to negative 4.19 percent and negative 2.87 percent, respectively. This means the HECM program will generate substantially more receipts than it pays out in claims. Budget estimates also show that HECMs made during fiscal year 2022 (which ended on September 30, 2022) performed at a negative credit subsidy rate of negative 2.54 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 budget provides a valuable bellwether on future HECM performance.
In addition to the HECM performance indicators, the President’s proposed FY24 budget continues the suspension of the cap on the number of HECMs that FHA can insure.