May-June2020 Issue

The Biz EVERYTHING NEW YOU NEED TO KNOW President’s FY2021 Budget Forecasts Strong HECM Performance The White House released a fiscal year 2021 proposed budget on February 10 that predicted strong economic numbers for the HECM program during the next federal fiscal year that begins on October 1, 2020. The budget projects the HECM program will operate at a credit subsidy level equal to negative 2.39, which means the program will generate substantially more receipts than it pays out in claims for that year’s book of business. Budget estimates show HECM endorsements totaling $13.6 billion for the current federal fiscal year that ends September 30 and $10.7 billion in FY2021. Because 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. Study: 70 Percent of Older Households Are Stable Enough to Tap Home Equity Researchers at the Center for Retirement Research at Boston College published a study that supports a long- held belief that most retirees do not want to move in their later years and, therefore, are likely candidates to tap their home equity. “Overall, the findings largely support the narrative from prior research that most people want to age in place and move only in response to a shock,” the study states. “As retirees live longer, spend more on medical care and get less income replaced by Social Security, many may need to tap their home equity to be comfortable in retirement.” Seventy percent of households have very stable homeownership patterns, even over several decades. These stable homeowners can tap their home equity either through a reverse mortgage or a property tax deferral, say People are talking about ... the researchers, but most fail to act. Their reluctance may be due to concerns that if they decide to move, they will have to pay back their loans with interest, which could leave them with inadequate resources at a vulnerable time in their lives. “Retirees might be more likely to tap their home equity if they felt that they had adequate public or private insurance protection against the risk of needing long-term services and supports,” the study states. In Memoriam: Michael Fitzpatrick, Co-Author, Reverse Mortgage Stabilization Act Michael Fitzpatrick, a former congressman from suburban Philadelphia who co-sponsored the Reverse Mortgage Stabilization Act of 2013 with then-freshman Congressman Denny Heck (D-WA), passed away in January after a long battle with cancer. He was 56. An attorney by trade, Fitzpatrick was a moderate Republican who represented the Bucks County area, located north of Philadelphia, from 2005 to 2007 and again from 2011 to 2017, serving four terms in total. He consistently ranked among the most bipartisan members of Congress. The Reverse Mortgage Stabilization Act—one of only a handful of bills passed by Congress that year—gave the Secretary of Housing and Urban Development the ability to quickly enact critical reforms to the HECM program by mortgagee letter rather than by rulemaking. To this day, the Stabilization Act remains a critical tool used by the Federal Housing Administration to manage the HECM program and ensure the financial stability of the Mutual Mortgage Insurance Fund. Michael Fitzpatrick 10 REVERSE MORTGAGE / MAY-JUNE 2020