July-Aug 2020

The Biz EVERYTHING NEW YOU NEED TO KNOW Financial Assessment Is Working (Part VI) Consulting firm New View Advisors reports that Financial Assessment (FA) is still working. Now in its sixth year, the Federal Housing Administration’s (FHA) policy requiring that borrowers demonstrate their ability to pay has cut tax and insurance (T&I) defaults by over 75 percent and serious defaults by over two-thirds. These results continue to validate the encouraging data shared in previous years. FHA’s objective for its FA regulations was to reduce the persistent defaults, especially T&I defaults, plaguing the Home Equity Conversion Mortgage (HECM) pro- gram from 2009 to 2014. FA requirements became effective for HECMs with case numbers issued on or after April 27, 2015. Since then, HECM lenders make an assessment of borrow- ers’ ability to meet their obligations, including prop- erty taxes and home insurance. T&I and other defaults People are talking about ... can lead to foreclosure and result in significant losses to FHA, home mortgage-backed security issuers and other HECM investors. Defaults rose steadily during the finan- cial crisis and remained a thorn in the side of the program until Mortgagee Letters 2014-21, 2014-22 and 2015-06 were released. Read the full article at www.nrmlaonline. org/2020/04/20/financial-assessment-is-working-part-vi. Senior Housing Wealth Reaches Record $7.23 Trillion Homeowners 62 and older saw their housing wealth grow by 0.5 percent or $39 billion in the fourth quar- ter to a record $7.23 trillion from Q3 2019, according to the quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI). The RMMI rose in Q4 2019 to 260.52, another all- time high since the index was first published in 2000. The increase in senior homeowners’ wealth was mainly driven by an estimated 0.6 percent or $55 billion increase in home values, offset by a one percent or $16.6 billion increase of senior-held mortgage debt. The Biz continued on page 32 REVERSE MORTGAGE / JULY-AUGUST 2020 31