July/August 2022 Reverse Mortgage Magazine

White House Budget Forecasts Strong HECM Performance On March 28, the Biden administration released a fiscal year 2023 proposed budget that predicted strong economic numbers for the HECM program during the next federal fiscal year that begins October 1. 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. A negative credit subsidy means the HECM program will generate substantially more receipts than it pays out in claims. Budget estimates also show that 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 Federal Housing Administration (FHA) 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 the FHA can insure. Senior Home Equity Exceeds Record $10.6 Trillion Homeowners 62 and older saw their housing wealth grow by 3.98 percent, or $405 billion, in the fourth quarter to a record $10.6 trillion from Q3 2021, according to the most recent quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI). The RMMI rose in Q4 2021 to 370.56, another all-time high since the index was first published in 2000. The increase in older homeowners’ wealth was mainly driven by an estimated 3.7 percent, or $452 billion, increase in home values, offset by a 2.3 percent, or $47 billion, increase in senior-held mortgage debt. “To help mitigate the risks and concerns surrounding the ability of homeowners to age their way, it is critical that housing wealth is carefully and responsibly considered when developing a comprehensive retirement plan,” NRMLA President Steve Irwin says. “For many, housing wealth is indeed their greatest asset, and tapping that equity, under the right circumstances, will enable a secure path to aging security.” Using Home Equity Improves Retiree Health While the strategic use of home equity can provide financial relief for retirees, a new study co-authored by Ohio State University (OSU) researcher Stephanie Moulton finds that it is also good for their health. Every $10,000 that Medicare beneficiaries extracted from their homes greatly improved their success in controlling a chronic or serious disease, according to a summary of the OSU research published by the Squared Away blog that’s affiliated with the Center for Retirement Research at Boston College. Among the retirees who had hypertension or heart disease, for example, one standard used to determine whether the condition was under control was whether blood pressure levels stayed below 140/90, which the medical profession deems an acceptable level. The people who tapped their home equity were more likely to stay below these levels than those who didn’t. Read the blog post at bit.ly/3li0z8t and check out the study at bit.ly/3KxSHKa. Robinson Joins NRMLA Board NRMLA’s Board of Directors unanimously voted to have Ed Robinson, president and chief operating officer at American Advisors Group (AAG), join the board for the duration of calendar year 2022 to fill the vacancy created by the retirement of Jules Vogel. People are talking about ... What’s News EVERYTHING NEW YOU NEED TO KNOW 8 REVERSE MORTGAGE / JULY-AUGUST 2022

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