Senior Reverse Mortgage

On February 13, President Obama released his budget proposal for the 2013 fiscal year, which will control spending from October 1, 2012 through September 30, 2013. In this budget are two figures that will affect the reverse home mortgage in the upcoming year. The first figure is the score assigned to the Mutual Mortgage Insurance (MMI) fund, and the second is the amount of money set aside for housing counseling.

How Obama’s Budget Scores the Mutual Mortgage Insurance Fund

The MMI fund is the fund dedicated to insuring both forward and reverse mortgages. According to the proposed 2013 budget, the portion of the MMI fund dedicated to insuring Home Equity Conversion Mortgages (HECMs) has earned a score of -0.921. While this score might seem negative, it actually means that the fund is expected to remain profitable through 2013. This is great news, as negative projections would leave the HECM program in need of appropriations, which may or may not be approved by Congress.

Reverse Home Mortgage Counseling Funding for 2013

The 2013 budget also plans to dedicate $55 million to the U.S. Department of Housing and Urban Development (HUD) to be used for housing counseling. Approximately 10% of this money will be put towards reverse home mortgage counseling. This would leave reverse mortgage counseling agencies with around $5.5 million, which is a significant increase from the $4 million given in 2012.

While the budget is still in the beginning stages, the proposal means great things for the reverse mortgage industry. The proposal proves that the HECM program is currently generating a profit and should continue to be profitable through at least 2013. Increased funding for housing counseling is also positive. If this part of budget is approved, reverse mortgage counseling agencies will be able to offer low- or no-cost counseling to more senior borrowers. While some people have questioned the HECM program’s staying power, it is clear that these loans are here to stay.