FHA Looks for a Second Opinion on MMI Insurance Fund
The FHA is looking into getting a second opinion on the financial health of its Mutual Mortgage Insurance Fund, courtesy of Summit Consulting, LLC and Miliman, Inc. The firm will conduct an independent analysis on the financial health of the MMI Fund in the upcoming months, which FHA hopes will better inform their decisions in the future.
FHA deputy assistant secretary of risk management and regulatory affairs, Frank Vetrano, said in article published in Reverse Mortgage Daily:
“This second assessment will provide another view of the health of the MMI Fund, giving HUD a new independent analysis and a second actuarial model. This will enable FHA to view the MMI Fund through another lens, informing future policy decisions, as the agency continues work to develop more sophisticated and refined internal capabilities.”
The assessment is a step toward stabilizing the MMI Fund, which came under scrutiny back in April when President Obama announced FHA might need a capital infusion of $943 million dollars in the budget report for 2014. According to an article in Reverse Mortgage Daily, the $943 million deficit stems from losses to the reverse mortgage program amounting to $5.2 million, as well as losses on forward during the housing crisis which was marked by low home values.
It’s important to note that this is the first time in it’s 80-year history the FHA needs a “bailout.”
In order to prevent such heavy losses in the future, President Obama passed the Reverse Mortgage Stabilization Act of 2013, which will include a financial assessment of the borrower(s) as well as mandatory set-asides for homeowners insurance and property taxes. The inability to pay these financial obligations have caused some reverse mortgages to fall into default in the past.
In the near future, however, FHA is adamant in making crucial changes to the reverse mortgage program so that it can continue to be a source of retirement income for house rich, cash poor retirees or homeowners, over 62 years of age and older, who what to use a reverse mortgage as a retirement planning tool.
In truth, the flexibility of the program has been one of the reasons for its growing popularity, despite its recent losses. There many options available for retirees looking to supplemen their retirement income, but time is running out. If you are consider a reverse mortgage, the time is now!
Interested in a reverse mortgage or simply have questions? Let us know at PS Financial Services by calling (888) 845-6630 or sending us an email at info@PSReverseMortgage.com. We do not pressure those who inquire. We are help to help.
Click here for more information about the elimination of the reverse mortgage program as we know it: