HUD Projections Falling Short
July 7th, 2008
Related Stories
- HECM Originations Drop In Late December, Says HUD
- Reverse Mortgages: Mid-Year Report
- FHA Reverse Mortgage Production Tops 100,000 in ‘07
- Reverse Application Originations Steady, Applications Soar
- Reverse Mortgage Growth At Record Level, Yet Constrained
Story Tools
As well as reverse mortgages are doing in the marketplace — and reverse mortgages are doing very well — it now looks as though HUD will fall far short of the 160,000 reverse loans it expected to endorse this year.
Figures from HUD as of July 15th show that 96,670 home equity conversion mortgages (HECMs) have been originated this year — that’s up 17.5 percent over last year. In a market where originations are down for virtually all loans, the HUD program is doing great.
However, dreams of insuring 160,000 HECMs this year seem unlikely to be fulfilled.
Why?
While 96,670 loans sure seems like a lot of mortgages and since almost half the calendar year remains, it might seem as if HUD’s projection is within reason or even conservative. However, the HUD fiscal year began last October 1st. Seen that way we only have 10 weeks until fiscal 2009 starts.
If HUD continues at its current pace it will endorse 119,687 reverse mortgages in fiscal 2008. This is actually somewhat less than the final number — 120,304 — reported for last year.
What happened?
Last year was a remarkably good year so building on the fiscal 2008 total is not so easy. Also, it’s clear that many borrowers are waiting to see if the reverse mortgage loan limit for HUD-insured loans will be increased. Equity is also an issue — in many communities home values are in decline, meaning that a reverse mortgage might not yield as much cash as in the past.
Although HUD’s fantasy number is unlikely to be met, the fact that the program has kept pace with last year is impressive. Just ask the folks who sell conventional mortgages, option ARMs or interest-only mortgages….
Related Resources You May Like
RSS Feed
