Better question: is it to prevent FHA from having to pay out on loans that go upside down?. Or another question: if the consumer is paying huge FHA insurance premiums, isn’t it up to them to make the choice as to where to place their home equity?

I’m a little skeptical.

In some cases the borrower mitigates the consequences of going upside down in the loan by separating the equity. Annuities bypass probate with properly designated beneficiaries. Many times I’ve seen surviving children have to wait one year or more for the home to sell (if there’s equity left), where as an annuity would have paid them immediately even though interest was paid on the amount to purchase the annuity. This becomes more evident in a declining real estate market where time to sell equals a loss of tens of thousands of dollars.

As far as holding annuity commissions in escrow to be paid over several years…sure, why not and let’s make reverse mortgage loan originations paid the same way.

A little tongue-in-cheek , but another viewpoint for originators and watchdogs in the industry to see all sides of the issue.