Real estate trouble: Reverse mortgages deplete FHA insurance reserves

The Federal Housing Administration's 2018 audits revealed that losses from real estate reverse mortgages destroyed about a third of the taxpayer-guaranteed insurance reserves. The FHA Mutual Mortgage Insurance Fund on November 15 reported an $8-billion profit with a $1.26-trillion portfolio of loan guarantees for the fiscal year ending September 30.  FHA's traditional single-family home loan portfolio program is very profitable due to the housing boom and has a positive economic net worth of +$46.8 billion.  But its reverse mortgage program for seniors, called Home Equity Conversion Mortgage (HECM) that represents only 6 percent of FHA guarantees, disclosed its economic net worth plunged to a negative -$13.6 billion, almost triple the prior year's negative net worth of -$5 billion. Congress originated FHA mortgage insurance during the Great Depression to stabilize banks that suffered skyrocketing mortgage defaults...(Read Full Post)
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