The reverse mortgage industry received a dollop of good news in the last couple of weeks. It looks like the lending limits will remain as they are. This, in my opinion is essential for the continued health of the industry. The industry is effectively held captive by the provisions in HERA that moved the program out of the general insurance fund. Keeping the MCA (Maximum Claim Amount) s as high as possible will increase revenues realized by the upfront MIP (Mortgage Insurance Premium). Unless legislation is enacted to move the program back into GIF, the proceeds generated by the HECM program will have to be re-examined each year.
Current economic circumstances are forcing older Americans to confront an additional layer of uncertainty. The program has already been mutilated by the denizens of doom. These pundits see no redeeming features in a program that has changed hundreds of thousands of lives. While low rates are good for the mortgage markets, it is not good news for our elders who are trying to maximize return on investments. In addition to this, Social Security will not have a cost of living increase for the next two years.
The economy is still quite fragile. Accordingly I continue to ask what intractable “black swan” events are lurking out in the ether. Even if our economy is spared another calamity, the reverse mortgage program still remains the safest and best way for an appropriate eligible senior who has already made the decision to remain in their home, to access equity.
It is also important to know that notwithstanding the staged and disingenuous actions of certain politicians, the program has a staunch supporter in Congressman Barney Frank, one of the most powerful members of congress.. The balance of 2009 and 2010 will also be the time when the entire industry will have to make its collective voices heard. As long as voices are not heard, lawmakers and regulators will assume that the industry agrees with the actions taken.
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