More than half of the seniors with delinquent FHA-insured reverse mortgages—due to nonpayment of insurance and taxes—are participating in a repayment plan, according to the Federal Housing Administration.
The agency said 56% of the 54,000 borrowers that are technically in default on their FHA
As of March 30, approximately 9.4% of the outstanding 578,000 HECMs were in technical default.
FHA officials are trying to update the HECM delinquency numbers by mid-October.
A recent report by the Consumer Financial Protection Bureau on reverse mortgages noted that many seniors applying for a reverse mortgage do not understand they must also pay property insurance and taxes going forward. Regulators believe many lenders don’t consider the borrower’s financial capacity to meet that obligation.
Voluntary efforts by the reverse mortgage industry to address this issue “have so far proved unsuccessful,” the CFPB says in a recent report.
FHA acting commissioner Carol Galante is expected to issue new HECM underwriting standards shortly. Requiring an escrow requirement on HECMs is believed to be under consideration.
Of the 54,000 delinquent HECM borrowers, 32,000 owe more than $2,000 in back taxes and insurance payments.
