Reverse mortgages have the potential to become more popular as more households with insufficient income reach retirement, according to a study done by the Center for Retirement Research at Boston College.Despite the possibility for increased popularity of reverse mortgages, or HECMs (Home Equity Conversion Mortgages), concerns have risen over an increased default rate for borrowers.
To respond to the concerns, the report states that HUD, starting in 2013, began restricting initial withdrawals as well as introducing criteria for underwriting. With these policy changes, property taxes as well as insurance default could potentially reduce by 50 percent. The report also states that the collective impact of both policies could reduce take-up by 12 percent attributed to the restrictions on the initial withdrawal amount instead of the underwriting criteria.
HUD’s latest housing scorecard, which examines housing recovery data, HUD’s programs performance, and areas for improvement, showed continued progress in the nation’s housing recovery for June—with growth in key indicators such as existing-home sales, homeowners’ equity, and home value appreciation. “While our housing market is on a healthy trajectory, it’s clear we must continue to support programs that help more Americans recover from the Great Recession,” said Katherine O’Regan, Assistant Secretary for the Office of Policy Development and Research.