The US Government Accountability Office released a new report last month that demonstrated that reverse mortgage policy changes from the Housing and Economic Recovery Act have had positive effects on lenders and borrowers but recent market changes have increased the Department of Housing and Urban Development’s (HUD) risk profile. The GAO surveyed reverse mortgage lenders originating Home Equity Conversion Mortgages (HECMs), analyzed loan-level data and reviewed estimates and analysis of the programs’ cost to taxpayers. The report reflected that the current economic conditions provided an impetus to offering the product sooner but the secondary market conditions provided a downward influence on the overall trend.
The GAO found that in recent years there has been a rapid increase in the number of lenders participating in the HECM program. However, the bulk of HECM business is concentrated among a relatively small percentage of lenders. In fiscal year 2008, roughly 80 percent of all HECMs were originated by fewer than 300 lenders, or about 10 percent of HECM lenders says the report.
For the full GAO report, click here: GAO-09-836