Housing Counseling FAQ

What are the changes HUD made to the Home Equity Conversion Program (HECM) program on August 29, 2017?

Date Published: September 2017

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On August 29, 2017 HUD announced changes to its HECM program, effective October 2, 2017. The changes are needed to put the program on a more sustainable path. According to FHA’s 2016 Annual Report, last year alone, the economic value of the program was a negative $7.7 billion. Additionally, the President’s Budget explicitly stated the program would need changes in FY 2018. Specifically, the May 2017 President’s budget noted, “Since the passage of the Reverse Mortgage Stabilization Act in 2013, FHA has implemented several changes to strengthen and enhance the HECM program; further changes will continue into fiscal year 2018.” The HECM losses are making it increasingly challenging for FHA to maintain the overall level of reserves that Congress requires for the FHA Mutual Mortgage Insurance Fund (MMI Fund). Without the changes announced in August, the HECM Program would require an appropriation from Congress to endorse new reverse mortgages in FY 2018. HECM program changes include adjusting Mortgage Insurance Premiums (MIPs) and revising the amount of equity seniors can draw from a HECM. See the FHA Mortgagee Letter 2017-12 for details about the policy changes.

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