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Home Equity Preferences as a Factor of Age and Race
Friday, February 28, 2020
A recent post on the Urban
Institute's (UI's) Urban Wire blog focuses on some overlooked data on FHA's Home
Equity Conversion Mortgage (HECM) program. The program guarantees loans, commonly
called reverse mortgages, for homeowners 62 years and older. These loans allow
homeowners to withdraw the equity from their home, either in a lump sum or in
monthly payments. The loan does not need to be paid back until the homeowner
leaves or sells the house. UI analysts Karan Kaul, Laurie
Goodman, and Sarah Strochak write that seniors are
currently "sitting on a mountain of housing wealth" (estimated in 2017 at $3
trillion) and are anxious about their finances. Therefore, one might expect
HECM to be a well-used program. But even as the number of older Americans has
grown, participation in the program has dropped from 73,112 borrowers to 33,000
between 2011 and 2018.
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