Housing Assistance: An Inventory of Fiscal Year 2010 Programs, Tax Expenditures, and Other Activities
U.S. Government Accountability Office
Home Equity Conversion Mortgage Program (Section 255)
| Administering Agency/Entity |
Department of Housing and Urban Development |
| Short Description |
Provides insurance that protects lenders from financial losses on Home Equity Conversion Mortgages (HECM), also known as reverse mortgages. HECMs are loans that allow qualified elderly homeowners to convert their home equity into payments from a lender. HECM borrowers can choose different ways to receive the money—as monthly payments, a line of credit, or a combination of both. Lenders approved by the Federal Housing Administration (FHA) can originate HECMs for borrowers who are at least 62 years of age and either own their home outright or have an outstanding mortgage balance that is small enough to pay off at loan closing. The home must be the borrower’s principal residence. The amount of money a lender can advance to a HECM borrower depends on the age of the borrower, the interest rate, and the “maximum claim amount” (the lesser of the home’s appraised value or the FHA loan limit). The loan typically does not require any repayments as long as the borrower continues to live in the home. |
| Primary Purpose |
Assistance for buying, selling, or financing a home |
| Type of Housing Supported |
Homeownership |
| Type of Assistance |
Insured loan |
| Fiscal Year 2010 Obligations |
-$106,000,000; expected credit subsidy costs are for loan commitments made in fiscal year 2010. These estimates are revised in subsequent years and the ultimate cost will not be known until the loans have matured. The HECM Program is part of the Mutual Mortgage Insurance Fund but has separate subsidy costs which are reported here. |
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