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Reverse Mortgages: Policy Changes Have Had Mostly Positive Effects on Lenders and Borrowers, but These Changes and Market Developments Have Increased HUD's Risk

GAO-09-836 Published: Jul 30, 2009. Publicly Released: Jul 30, 2009.
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Highlights

Reverse mortgages--a type of loan against home equity available to seniors--are growing in popularity. A large majority of reverse mortgages are insured by the Department of Housing and Urban Development (HUD) under its Home Equity Conversion Mortgage (HECM) program. The Housing and Economic Recovery Act of 2008 (HERA) made several modifications to the HECM program, including changes in how origination fees are calculated and an increase in the loan limit. The Act directed GAO to examine (1) how these changes have affected lenders' plans to offer reverse mortgages, (2) how the changes will affect borrowers, and (3) actions HUD has taken to evaluate the financial performance of the HECM program. To address these objectives, GAO surveyed a representative sample of HECM lenders, analyzed loan-level HECM data, and reviewed HUD estimates and analysis of HECM program costs.

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ClaimsCost analysisData collectionEconomic analysisFeesFinancial managementFunds managementInsuranceInsurance claimsInsurance premiumsLending institutionsLoan interest ratesLossesMortgage loansMortgage programsMortgage protection insurancePrice regulationRisk managementSurveysHousingHousing programsProgram evaluationCost estimatesProgram costs