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Reverse Mortgage v.s. FHA Fund: Why Some Are Calling For Separation

When the Federal Housing Administration released its most recent actuarial report, proponents for the separation of reverse mortgages gained added concern. They are also becoming more adamant on the request to separate reverse mortgages from the FHA fund.

"It is has become an albatross around the neck of the FHA forward program and millions of low-income and minority homebuyers," said Brian Chappelle, a mortgage consultant at Potomac Partners in Washington, according to a National Mortgage News report.

"How much longer are first-time homeowners going to be subsidizing the FHA reverse mortgage program?"

Experts are worried that the number of seniors who default on their loans will rise. Though, there are a lot more risks involved, according to the report.

"A large percentage of HECMS are adjustable rates and as interest rates rise ... the negative amortization inherent in reverse mortgages increases, and that increases risk to the fund," said senior adviser to Ben Carson, Adolfo Marzol at a Nov. 15 conference call with reporters.

It's clear that there may be a bigger push for separation given the new numbers from the actuarial report. Whether that separation will actually happen, still remains to be seen.

You can learn more about the latest FHA actuarial report and more by clicking on the image above.

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