Financial Sustainability and the Home Equity Conversion Mortgage: Advancing Fiscal Soundness and Affordable Financing for Senior Homeowners

Edward J. Szymanoski
Alven Lam
Christopher Feather
U.S. Department of Housing and Urban Development

Opinions expressed in this article are those of the authors and do not necessarily reflect the views and policies of the U.S. Department of Housing and Urban Development or the U.S. government.

The Home Equity Conversion Mortgage (HECM) has undergone significant changes in its 25-year history since its modest start as a 2,500-loan pilot in 1987 to its nearly one million endorsements at the end of 2015. The Great Recession more recently underscored the need for measures to secure the financial sustainability of these reverse mortgages. Such measures have sought to mitigate risk and improve the financial health of the HECM program while promoting affordable financing through the HECM mortgagebacked securities, or HMBS, program. Improved fiscal soundness for HECM ensures the program is viable and continues to provide affordable financing in the conversion of home equity for senior homeowners. This article examines changes made toward increasing the financial sustainability of HECM through fiscal soundness and the facilitation of affordable financing. These changes are especially relevant as American households continue to age and seek the option to affordably access their housing wealth while remaining in their home.