This is nonsense, of course. The creation of the program, like FHA, and other “guarantee” programs, put taxpayer funds at risk from the beginning, and now that risk is being realized without any provision having been made for absorbing it.

The federal government’s “cash accounting” disguises this fact, until the losses materialize, then the program’s promoters profess that they are “shocked, shocked” that yet another government guarantee program has blown up. Taxpayer dollars “go in” to these programs from their inception, but the failure to account for this unrecognized capital consumption simply means that future taxpayers will get fleeced because of the unwillingness of present and past taxpayers to pony up the capital when the program was set up. In the case of HECM, the “future” is now.

Perhaps the needed capital should be extracted from those who have benefited from the program: borrowers, originators, and investors.