The U.S. Department of Housing and Urban Development (HUD) continues to support the Home Equity Conversion Mortgage (HECM) program as an option that can benefit certain seniors looking to age locally, although certain questions about the department’s HECM program guidelines remain are unclear or unanswered. This is evident from a statement the ministry provided RMD after specific education about the reverse mortgage program.
In general, the HUD Statement provides an overarching policy perspective on the general stance the HUD, under the administration of President Joe Biden, has on reverse mortgages in general and the HECM program in particular, but direct questions remain about its current and future plans unanswered by HUD for HECM policy via RMD’s correspondence with a HUD spokesperson.
General HECM perspective from HUD
Since the HECM program is not often a recurring topic of conversation at the HUD when the ministry or its secretary makes housing-oriented public statements, it is always noteworthy when the HECM program is addressed directly by federal government officials at the HUD occurrence.
It is understandable, however, that the HECM program takes a backseat in terms of general policy statements and public debates when one considers the other housing policy priorities that both President and HUD Secretary Fudge share with the public, the direct one Information sent by the ministry Outside of communications like Mortgagee Letters, there are few.
When the HUD department asks about a perspective on the HECM program at this time of the United States’ recovery from the COVID-19 coronavirus pandemic, the department clarifies that HECM offers a place for those members of the older population looking for options looking to stay in your own four walls without having to sell the property.
“The Home Equity Conversion Mortgages (HECM) program has a unique role in the national mortgage market, providing vital opportunities for the nation’s seniors to use their own assets and resources to sustain their quality of life through aging,” said a HUD -Speaker RMD.
In addition, the HUD also referred to the recently released White House Draft Budget, a document asking Congress for an amount of funding the department believes is necessary to adequately support HECM and other mortgage programs for the foreseeable future, it said in the statement.
“The President’s budget for fiscal 2022 includes FHA commitment authority for both FHA-insured single family forward and home equity conversion mortgages at a level appropriate to sustain the programs for the country’s homebuyers, including seniors who are looking for a Home Equity Conversion Mortgage. “Said the statement.
Finally, the department briefly mentions the cost of the HECM service related to the funding application for the Mutual Mortgage Insurance (MMI) fund.
“As in previous years, the budget proposal includes management contract costs required to run the programs, including servicing HECM mortgages that are in the secretary’s portfolio,” the statement said.
While any clarity about HUD’s perspective on the HECM program is welcome, several questions from RMD about the program and related issues remain unanswered by HUD’s relatively brief explanation. For example, RMD specifically asked why the Ministry does not need to include legislative or administrative inquiries or recommendations on the HECM program in its budget request, which is a notable departure from several HECM recommendations made by the Ministry under the previous administration.
The department also declined to answer questions related to the possible selection of a new HECM service provider, a selection that was an obvious priority of previous HUD leadership, but before President Biden’s inauguration and the introduction of a new team at the department. RMD also sought additional clarification of the department leadership void, leaving positions such as Commissioner of the Federal Housing Administration (FHA) and Deputy HUD Secretary unfulfilled without public evidence of potential candidates for that and other positions.
In the past, Secretary Fudge has dealt with staff shortages in the department – especially in a Press briefing She attended the White House earlier this year – but certain positions were not addressed, nor was there a timetable for when vacancies could be filled. Currently, the FHA’s senior officer is the Deputy Assistant Secretary of the Housing Office and FHA Lopa P. Kolluri, who herself addressed the reverse mortgage industry in April at the National Reverse Mortgage Lenders Association’s (NRMLA) Virtual Policy Conference.
The budget request
The latest draft federal budget and an accompanying congress Justifications Document on HUD-Specific Items Critically Indicates $ 180 Million Application to MMI Fund for FHA Management Contract Costs; an extension of the Good Neighbor Next Door (GNND) program; and a new Home Equity Accelerator Loan (HEAL) pilot. This adds up to an additional $ 50 million from the regulatory level last year, which FHA attributes primarily to the increased cost of the FHA mortgage service, with most of the HECM service being singled out.
“The main reason for the increase is the growing spending on maintaining the HECM portfolio held by the secretary,” the document reads. Additionally, the mortgage services portfolio held by the secretary continues to grow, partly due to the increased volume of partial claims in response to COVID-19 and disasters. FHA expects to spend significantly more resources servicing these mortgages and selling the properties as soon as they become empty. “
In addition, a section HUD in the full budget document shows that the FHA’s HECM program is expected to operate at a loan subsidy level of -2.54% in Fiscal Year (FY) 2022. This means that HECM is expected to generate more revenue for the federal government than it will pay off in claims for the HECM ledger of the year, which significantly improves the overall position of the HECM portfolio and confidence in its solvency by the HUD and the White House means.
The estimated loan subsidy level of the HECM program for the remainder of FY2021 is estimated at -2.39%, which is the last estimate made in the FHA MMI fund programs of the first quarter report published to Congress in March. This report detailed that the HECM program showed a trend towards positive overall budgeting, even though the raw volume had decreased compared to the fourth quarter of 2020.