While the U.S. Department of Housing and Urban Development (HUD) has a lot of key leadership positions that remain to be filled as the nation approaches the 100th day of the Joe Biden administration – including the critical roles of Federal Housing Administration (FHA) Commissioner and Deputy HUD Secretary – at the moment the senior FHA authority belongs to Principal Deputy Assistant Secretary (PDAS) for the Office of Housing and the FHA Lopa P. Kolluri.
Ms. Kolluri is a housing expert with over 25 years of experience in affordable housing, community and economic development, having served in executive positions in the public and private sectors as both a practitioner and policymaker at all levels.
She joined HUD for a second time in February 2021 under the leadership of Secretary Marcia Fudge, and addressed reverse mortgage industry participants at the National Reverse Mortgage Lenders Association (NRMLA)’s Virtual Policy Conference this week after being introduced by NRMLA CEO Peter Bell.
FHA and reverse mortgage industry ‘working toward the same outcome’
PDAS Kolluri began her remarks with an introduction, indicating that while she may be new to both HUD’s Office of Housing and to the reverse mortgage industry audience served by the trade association, she feels united with members of the reverse mortgage industry in a shared goal to assist the senior population.
“My team speaks very highly of the collaboration and engagement between NRMLA and FHA, and I really look forward to continuing this positive and mutually beneficial working relationship,” PDAS Kolluri began. “Because at the end of the day, I believe that we’re trying to achieve the same outcome.”
In terms of those shared goals, PDAS Kolluri listed three: making sure that older Americans continue “to have the support and options they need to age in place in their own homes if they choose to do so;” addressing the immediate needs of Home Equity Conversion Mortgage (HECM) borrowers affected by the COVID-19 coronavirus pandemic; and ensuring the operational viability and financial workable status of the HECM as a tool for American seniors, she explained.
While Secretary Fudge has yet to make any explicit public comment on the HECM program in the course of her tenure as HUD secretary, PDAS Kolluri was quick to tie the policy priorities of both the secretary and the president to the goals of the HECM program in her remarks.
“[Secretary Fudge] has made it clear that HUD, under her leadership, will be focused on serving those who need us the most: those who are homeless, the individuals and families and groups who are most vulnerable, and those who too often and for too long have been underserved by our nation’s housing system,” Kolluri said. “Secretary Fudge has also made it clear that we need to make sure that our programs and policies are working, and that they must work to achieve greater equity in homeownership for underserved groups. This includes those homeowners who now would have fewer options to stay in the home without the HECM program. It is a cornerstone for why the HECM program exists.”
Importance of aging in place
The importance of aging in place, especially in light of the ongoing COVID-19 pandemic, helps to illustrate for HUD and FHA the necessity of having a viable and sustainable HECM program, PDAS Kolluri said.
“Aging in place has become even more important in this last year as seniors seek to protect themselves and their families from COVID-19,” she explained. “We have a full-time, full team focus at HUD on making sure that the millions who are struggling because of COVID have the financial relief that they need.”
An example she cited is the work HUD is doing in conjunction with the Department of the Treasury after the passage of the American Rescue Plan Act, as well as the additional allocations to the Department to act under its own authority. This includes relief for HECM borrowers behind on required tax and insurance payments, and the repeated extensions of due and payable requests so that seniors affected by the pandemic cannot be foreclosed upon.
The work of originators, increasing volume levels
PDAS Kolluri also praised reverse mortgage originators for continuing to work diligently in the midst of the pandemic, particularly as many in-contact processes have been mitigated or replaced with virtual and/or contactless options to limit the spread of the virus. This is evident in the amount of HECM volume that the Department has processed since 2019, she explained.
“Through your work with the HECM program, we collectively continue to support homeowners without interruption, and this is evident in the current HECM volume that we’re seeing,” she said. “This past February, FHA insured over 4,000 HECMs, originated by many of you who are listening today. As of February 28, we had active insurance on more than 432,000 HECMs, and a maximum claim amount of $125 billion.”
After a visible decline in fiscal year 2019, PDAS Kolluri discussed how volume began to increase again last year with a maximum claim amount of over $16 billion at the end of fiscal year 2020. While wanting to avoid predictions for how volume will turn out at the end of fiscal year 2021, she did nonetheless offer a slight look ahead based on the department’s internal data.
“While I can’t make any predictions on where we’ll end up at the end of the fiscal year 2021, right now volume is slightly ahead of last year’s numbers,” she said. “As of the end of February, we have served almost 20,000 seniors through the [HECM] program [in the current] fiscal year to-date.”
The need for further refinement
The reverse mortgage program and the industry which surrounds it is no stranger to change, and PDAS Kolluri indicated that additional changes could be on the horizon but will require additional review once more leadership positions in the Department are filled.
“I don’t think we can wait for the future to act,” she said. “The pandemic will subside at some point, and I believe that we will take from it a stronger model for doing mortgage business, both in the times of crisis as well as in the times of prosperity. Part of preparing now for the future means we must continue to refine the HECM program to ensure its long-term viability.”
Reiterating Secretary Fudge’s commitment to serve historically underserved and disadvantaged populations, PDAS Kolluri related encouragement at the performance of the HECM book of business in 2020’s Mutual Mortgage Insurance Fund report, while acknowledging that the fact it remains negative – albeit barely so – means that additional improvements may be required.
“[W]e know that we need to do some work to address the more immediate needs of both the HECM origination and servicing [systems],” she explained. “We need to address requirements for non-borrowing spouses, so that all the same protections when the borrower is no longer in the home. [We must] understand more fully the challenges that HECM servicers are faced with reasonable diligence timeframes for verifying the date of the death of a borrower. And, we want to continue to address the implications of no longer using the [London Interbank Offered Rate (LIBOR)] index on the legacy HECM adjustable-rate mortgages in our public business.”
Look for more on PDAS Kolluri’s remarks in the days to come on RMD.