Julia Gordon, the incumbent Federal Housing Administration (FHA) Commissioner, recently discussed with RMD the merits of the Home Equity Conversion Mortgage (HECM) program, what she sees as its ability to fulfill a portion of FHA and the U.S. Department of Housing and Urban Development (HUD)’s overarching mission and offered hints about the performance of the HECM book of business in 2022.
She also discussed the ongoing work of the agency in meeting the needs of both reverse mortgage-eligible senior borrowers and the industry itself in terms of the administration of the HECM program, FHA’s collaborations with members of the reverse mortgage industry and the progress that can come with filling the commissioner position after over a year of its vacancy. In this final part of our exclusive interview with Commissioner Gordon, she offers some thoughts directly to the reverse mortgage industry.
The commissioner’s message, FHA’s reverse perspective
When asked if there was anything she wanted to say directly to the reverse mortgage industry, Commissioner Gordon just wanted to express her thanks to industry professionals and representatives.
“The first thing I would like to say to everyone working in the reverse space is thank you for your work,” she said. “Thank you for your service to borrowers, thank you for being a partner to FHA, and we look forward to continuing to work together to continue to make this a stronger program, and a program with good recognition, and a program that borrowers are able to access at such a time in their life when it becomes useful for them.”
The thanks that the commissioner expressed also align with previous comments that senior HUD officials had previously made to RMD when they were asked about the role of the reverse mortgage program. A key reason that the HECM program remains important in the eyes of HUD is due to its uniquely focused mission in serving seniors who are seeking financial options, according to senior HUD officials who commented to RMD in July.
“The HECM program is a very important program, particularly at a time where many seniors who are on a fixed income and who maybe don’t have enough income for a refinance are sitting on a lot of home equity,” a senior official said in July. “The reverse mortgage product does enable them to access that equity, which is its great strength.”
A senior official also described in that discussion the ways that a reverse mortgage property can serve the broader homeownership goals HUD maintains when that property is assigned to HUD during servicing.
“It’s not really a supply-oriented program, in that people who get a HECM mortgage, by definition, are already [residing] in their property,” an official explained. “It is important that if there are situations where a HECM property ultimately goes to claim — whether it’s because the borrower is deceased, or something else happens — it is very important for us to provide that first look on those properties, so that those properties can remain in homeownership with a new owner.”
The role of the housing market, work since confirmation
Commissioner Gordon also explained that one of the broader dynamics that she and FHA aim to monitor in its administration of the HECM program is the performance of the broader housing market, which could provide indications regarding the HECM program’s performance.
“I want everyone to know that here at FHA, we pay very close attention to the trajectory of the housing market,” she said. “And that we will continue to try to be strategic and prudent in the decisions that we make.”
This is an area where collaboration with relevant industries, including those active in the reverse mortgage space, becomes critical as HUD and FHA develop policy that is designed to sustain the reverse mortgage program on an ongoing basis.
“We are always open to suggestions,” she said. “And we’re also always open to criticism. We just want to be here to provide the expertise and the policies that can enable HECM and our forward work, as well as every other program that we run to serve the public as best as they possibly can.”
After she was confirmed by the Senate for her role as FHA Commissioner in mid-May, work in several different areas of the HECM program has demonstrably progressed. The HUD Office of the Inspector General (OIG) released a report aiming to take stock of current and lingering HECM program issues including residency requirements, reverse mortgage flood insurance and the need to update the HECM provisions of the Single Family 4000.1 Handbook.
In June, HUD refreshed a series of temporary partial waivers which apply to the HECM program allowing for partial repayment plans and assignment to HUD after property charges. The following month, HUD announced an increase in the appraisal validity period for all Single Family Title II forward and HECM transactions, increasing the period specifically for the HECM reverse mortgage program from 120 days to 180 days.
Late last month, a package of six appropriations bills that passed the House of Representatives included language that allows the FHA to continue insuring HECM loans.