Hud Seeks Public Feedback On Hecm, Hmbs Programs

The U.S. Department of Housing and Urban Development (HUD) announced last week that it’s seeking public comments about possible improvements to the Home Equity Conversion Mortgage (HECM) and HECM mortgage-backed securities (HMBS) programs.

Through a request for information (RFI) in the Federal Register, HUD, along with the Federal Housing Administration (FHA) and Ginnie Mae, are aiming to assess the role of the HECM and HMBS programs in helping seniors access home equity while identifying potential improvements.

The request lists 21 questions for consideration. These include any regulatory or other administrative changes HUD should make; whether lenders have a barrier to entry when it comes to providing reverse mortgages; and whether there is possible investor demand. Comments are due by Dec. 1.

“I think the RFI is trying to get a sense of where the industry is. And, you know, obviously, we’ve seen a lot of growth in the proprietary (reverse mortgage) space,” Tim Wilkinson, vice president of capital markets at Longbridge Financial, said Wednesday during a panel discussion at the annual meeting of the National Reverse Mortgage Lenders Association (NRMLA). “Some of the questions were quite pointed about the role of the government in the HECM program.”

The agency said it wants feedback on how the programs can better align with its policy goals, including questions about consumer demand, market participation and liquidity in the HMBS market.

Development of Ginnie Mae’s HMBS 2.0 program, introduced in 2024, has stalled under the Trump administration. The proposal would reduce HMBS pool sizes to 95% of a loan’s unpaid principal balance to provide “an additional economic incentive to protect Ginnie Mae and taxpayers against a decline in collateral value,” the agency said when announcing the plan.

But Ginnie Mae has not issued any guidance about the program since releasing a final term sheet in November 2024, coinciding with acting president Sam Valverde’s exit from the company that month.

Finance of America CEO Graham Fleming said in during the company’s fourth-quarter and full-year 2024 earnings call in March that HMBS 2.0 was making progress.

HECMs, meanwhile, have had mixed activity over the past few months. Following a tumble in August, HECM endorsements increased 7.2% in September ahead of the federal government shutdown, according to recent data from Reverse Market Insight.

The reverse mortgage industry faces new hurdles from the shutdown. The FHA said it will process claims but cannot endorse new HECMs until funding resumes. Lenders said borrower service will continue, with many emphasizing proprietary alternatives.

Since their inception, HUD’s reverse mortgage programs have helped more than 1.3 million older Americans tap into their home equity, but they have also faced operational and financial challenges.