I had upon becoming FHA Commissioner was how important this program can be to support seniors who want to age in place. Many seniors, especially now, have a good deal of home equity but don’t have access to a wide range of programs to help them tap that equity. For example, they may be living on fixed incomes that prevent them from qualifying for a home equity line of credit. The only other option they would have if HECMs weren’t available would be to access products in a less-regulated financial marketplace, which can be risky, even more than the complex HECM program. RM: In terms of volume, the HECM dwarfs in comparison to FHA’s forward mortgage program, and yet we understand that FHA spends an inordinate amount of time managing it. Why do you think the HECM program is such a challenge to administer? JG: HECM is a complex and highly regulated program. We have statutes, regs, years and years of mortgagee letters and stand-alone policy documents. That’s why the publication of the HECM section of the Single-Family Housing Policy Handbook this past year was so incredibly important. While the portfolio itself accounts for less than five percent of the total MMI Fund, it is the most volatile part of that fund. Its performance is highly dependent on house price appreciation forecasts, where only moderate changes in appreciation expectations can have a significant impact on the actuarial picture of the portfolio. This is a complex program to operate both in the primary market and at the secondary market level, which requires a great deal of collaboration and cooperation between FHA and Ginnie Mae, as well as a lot of collaboration with the housing counseling industry, which plays such a critical role. RM: What do you consider to be your proudest achievement thus far? JG: First, I should note that our achievements are collective, featuring the work of a large number of people across our organization. We have policy experts. We have people in the National Servicing Center. We have people in our finance and budget team. There are information technology (IT) specialists and procurement gurus. That said, I think all of us agree on the importance of issuing the Single-Family Housing Policy Handbook, which has been a work in progress for many years. What I think I can look to as a more personal achievement is the orientation that we now apply to all our work, which is to be as transparent as possible and to aim to make policy and operational changes that are wins for all our stakeholders—lenders, issuers, servicers and borrowers. That’s what I’m most proud of, and I think you can see those results in a wide range of the changes that we’ve put out this year, both in HECM and in our other lending programs. RM: What additional reforms would you like to see implemented in the time you have left? JG: Our agenda includes making some currently nonassignable claims assignable, modernizing technology, reviewing origination costs and, overall, ensuring that HECM is as strong as it can be to meet seniors’ needs. We’re also supporting Ginnie Mae’s efforts to explore HMBS 2.0, which we believe would provide excellent liquidity support for the industry. RM: You manage one of the largest insurance funds on the planet, and I respect your prior comments that you want to be an attentive steward of those assets. Nevertheless, one of the biggest consumer criticisms of the HECM program is that it’s too expensive. Would you be receptive to looking at opportunities to reduce costs without creating additional risk to the MMI Fund? JG: We’re already looking at proposals related to the mortgage insurance premium for the program, as well as the full range of origination charges that HECM borrowers encounter. We hope that the industry can partner with us as we make HECM more understandable to seniors so that they know what they are paying for and what to expect throughout the life cycle of their HECM loan. RM: As we look to create a HECM for the future, one of the realities of aging is that most of us become more forgetful the older we get, which in the case of the HECM can lead to complications with verifying occupancy, keeping taxes and insurance current, etc. From the Top From the Top continued on page 12 REVERSE MORTGAGE / JULY-AUGUST 2024 11
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