Have you and your team considered policy reforms to help improve the servicing of HECMs, so that these types of unfortunate events that could lead to foreclosure can be avoided? JG: Yes, absolutely. Not only are we considering them, but we’ve already made several changes, among them assessing annual occupancy by telephone and reducing tax and insurance defaults by allowing servicers to offer eligible homeowners a longer period to repay property charges advanced by the servicer. Also, I cannot overstate how important HECM housing counseling requirements are. The housing counseling sector is continually trying to improve its work in this area. Some challenges are extremely hard to address. For example, we know that many children of HECM borrowers, who become heirs when the last surviving parent dies, were not included in the original decision-making process to obtain the HECM loan. Counselors and everybody else involved in this industry try as hard as they can to encourage family involvement when considering a reverse mortgage, but that’s not always possible or realistic. RM: Some borrowers can live 15 to 20 years after getting a reverse mortgage before a maturity event occurs. It’s not realistic for these borrowers or their children or trusted advisers who may have gone through counseling with them to remember everything they learned. What do you think about periodic counseling post-closing to help them understand their obligations? JG: I believe it would be ideal to have more touch points for borrowers. I’ll be honest with you—the challenge is funding. We’ve asked for more funding for counseling, but we’ve not gotten as much as we need to make the counseling more robust, and particularly as borrowers age, they are less and less likely to be able to pay for that counseling themselves. I think it would be enormously additive to this program if Congress chose to fund a much more robust housing counseling outreach program. RM: NRMLA has proudly enforced a code of ethics since its founding. Are there any practices going on in the marketplace that concern you and need to be addressed? JG: In all our programs, FHA finds unintentional mistakes and encounters the occasional bad actor. As I’m sure your readers know, FHA has a quality assurance division, and if we see anything that isn’t being run according to our policies and procedures, we have steps we can take to address it. More generally, as we go forward and look at origination costs as I talked about earlier, we want to make sure that the borrower fully understands what they’re paying for and that they’re being charged the appropriate amounts for the products and services they’re receiving. RM: The cost of homeowners insurance has dramatically increased across many parts of the country, which negatively impacts all FHA borrowers. What is FHA doing to address this problem? JG: Across the entire Office of Housing, all of HUD and in every federal agency that touches housing, there is incredible urgency about the skyrocketing costs and reduced availability of comprehensive property insurance. This is an existential problem that is going to take partnering on the federal, state and local levels to address. Long term, we need to address climate change, which is driving the increased incidence and intensity of natural disasters. We need to make sure that borrowers are well aware of what coverage they need and what coverage they might not have if they aren’t keeping up with their insurance policies. In the HECM program, for those borrowers who have Life Expectancy Set-Asides (LESAs), we know that increases in the cost of insurance can cause LESAs to run out earlier than expected, which might become a more widespread problem. I hope everybody in the industry is paying sufficient attention right now because it’s going to take all of us working together to make sure borrowers can accommodate changes in the cost of insurance. RM: What does a typical day look like for you? JG: The Office of Housing comprises many program offices. There’s FHA, which has a single-family portfolio, both forward and reverse, a multifamily portfolio and a healthcare portfolio with hospitals and residential care facilities. There’s the Office of Housing Counseling, the Office of Manufactured Housing Programs and our assisted rental multifamily programs, along with support offices, such as our risk office and operations team. In addition to the 7.6 million or so single-family borrowers whom we serve, we assist millions of renters From the Top From the Top continued from page 11 12 REVERSE MORTGAGE / JULY-AUGUST 2024
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