Reverse mortgage lending leaders tout the FHA involvement and back-end improvements
Although 2024 is a challenging year in terms of sales volume, the reverse mortgage industry is still encouraged by the involvement of the Federal Housing Administration (FHA) on matters related to the Home Equity Conversion Mortgage (HECM) program, as well as highlighting issues with back-end loans from Ginny Mae.
This feedback came from a panel discussion of industry leaders that took place at the National Association of Reverse Mortgage Lenders (NRMLA) Annual Meeting and Expo in San Diego in late September.
Panel participants included Mike Kent, NRMLA board chairman and leader in reverse asset management and industry relations at Liberty Reverse / PHH Mortgage; Jim Cory, director of Reverse at Guild Mortgage; And Longbridge financial CEO Chris Mayer.
FHA Collaboration
At the request of moderator and HousingWire Editor-in-Chief Sarah Wheeler on FHA’s partnership with the reverse mortgage industry during a challenging time; each leader praised the commitment of their public sector partners.
“FHA has been such a great partner, especially from 2023 through 2024,” said Kent. “They’ve done a fantastic job streamlining assignment submissions, especially improving the assignment submission package and allowing us to turn in a little earlier. Once the packages were submitted, the quick turnaround time was remarkable.”
At Liberty/PHH, 70% to 75% of orders are now processed and claims are paid before the Ginnie Mae bond needs to be purchased, Kent said.
“What does this mean for us? It means liquidity,” he said. “I normally buy $40 million to $50 million worth of loans every month, so if I can save $30 million to $40 million in cash that I don’t have to spend on buyouts, that makes a lot of sense.
“FHA did a fantastic job and it was a great partnership. Commissioner (Julia) Gordon said they would get it done, and they did. It really was a fantastic collaboration.”
Mayer praised the involvement of both Gordon and Marcia Fudge, the former secretary of the U.S. Department of Housing and Urban Development (HUD), because they are concerned about the impact that any policy developments could have on older Americans.
“Recognizing the needs of this demographic and the importance of government in helping to serve them is something I continually think about and appreciate,” Mayer said.
Impact on the origin
Mayer also noted that FHA and Ginnie Mae staff “have shown a real commitment to putting the industry on stronger footing and thinking about the future.”
“We need two things: a stable base to operate from, and we need to stay relevant in the world,” Mayer said. “I think we’re about to lose relevance – or maybe we’ve already crossed that line. It is critical to recognize this and take steps to address it. Commissioner Gordon’s deep insight into the program reflects a level of care and dedication that is incredibly valuable to us.”
Cory added that he is very involved in the originations side, so addressing back-end issues can make a real difference in keeping the originations machinery well-oiled, he explained.
“Thank you to the commissioner, her fantastic staff and the NRMLA leadership for working on these issues – things that many of you in this room who are also focused on sales and origination may not always see,” Cory said. “It’s really a big problem. But Chris is right: we can’t just focus on solving the back-end problems. We need to expand and improve the overall distribution of the product.”
To achieve that goal, Cory wants the reverse mortgage product to become more of a mainstream financial instrument so it can reach more borrowers.
“The rising tide lifts all boats, and I think it is critical that we work to make this product accessible and widely accepted,” he said.
