After facing staffing issues with during and after the pandemic, Federal Housing Administration (FHA) officials said staffing to service the reverse mortgage loan portfolio held by the U.S. Department of Housing and Urban Development (HUD) has been expanded during a Q&A earlier this month at the National Reverse Mortgage Lenders Associaton (NRMLA) Western Regional Meeting.

The FHA experts also fielded questions about servicing issues, second appraisals and home equity conversion mortgage (HECM) counseling.

Staffing

HUD and FHA have been facing staffing shortages for years, an issue highlighted by HUD Secretary Marcia Fudge upon entering office in 2021.

“At FHA, we have been running for a while with very minimal staff,” Kasey Watson, senior HECM policy advisor in HUD’s Office of Single-Family Asset Management, said. “There were 16 of us total [who were] responsible for the 161,000-loan portfolio that the Secretary holds, as well as policy and every other development on servicing. We tried our best, but certainly we know we were not able to get to everything as fast or as thoroughly as we would like.”

However, the HECM servicing department has doubled in size, Watson said.

“This is all happening as we speak,” she said. “We’ve had a lot of positions recently filled. Fourteen new staff members, so we are beyond thrilled about this. Of course I have shifted out, so I took one away from our total numbers there, but we have got some amazing new staff working there in the [National Servicing Center (NSC)]. We actually think we are in a much better position than we have been, probably since 2010, as far as staffing goes.”

The new staff members are also dedicated to HECM servicing, according to Jenny Fingerlin, acting program director in the servicing branch of the NSC at HUD.

Servicing

Several industry professionals requested more information about servicing practices. A servicing professional said she has fielded questions about contact information for servicing matters on loans assigned to HUD since HUD’s HECM servicing contractor changed to Celink.

“We’ve got everything funneled to the FHA Resource Center for all of our servicing, and forward complaints go there, too,” Watson said. “All the FHA complaints go in through [the Resource Center], are coded and transitioned out to the different offices that handle those, but the FHA Resource Center is really the one place that we can direct any borrowers to, to get them funneled to the right place within the department.”

Fingerlin said if there is a specific servicer seeking additional help, the FHA Resource Center remains the best point of contact.

“If you have a servicer that’s trying to escalate a question, they need to communicate that with the resource center,” she said. “That they want to speak with HUD, and they can in fact, do that.”

H4P appraisals and counseling

Another question was on the second appraisal requirements for HECM for Purchase (H4P) loans. Watson, who is relatively new to her role, was unsure about the current thinking, but said she would take the issue to her superiors.

“That does seem like something that could potentially be a more broad issue,” Watson said. “With everything right now, we are meeting daily with the [FHA] Commissioner [and are] focused on liquidity constraints and what can we do quickly within our power to help ease some of those burdens. So, that’s really been the focus in this last month.”

Another comment related how HECM counselors may be overstepping by quoting interest rates rather than encouraging borrowers to shop.

“As an originator and sales manager, I have no issue with the counselors encouraging borrowers to shop,” the attendee said. “I do have an issue with them quoting interest rates and telling a borrower that they need to negotiate a two margin when they’re free and clear. It’s just not a market condition that we have right now. You can shop all you want. I’m absolutely capable of competing, but quoting interest rates, I think, is outside their [purview].”

Watson acknowledged the comment and said she would seek input from the Office of Housing Counseling.