Members of the House Financial Services Committee listened with an attentive ear to proposed cures for the Federal Housing Administration’s biggest headache: the reverse mortgage program.
As it stands now, the FHA may have to seek a first-time Treasury draw of $943 million. To avoid such a critical shock to the housing agency, members from the single-family housing, multifamily housing and health care programs proposed timely changes to preserve the Home Equity Conversion Mortgage program for seniors.
Specifically, FHA would like to limit the amount of the allowable draw; mandate the use of escrow accounts - or money set aside - to ensure continued and timely payment of property charges and require the use of a financial assessment as part of the loan origination process.
The FHA has lost roughly $5 billion from its reverse mortgage program.
If the agency is unable to take the appropriate steps to ensure the reverse mortgage program is fiscally sound for the long run, the U.S. Department of Housing and Urban Development will have to take aggressive short steps to strengthen the program, members of the FHA cautioned.
"With the support of Congress, FHA can make the HECM program financially sound ensuring that fiscally responsible seniors from all walks of life can continue to enjoy the benefits of homeownership during retirement," the housing agency explained.
Last month, the FHA announced the Office of Multifamily Housing will reorganize its headquarters structure and consolidate field office operations.
"By taking proactive steps, the Office of Multifamily Housing Programs will better serve customers and stakeholders, by operating more efficiently and consistently and improving risk management, all in an era where HUD and agencies across the government are working diligently to determine how best to do more with less," the agency explained in prepared testimony.
The FHA members also outlined initiatives to transform the agency's multifamily business model. Prior to the hearing, FHA Commissioner Carol Galante discussed a few of those goals with HousingWire.
The agency wants to launch more routine and effective workload sharing across the country, which would reduce unevenly distributed pressure on staff and consequently, reduce customer wait times and application backlogs.
"A workload sharing pilot is already in process throughout the country, receiving positive feedback from customers and staff," FHA officials said.
"Other account executives with less expertise will focus on non-troubled portfolio while building the expertise and skill sets to manage more complex transactions."