Ginnie Mae President talks reverse mortgage environment, federal challenges in RMD exclusive

Alanna McCargo sat down for an exclusive interview with RMD at a recent reverse mortgage industry conference

2023 has been a very busy year for Alanna McCargo, president of the Government National Mortgage Association (Ginnie Mae).

Sworn into her role at the beginning of 2022, McCargo became Ginnie Mae’s first full-time president since the Barack Obama administration, when Ted Tozer resigned from the position just ahead of the inauguration of former President Donald Trump.

In addition to managing the government’s mortgage-backed securities program, Ginnie Mae is now more invested in its reverse mortgage equivalent — the Home Equity Conversion Mortgage (HECM)-backed securities (HMBS) program. This change followed the bankruptcy of Reverse Mortgage Funding (RMF) and Ginnie Mae assumed its servicing portfolio despite identifying a need for more resources to adequately manage it.

To get the lay of the land from her leadership perspective, RMD sat down with McCargo during the National Reverse Mortgage Lenders Association (NRMLA) Annual Meeting and Expo in October.

Editor’s note: This Q&A has been edited and condensed for clarity.

Chris Clow/RMD: Is this your first reverse mortgage conference?

Alanna McCargo: No, but this is my first conference with NRMLA as Ginnie Mae’s President.

Clow: When you come to these meetings what are you trying to learn from the industry professionals you interact with?

McCargo: The main thing is [that] our work is better when we’re hearing from and listening to industry feedback. It’s very valuable to be in the room and hear directly about changes we’ve made, or things we’ve done, things they want that we haven’t done yet, etc. This is just a great opportunity for listening, and we’re trying to do a lot of listening these days.

It’s really important, and my style is to listen and collaborate. It’s how I grew up in the industry, always doing that in different ways and throughout my career, so it’s very beneficial to us in the work we’re doing now.

Clow: Have you learned things in these sessions that you see as actionable?

McCargo: Oh, yes. [Certainly] since we acquired the RMF portfolio at the end of last year, but we have been listening all along. We have done a tremendous amount of deep work with the industry to, first of all, think about and fully understand the stress that is in the system right now, and the pain points that issuers are feeling. Our job is liquidity, and making sure that we can stabilize things and get through what is a tough market cycle, given the high interest rates and liquidity strains that the industry is seeing right now.

Alanna McCargo, president of the Government National Mortgage Association (Ginnie Mae).
Alanna McCargo

That listening on its own has enabled us to do several things pretty quickly to try to help stabilize liquidity. Whether it’s changing the pool size that helped some smaller issuers, and then the most recent thing that we just announced that went into effect on Oct. 1 was the multiple-tail securitization operation, which is brand new. We just started and got that up pretty quickly.

Already, we’re hearing that it’s making a difference. It’s a little surgical, in that we’re just hearing feedback, and then really trying to work on the things that we can do, including the things that we can move quickly that don’t require Congress or require legislation. We’re taking those really seriously, as is FHA. [HUD Commissioner Julia Gordon] spoke about those things that they’ve just honed in on because we’re all listening. FHA has a role to play in liquidity as well.

They’re helping with their expedited claims processing and everything that they’ve got going on, so it’s been really helpful, and we couldn’t have gotten here as fast without input from the industry, which is why the NRMLA conference is really helpful.

Clow: It’s no secret that there are severe challenges in the HMBS program right now, due in no small part to the collapse of a major issuer. What do you think our industry audience should know about the challenges that may not be so obvious to them?

McCargo: Ginnie Mae has a guarantee that has been there all along, and this is the first time that Ginnie Mae has had to take on a reverse mortgage portfolio. That is brand new for the entire agency, and it comes with a lot of responsibilities. It’s been a learning experience for us since the reverse mortgage business is unique in terms of how the business model runs, how to handle the transition of borrowers and how to handle the draws that borrowers are requesting every single month.

Our ability to act as a reverse servicer and really deliver our guarantee in the way that we have, and to have done it really without a hiccup, has been pretty amazing to see and watch this team do. So, I would just say that I think it’s been a great learning experience for us, we have learned how to do a lot more functionally.

[We’ve been] managing a $20 billion portfolio with the same or similar amount of resources, redirecting things that we have been working on, trying to increase our budget so that we can hire more people to manage and take on the responsibilities that we have now.

I think that’s something that I don’t think folks realize: we were taking over and taking on major responsibility as a servicer while trying to still address the liquidity needs of the rest of the industry. I would just say that’s probably the most kind of “in-your-face” thing I can think of that we’ve experienced. It’s been a big thing for us, and a big challenge that, itself, comes with a set of challenges we weren’t anticipating. But, I think the team has taken it in stride.

Clow: You said in your remarks in front of the audience that Ginnie Mae has yet to secure all the resources it’s requested from Congress. Do you think that will come to fruition?

McCargo: I hope so. When I joined Ginnie Mae almost two years ago, it was a priority for me to really focus inward first, because I knew I was joining an agency that had been woefully underfunded for many years.

We’ve been on a journey to right-size Ginnie Mae since I started, and then the acquisition of this portfolio and with the role we’re playing right now in the reverse industry, [that has] only accelerated our need to have more focus, more resources and more people to do the business that we have to do.

So this is important. We did see increases in our FY 2024 budget, and both the House and Senate in their full-year markups supported those. Unfortunately, the [continuing resolution] that we’re currently operating under keeps us flat, so it really does slow down our ability to do the hiring and planning that we want and need to do.

So, the situation in the House does need to get settled. Obviously, we need a budget, and we hope to get the full budget that we asked for for 2024. So we’re hopeful, and we play a critical role in the financial markets. Whether the government shuts down or not, we are a national essential function, and we will continue to operate and do the core business. But the things we’re talking about that we need to do, for example in the reverse mortgage industry, are beyond the core business.

So this is a program and policy work that requires that we have the human resources and people in place to execute. That’s paramount for us, and that’s why it’s so important that we get a full budget that we ask for passed, and that would mean that we can continue to do the hiring that we need to do to build up for the future.

Editor’s note: This interview took place before the current Speaker of the House took office.

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