“The
HECM
and
HMBS
programs
do
not
inhibit
the
private
sector.
On
the
contrary,
they
provide
a
benchmark
‘target’
for
private
lenders
to
attain
and
exceed,”
Andrew
Draper,
a
reverse
mortgage
specialist
at

Community
First
National
Bank,
wrote
in
response
to
a
question
listed
on
the
request
for
information.
“By
establishing
a
federally
backed
standard,
HUD
encourages
private
sector
innovation
to
provide
specialized,
competitive
products
that
supplement
the
government’s
baseline.”

HousingWire’s
Reverse
Mortgage
Daily
contacted
HUD
about
a
potential
timeline
for
its
next
steps,
including
a
rulemaking
process,
but
did
not
receive
an
immediate
response.

Leading
lender
feedback

Mutual
of
Omaha,
which
was
the
country’s

top
HECM
lender
in
2025
with
5,740
endorsements,
focused
on
two
potential
improvements
to
the
HECM
program
in
a
letter
signed
by
CEO
Terry
Connealy.

The
letter
echoed
other
recent
public
comments
by
pushing
for

lower
upfront
mortgage
insurance
premiums,
which
currently
stand
at
the
lesser
of
2%
of
a
home
value’s
or
2%
of
the
HECM
limit
of
roughly
$1.25
million.

Connealy
also
wrote
that
the
Housing
and
Economic
Recovery
(HERA)
Act
of
2008
—
enacted
in
the
wake
of
the
subprime
mortgage
crisis
— 
includes
provisions
that
“restrict
access
and
consumer
choice
by
prohibiting

licensed
financial
professionals
from
helping
seniors
evaluate
or
originate
a
HECM.”
While
the
rules
were
“rightly
intended
to
prevent
abusive
sales
practices,”
he
argued
they
prevent
seniors
from
receiving
trusted
professional
advice
and
“limits
access
to
holistic

retirement
planning.”

Since
HERA’s
implementation,
he
wrote
that
“strong
safeguards”
such
as

borrower
counseling,
a
financial
assessment
and
limits
on
drawing
from
proceeds
in
the
first
year
following
origination
have
been
added
to
the
HECM
program.
He
called
for
the
law
to
be
modernized
through

Congress
so
that
financial
advisers
can
offer
better
assistance,
while
maintaining
prohibitions
on
bundling
reverse
mortgages
with
other
financial
products.

Finance
of
America
submitted
an
unsigned
letter
to
the
agencies
that
listed
six
“core
policy
objectives.”
Among
these
goals,
FOA
wrote
that
it
seeks
to
enable
seniors
to

age
in
place
and
address
the
retirement
crisis;
recirculate

trapped
home
equity
into
the
U.S.
economy;
and
reduce
the
federal
government’s
operational
footprint
in
reverse
mortgages
through
the
deployment
of
private
capital.

To
advance
these
objectives,
FOA
proposed
three
key
changes
that
would
be
“supported
by
complementary
operations
and
consumer-focused
enhancements.”

The
lender
suggested
that
FHA
transition
to
an
“insurer-only
role”
by
ending
the
assignment
of
HECMs
that
reach
98%
of
their
maximum
claim
amount
while
removing
the
related
mandatory
buyout
requirement
under
HMBS
rules.
“FHA
would
continue
to
provide
insurance
protection
while
exiting
the
loan
ownership
and
servicing
function,”
the
letter
explained.

Second,
FOA
calls
for
the
allowance
of
HECM
pooling
for
the
life
of
the
loan
and
for
100%
of
the
unpaid
principal
balance
to
be
eligible
for
securitization.
“This
change
would
mitigate
issuer
liquidity
risk,
attract
broader
private-capital
participation
and
reduce
systemic
concentration,”
FOA
wrote.

Third,
the
company
is
looking
to
improve
the
consumer
experience
in
multiple
ways.
It
proposed
the
reintroduction
of
a

HECM
Saver-style
product,
which
was
discontinued
more
than
a
decade
ago
—
to
deliver
lower
upfront
costs
for
lower-leverage
borrowers.
FOA
also
pushed
for
automated
valuation
models
to
replace
appraisals
on
low-risk
loans.

Advocating
for
HMBS
2.0

Ryan
LaRose,
chief
client
and
industry
relations
officer
for

Celink,
said
his
company
supports
two
key
changes
to
the
HMBS
program
which
would
benefit
Celink
clients
that
actively
issue
pools.
 

LaRose
noted
that
Ginnie
Mae
rules
currently
prohibit
the

issuance
of
tail
pools
for
HECM
loans
declared
due
and
payable.
This
forces
issuers
to
pay
a
laundry
list
of
expenses
—
 including
appraisal,
inspection
and
attorneys’
fees
—
associated
with

foreclosure
and
real
estate-owned
(REO)
auctions.
Celink
said
the
“substantial
financial
burden”
posed
by
these
expenses
would
be
better
managed
by
allowing
issuers
to
pool
post-due
and
payable
advances.

Celink
is
also
advocating
for
the
advancement
of
the

HMBS
2.0
program
that
was
previously
proposed
by
Ginnie
Mae
leadership
during
the
Biden
administration.

The
agency
released
a

final
term
sheet
for
the
proposal
in
November
2024.
But
its
implementation
has
stalled
under
the
Trump
administration
—
delays
that
could
be
tied
to
reported

staff
cuts
at
Ginnie
Mae
and
leadership
vacancies
that
were
more
recently
settled
by
the

Senate

confirmations
of
Frank
Cassidy
at
FHA
and
Joseph
Gormley
at
Ginnie
Mae.

The
lack
of
an
alternative
to
traditional
HMBS
issuance
affects
about
15%
of
loans
that
reach
the
maximum
claim
amount
(MCA)
threshold
and
causes
financial
hardship
for
issuers
until
they
reach
a
resolution,
which
can
take
years,
Celink
said.

“We
heard
directly
from
entities
that
were
exploring
entry
into
the
reverse
mortgage
market
that
the
absence
of
a
sustainable
solution
for
this
subset
of
loan
was
the
key
factor
in
their
decision
not
to
proceed,”
LaRose
wrote.

Brandon
Milhorn,
president
and
CEO
of
the

Conference
of
State
Bank
Supervisors
(CSBS),
wrote
that
his
organization
also
supports
the
“prompt
finalization
and
implementation
of
liquidity
enhancements,
such
as
those
outlined
in
the
proposed
HMBS
2.0
program.”

“The
repurchase
requirement
(at
98%
of
the
MCA),
funded
temporarily
by
the
Issuer,
often
creates
a
substantial
liquidity
burden
because
the
Issuer
must
advance
the
funds
to
investors,
but
may
not
be
able
to
immediately
convey
the
loan
to
HUD
due
to
outstanding
documentation
issues,
unresolved
borrower
defaults
or
other
procedural
requirements,”
Milhorn
wrote.

“This
structural
timing
gap
has
historically
placed
immense
strain
on
Issuer
capital,
contributing
to
a

major
bankruptcy
in
the
reverse
mortgage
industry
in
late
2022
and
creating
a
clear
risk
to
the
market.”