Notice2025-19344
Future of the HECM and HMBS Programs and Opportunities for Innovation in Accessing Home Equity
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Published
October 2, 2025
Issuing agencies
Housing and Urban Development Department
Abstract
The Department of Housing and Urban Development (HUD), through the Federal Housing Administration (FHA) and the Government National Mortgage Association (Ginnie Mae), are seeking public comments regarding the market for senior homeowners to access equity in their homes and possible improvements to the Home Equity Conversion Mortgage (HECM) and HECM mortgage-backed securities (HMBS) programs. Over its lifetime, HUD's reverse mortgage programs have served over a million American seniors but have faced operational and financial challenges. This Request for Information (RFI) aims to gather market feedback on opportunities to enhance the HECM and HMBS programs and the appropriate role of these programs in facilitating access to home equity for senior homeowners.
Full Text
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<title>Federal Register, Volume 90 Issue 189 (Thursday, October 2, 2025)</title>
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[Federal Register Volume 90, Number 189 (Thursday, October 2, 2025)]
[Notices]
[Pages 47808-47809]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-19344]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6551-N-01]
Future of the HECM and HMBS Programs and Opportunities for
Innovation in Accessing Home Equity
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner and the Government National Mortgage Association,
Department of Housing and Urban Development (HUD).
ACTION: Request for information.
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SUMMARY: The Department of Housing and Urban Development (HUD), through
the Federal Housing Administration (FHA) and the Government National
Mortgage Association (Ginnie Mae), are seeking public comments
regarding the market for senior homeowners to access equity in their
homes and possible improvements to the Home Equity Conversion Mortgage
(HECM) and HECM mortgage-backed securities (HMBS) programs. Over its
lifetime, HUD's reverse mortgage programs have served over a million
American seniors but have faced operational and financial challenges.
This Request for Information (RFI) aims to gather market feedback on
opportunities to enhance the HECM and HMBS programs and the appropriate
role of these programs in facilitating access to home equity for senior
homeowners.
DATES: Comments must be received by December 1, 2025. Late-filed
comments will be considered to the extent practicable.
ADDRESSES: Interested persons are invited to submit comments responsive
to this RFI. Copies of all comments submitted are available for
inspection and downloading at <a href="http://www.regulations.gov">www.regulations.gov</a>. To receive
consideration as public comments, comments must be submitted through
one of the two methods specified below. All submissions must refer to
the above docket number and title. Commenters are encouraged to
identify the number of the specific question or questions to which they
are responding. Responses should include the name(s) of the person(s)
or organization(s) filing the comment; however, because any responses
received by HUD will be publicly available, responses should not
include any personally identifiable information or confidential
commercial information.
1. Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
<a href="http://www.regulations.gov">http://www.regulations.gov</a>.
2. Submission of Comments by Mail. Comments may be submitted by
mail to the Regulations Division, Office of General Counsel, Department
of Housing and Urban Development, 451 7th Street SW, Room 10276,
Washington, DC 20410-0500.
FOR FURTHER INFORMATION CONTACT: Elizabeth Davis, Housing Program
Officer, Office of Housing, Department of Housing and Urban
Development, 451 7th Street SW, Room 9262-9280, Washington, DC 20410-
0500; telephone number 202-402-4491 or (800) CALL-FHA (1-800-225-5342);
email <a href="/cdn-cgi/l/email-protection#3b485d5d5e5e5f595a58507b534e5f155c544d"><span class="__cf_email__" data-cfemail="c9baafafacacadaba8aaa289a1bcade7aea6bf">[email protected]</span></a>. HUD welcomes and is prepared to receive calls
from individuals who are deaf or hard of hearing, as well as
individuals with speech and communication disabilities. To learn more
about how to make an accessible telephone call, please visit: <a href="https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs">https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs</a>.
SUPPLEMENTARY INFORMATION:
I. Background
The Home Equity Conversion Mortgage (HECM) program, administered by
the Federal Housing Administration (FHA), was authorized by Congress in
1988 as a pilot initiative to help senior homeowners convert a portion
of their accumulated home equity to cash--without having to sell their
homes, relocate, or make monthly mortgage payments. The program was
made permanent in 1998.
HECMs are available to homeowners aged 62 and above who occupy
their homes as primary residences and meet certain financial and
property eligibility criteria set forth in the regulations at 24 CFR
part 206 and guidance in HUD's Single Family Housing Policy Handbook
4000.1. The product allows borrowers to receive loan proceeds in the
form of a lump sum, monthly payments, a line of credit, or a
combination of these options, with repayment deferred until certain due
and payable events occur, such as when the borrower sells the home,
moves out, or passes away. The FHA insures the HECM up to a Maximum
Claim Amount (MCA), which is determined at the time of origination.
Borrowers or their estates are guaranteed never to owe more than the
home is worth, even if the loan balance exceeds the property value.
Over time, FHA has implemented a range of programmatic reforms
aimed at mitigating losses to FHA's Mutual Mortgage Insurance Fund
(MMIF), the federal fund covering HECMs and forward mortgages, caused
by HECM activity and other external factors. These reforms include the
introduction of financial assessment requirements, limits on upfront
draw amounts, servicing rule changes, and adjustments to principal
limit factors. Ginnie Mae, likewise, has developed HMBS pooling
guidelines in an effort to address persistent liquidity constraints and
other structural issues within the industry. As per its statutory
purpose to increase liquidity of mortgage investments and distribution
of the investment capital, Ginnie Mae launched the HMBS program in
2007. Like other Ginnie Mae programs, the HMBS carries the Ginnie Mae
guaranty backed by the full faith and credit of the United States
government.
HMBS enables FHA-approved HECM lenders, who also are approved
Ginnie Mae issuers, to pool their loans into government-backed
securities. Prior to the development of the HMBS security, Fannie Mae
had been the largest investor in HECMs, purchasing them from
originators and holding them in their investment portfolio. Fannie Mae
officially stopped purchasing reverse mortgages in 2010, effectively
leaving the HMBS structure as the only meaningful secondary mortgage
market outlet for HECMs. Originally, the HMBS program saw modest
uptake, with $1.2 billion in issuances in its first year, and a total
Unpaid Principal Balance (UPB) of $6.3 billion by the end of the second
year. Since 2022, HMBS issuance volumes have fallen, with only $6.3
billion in UPB being securitized in 2024, nearly the same level as that
of a decade ago. Additionally, a private label market for HECM
securities has developed in parallel as another source of liquidity and
an outlet for collateral ineligible for the inclusion in federally
guaranteed securities.
II. Purpose of This Request for Information
The purpose of this RFI is to solicit information on the
appropriate role of the HECM and HMBS programs in facilitating access
to home equity for senior homeowners and opportunities to improve and
more closely align these programs with their intended role.
[[Page 47809]]
III. Specific Information Requested
While HUD welcomes all comments relevant to the appropriate role of
the HECM and HMBS programs and enhancements to these programs, HUD is
particularly interested in receiving input from interested parties on
the questions outlined below.
Program Performance, Market Role, and Emerging Risks
1. To what extent have the HECM and HMBS programs met their
intended policy goals?
2. What should HECM's role be for senior borrowers, given the rise
of proprietary home equity products and competition in the market?
3. Do the HECM and HMBS programs inhibit private sector innovation
in developing products for senior Americans to access home equity?
4. Are there certain features of the HECM and HMBS programs that
present emerging risks or costs to the MMIF or Ginnie Mae?
Consumer Interest and Demand
5. As noted in FHA's Fiscal Year 2024 Annual Report to Congress,\1\
the 2024 total current Maximum Claim Amount (MCA) for HECM endorsements
declined by 17 percent from 2023's total MCA. HECM endorsements
declined by 59 percent since 2022. Why has consumer demand for HECMs
declined over this period, despite a growing aging homeowner population
and record levels of home equity?
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\1\ FHA's Fiscal Year 2024 Annual Report to Congress, available
at <a href="https://www.hud.gov/sites/dfiles/Housing/documents/2024FHAAnnualReportMMIFund.pdf">https://www.hud.gov/sites/dfiles/Housing/documents/2024FHAAnnualReportMMIFund.pdf</a>.
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6. How well do borrowers understand the HECM product, including
terms and risks? Are existing safeguards sufficient to protect
borrowers from potential predatory lending practices?
7. How do borrowers respond to other home equity and proprietary
reverse mortgage products versus the HECM product? Are there notable
differences between those products and HECM in terms of usability,
complexity, or borrower's loan performance?
Origination Volumes
8. What are lenders' primary barriers to entry into the reverse
mortgage market? How can HUD help remove those barriers to increase
lender participation in the HECM program?
9. Should HUD reevaluate HECM features or products, such as certain
payment plan options, Principal Limit growth, HECM for Purchase, and
HECM-to-HECM refinances?
Liquidity
10. Is there possible investor demand for HMBS that is not
currently being met? What changes or features would enable HMBS to
better meet that demand, and what benefits and risks are associated
with them?
11. Would a different issuance volume attract more broker-dealers
and investors?
12. What features of the current HMBS product could be changed to
improve issuer operations and provide greater liquidity, and what are
the benefits and risks associated with them?
Program Improvements
13. What regulatory or other administrative changes should HUD make
to improve the HECM program, including but not limited to new servicing
policies or tools, changes to HECM Refinance policies (e.g., net
benefit test), and use of note sales and other strategies for active
and due and payable HECMs?
14. Are there any statutory changes that would improve the HECM or
HMBS programs?
15. Is there renewed interest in HUD providing HECM Lender
Insurance authority? \2\
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\2\ HUD removed the reference to Lender Insurance authority in
24 CFR 206.15 through the final rule: The Federal Housing
Administration: Strengthening the Home Equity Conversion Mortgage
Program, effective September 19, 2017 (82 FR 7117).
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16. Does the Life Expectancy Set Aside (LESA) adequately cover
borrowers' actual property charges throughout the life of the HECM? If
not, should HUD adjust the LESA or provide an alternative to combat tax
and insurance defaults? Also, should HUD mandate a LESA for all
borrowers?
17. What changes would you recommend to HECM's underwriting
policies in the Financial Assessment, and what are the related
considerations?
18. What factors influence a HECM holder's decision to transfer
ownership of HECMs to another party, such as if whether the UPB is less
than 98 percent of the Maximum Claim Amount (MCA) or the HECM is
eligible for assignment? Do those factors differ based on the UPB to
MCA ratio?
19. How could HUD reduce obstacles to asset resolution and claim
payment following a HECM becoming due and payable?
20. How can FHA monitor better for deferred maintenance?
21. What program changes would improve the HECM and HMBS programs'
ability to meet their intended policy goals, while reducing or not
increasing FHA's or Ginnie Mae's exposure to additional losses or
risks? Are there aspects of other foreign or domestic reverse mortgage
or aging-in-place programs that could be incorporated into HUD's
reverse mortgage programs?
Frank Cassidy,
Principal Deputy Assistant Secretary for Housing.
Joseph Gormley,
Executive Vice President and Chief Operating Officer for Ginnie Mae.
[FR Doc. 2025-19344 Filed 10-1-25; 8:45 am]
BILLING CODE 4210-67-P
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