This article was originally published at: https://breaking9to5.com/hecm-stability-challenges/

The Home ⁢Equity ​Conversion Mortgage ‍(HECM)‌ program ‌is currently facing stability and viability challenges. These issues have arisen​ from the 2022 ⁢collapse of ‌a significant ⁤industry lender and ⁤its subsequent removal from the HECM-backed Securities (HMBS) ⁢program. If these challenges are not ⁤adequately addressed by the U.S. Department⁣ of Housing ‍and⁤ Urban Development ⁣(HUD) and Ginnie Mae, they could warrant congressional ⁤scrutiny.

These concerns were raised in⁣ a letter submitted to ​Ginnie Mae President Alanna McCargo ⁤by Sen. Mike ⁣Braun (R-Ind.),⁢ the ranking minority member of the U.S. Senate Special ​Committee on Aging. Sen. Braun is seeking more information on what ⁢the⁣ government-owned⁣ company ⁤is⁢ doing to ensure the continued viability of the HECM and‌ HMBS programs in serving U.S. seniors.

HECM Concerns⁢ Outlined

Sen. Braun views the federal reverse mortgage program as a crucial one ‌for serving the needs of U.S. seniors. He ​expressed his concerns in the letter, stating, “Reverse mortgages‍ can be a lifeline for older homeowners needing access to cash during retirement, and recent failures threaten‍ the financial security for hundreds of thousands of seniors.⁤ Mismanagement of this program could lead to the collapse‍ of the‌ reverse mortgage market that hurts both seniors⁢ and taxpayers.”

Recent concerns regarding the⁢ collapse⁢ of Reverse Mortgage Funding (RMF) and its subsequent removal from‍ the HMBS program prompted the senator to reach out. He is also seeking information regarding the “proposed policy solutions⁤ to safeguard the‍ reverse mortgage market in the future.”

Questions for Ginnie Mae

Sen. Braun has several questions for Ginnie Mae regarding ‍its stewardship of the ​HMBS program. He is particularly interested in ⁣understanding how seniors were‍ impacted ⁣by this glaring ⁢failure. He also requests detailed insights‍ into Ginnie Mae’s actions prior ​to and following the bankruptcy of RMF and more information on steps taken to improve troubled ‍issuer management practices that threaten market stability.

‘HMBS 2.0,’ ⁣TCB‍ Litigation

In the letter, ⁣Sen. Braun also mentions the ‌January announcement that Ginnie Mae‌ was exploring⁣ the creation ⁣of a new ​reverse mortgage-backed security product. This product would enable⁢ the ​acquisition of⁢ loans from an HMBS pool above the existing 98% maximum claim amount (MCA) requirement. He has requested extensive information on the development of this product.

Sen. Braun also ​focuses on‌ the legal dispute currently playing out between Ginnie Mae⁢ and Texas Capital Bank (TCB). The bank alleges that the government-owned ⁢company⁢ “extinguished, in return for no consideration, TCB’s first priority lien on tens ⁢of millions of dollars in collateral” stemming from the HECM and HMBS programs.

The senator requested answers to his questions by May 10, 2024. A representative from HUD declined to comment on the contents of ⁣the letter. Democratic leaders in the Senate⁢ Committee on Aging were also contacted but​ did not immediately respond.

This article was originally published at: https://breaking9to5.com/hecm-stability-challenges/

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