Latest Reports from the Biden Administration
One of the final financial reports from HUD during the Biden administration, the fiscal year 2024 agency financial report, highlighted the performance of programs within HUD and the MMI fund. The report indicated a steady increase in insurance in force since 2020, reaching its peak in 2024, the highest level in the past five years.
Risk management plays a crucial role in maintaining overall financial solvency, with previous efforts to address FHA claims being a priority during the initial Trump administration.
The annual report to Congress issued by the FHA last year revealed a significant recovery in the HECM book of business from its previous deficit in the late 2010s. The positive capital ratio of the HECM book of business for the fourth consecutive year in the overall government-backed portfolio surpassed previous highs, standing at 24.5% in FY 2024, exceeding the peak from 2022 (22.77%).
Despite a decline in overall HECM volume in FY 2024 compared to the previous year, the positive trend in capital ratio continues.
HUD Scrutiny and Future Prospects
The stance of the Trump administration regarding the financial impact of HUD programs remains uncertain. With the recent executive order from President Biden directing the establishment of a leader for the Department of Government Efficiency (DOGE) at every federal agency, HUD’s future direction is under scrutiny.
Former Ginnie Mae President Alanna McCargo emphasized the need for additional personnel and resources to manage the workload resulting from the company’s assumption of a substantial HMBS portfolio in 2023.
In an interview with HousingWire’s Reverse Mortgage Daily (RMD), McCargo expressed optimism that Congress would authorize increased budget authority for the company.
Challenges Facing HECM Programs
In a recent editorial by HousingWire, former HUD deputy secretary Brian Montgomery highlighted the challenges Turner will face in managing the department’s reverse mortgage programs, particularly in the current interest rate environment.
Montgomery emphasized the importance of strong risk management across housing programs to navigate the complexities and uncertainties in the market effectively.
NRMLA President Steve Irwin expressed confidence in Secretary Turner’s ability to lead HUD and foster public-private partnerships to address industry challenges.
Funding and Efficiency of FHA Programs
In an op-ed for The Wall Street Journal, Montgomery explained why political conservatives should appreciate HUD’s support for homeownership through programs like FHA and Ginnie Mae. He clarified that taxpayers do not directly fund the FHA, as the agency’s operations are primarily sustained by borrowers’ premiums and investment income.
The surplus generated by these programs, which is delivered to the U.S. Treasury annually, underscores the efficiency and self-sustainability of the FHA.
As key roles within the administration remain vacant, including FHA commissioner and Ginnie Mae president, the industry awaits the appointment of suitable candidates to lead these critical positions.