HECM Program Has Evolved as Secretary Held Has Grown, Servicing Challenges Rise

Gate House Chairman Brian Montgomery recently spoke with Chris Clow of Reverse Mortgage Daily to discuss HUD’s reverse mortgage (Home Equity Conversion Mortgage or “HECM”) program and the impact of that program in the recent budget request. The growth in the Secretary-held HECM portfolio which has been significant in recent years, and the challenges presented to servicing that portfolio, likely contribute to the Biden Administration requesting an additional $50 million in its budget request.

“Due to the structure of the program,” Montgomery said, “the Secretary-held portfolio has grown significantly in the last 5 years (approximately 150,000 loans), and it keeps growing.”

Montgomery, who led FHA twice under three presidents and recently served as Deputy Secretary of HUD, added that “This process requires a highly competent Servicer to handle a highly complex product for one of HUD’s key constituents — seniors.”