HousingWireHousingWire
Staffing cuts at Ginnie Mae could table or delay the rollout of a complementary reverse mortgage securities program announced last year, according to an interview with a former Ginnie Mae official who requested anonymity out of fear of retaliation and reports of staff cuts by multiple outlets.
But a source familiar with HUD’s plans disputed such reports, saying that suggestions of “drastic staffing cuts” at Ginnie Mae were false.
One of Ginnie Mae’s core functions in the reverse mortgage industry is providing liquidity through its Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) program. After challenges caused by a major lender and HMBS issuer’s bankruptcy in 2022, the government-owned company aimed to remedy these issues by developing a complementary program dubbed “HMBS 2.0.”
HMBS 2.0 is designed to bolster liquidity in the secondary reverse mortgage market, including through a reduction in the HMBS pool size to 95% of the loan’s total unpaid principal balance (UPB). The program was announced in January 2024 and a final term sheet was released in November.
While major industry companies, including Finance of America (FOA) and Onity Group, have stated their high levels of anticipation for the program’s eventual rollout in recent earnings calls, the debut could be at risk due to reported staff cuts at Ginnie Mae, the former official suggested.
More than 40% of the company’s staff may have been impacted by large-scale reductions in force, the source said. While Ginnie Mae has a lower level of staff compared to other entities under the purview of the U.S. Department of Housing and Urban Development (HUD), the company oversees key functions in managing the government’s mortgage-backed securities (MBS) portfolios.
The cuts reportedly leave a staff of about 150 to manage a portfolio of 140 issuers and more than $2 trillion in guarantees, according to reporting by National Mortgage News, while Inside Mortgage Finance reported that 50 probationary staffers at the company were let go. The HMBS program is a smaller share of the company’s portfolio, but it provides liquidity for the commensurately smaller reverse mortgage industry’s most prominent product, the Federal Housing Administration (FHA)-backed HECM.
A source familiar with HUD’s plans told HousingWire’s Reverse Mortgage Daily (RMD) that “suggestions that drastic staffing cuts will be made to Ginnie Mae are false” but did not elaborate further.
A HUD spokesperson previously told HousingWire on Wednesday that the agency “is carrying out President Trump’s broader efforts to restructure and streamline the federal government to serve the American people at the highest standard.” The spokesperson said this will be done “while also ensuring the department continues to deliver on its critical functions, mission to serve rural, tribal and urban communities and statutory responsibilities.”
Ginnie Mae’s late 2022 assumption of a sizable HMBS portfolio from an extinguished issuer put strain on its staff, leading company leadership at the time to request additional staffing and budgetary resources from Congress. These were ultimately approved, but the reported cuts are taking place at a time when only about 60% of these new resources have been deployed, according to the former official.
Housing trade and advocacy groups have consistently described Ginnie Mae as underresourced. Groups including the Community Home Lenders of America (CHLA), the Mortgage Bankers Association (MBA) and the National Reverse Mortgage Lenders Association (NRMLA) successfully lobbied Congress to approve full funding for the company ahead of a budget vote.
The former official relayed a sense of perplexion on a path forward for HMBS 2.0. Much of the staff handling the potential implementation, the source said, have been impacted either by cuts, retirements or the government’s deferred resignation program.
The potential impacts of HMBS 2.0 on the reverse mortgage industry could be immediate. HMBS issuance has fallen dramatically since record levels of home-price appreciation, combined with historically low interest rates, drove issuance levels to record highs in 2022. Although it is smaller today, the HMBS market is still considered generally healthy, according to recent perspectives shared by Michael McCully, a partner at New View Advisors.
Regarding the potential for HMBS 2.0, the program “could almost double current issuance levels,” McCully said earlier this month.
Former Ginnie Mae President Ted Tozer also previously told RMD that insufficient staffing levels at Ginnie Mae could hamper the rollout of HMBS 2.0. While cuts to the agency were not being discussed at that time, Tozer suggested that a federal hiring freeze put in place by the White House could compound issues presented by the retirements of key officials.
“The problem that I see right now — and I think it’s going to get worse — is Ginnie Mae’s inability to replace key people that I was able to hire when I was there 10 years ago,” Tozer said late last month.
Tozer attributed some of his ability to hire “really good people” at that time to budget reductions at Fannie Mae and Freddie Mac due to their federal conservatorship status.
He also said he had heard rumblings that the HMBS 2.0 policy is harder to implement than originally anticipated, which he took to mean the actual work that will go into operationalizing the program.
