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As the Trump administration continues to impose cuts to staff and offices across the federal government, the Federal Housing Administration (FHA)’s Home Equity Conversion Mortgage (HECM) program — which handles the vast majority of reverse mortgage business in the U.S. — could be impacted.
According to Bloomberg, the U.S. Department of Housing and Urban Development (HUD) is planning to eliminate dozens of field offices across the country. HUD currently maintains 65 field offices, but the proposed cuts would leave only six field offices in operation, according to two agency staffers who spoke to the outlet.
HECM and the National Servicing Center
The impacts to the HECM program are tied the potential closure of the HUD field office in Tulsa, Oklahoma, which houses HECM-specific functions of HUD’s National Servicing Center (NSC). The NSC is key to the work of the HECM program, and it could see its functions relocated to a different field office in Texas, according to Bloomberg.
According to 2019 congressional testimony from the Government Accountability Office (GAO), the NSC fielded 105,000 HECM-related servicing inquiries between 2015 and 2018. NSC staff have also conducted HECM program policy work related to the administration of insurance claims and interest rate calculations, as detailed by its staff at a reverse mortgage meeting in mid-2023.
“Some HUD offices represent nodes for specialized work that isn’t done at other locations,” Bloomberg reported. “For example, the field office in Tulsa, Oklahoma — one of the many slated to be shut down — employs key staff for the FHA’s [HECM] program, which processes reverse mortgages. If Tulsa staff are offered the chance to relocate, the nearest office is nearly five hours away, in Fort Worth.”
According to HUD’s website, general NSC inquiries are directed to an address in Oklahoma City, while all HECM-related functions are listed as emanating from Tulsa.
“The goal of HUD’s [NSC] is to work with FHA homeowners and their lenders to avoid foreclosure,” HUD said of the NSC’s functions. “NSC staff also provides direction and training to mortgage lenders and housing counseling agencies, who are then better able to provide assistance to homeowners.”
Federal requirements for field offices
Antonio Gaines, president of the American Federation of Government Employees (AFGE) National Council 222, which represents more than 5,000 HUD workers, argues that these rampant closures would violate federal law.
The U.S. Code requires that “the Secretary shall maintain not less than one office in each State to carry out” the processing of mortgage insurance.
“If they decide not to do that, they’re supposed to ask for a waiver,” Gaines told Bloomberg. “They’re supposed to go to Congress.”
“No decisions have been finalized, however the department is exploring consolidation while continuing to prioritize service,” a HUD spokesperson told Bloomberg.
HousingWire’s Reverse Mortgage Daily (RMD) reached out to HUD about the functions of the National Servicing Center and received the following response: “The HECM program is a mission critical function and it will continue.”
Industry response, Urban report
Steve Irwin, president of the National Reverse Mortgage Lenders Association (NRMLA), told RMD that the association is in contact with the relevant staffers to determine what the path ahead will look like for HECM insurance endorsements.
“NRMLA is aware that HUD has been looking at consolidating functions from various field offices, and I have been in touch with members of the team at the Tulsa field office regarding which HECM-related functions may be consolidated within other departmental offices,” Irwin said.
“The final determinations of the distribution of specific resources, and the impacts to HECM-specific tasks is not yet known. NRMLA will be certain to inform its members once HUD’s final determinations are made known.”
A recent report from the Urban Institute, which cautioned about the negative impacts that severe cuts at FHA would bring to mortgage borrowers and the wider industry, included a note about the work of the NSC.
“The origination process for government loans is largely, but not completely, automated, especially for large lenders,” the report explained. “Throughout the origination process, lenders regularly rely on the FHA’s National Servicing Center, meaning staff cuts could lead to a meaningful reduction in FHA lending.”
The report also described the importance of maintaining well-staffed HECM program functions at HUD and FHA.
“Through the HECM program, seniors can extract home equity for maintenance, repairs, or general living expenses, all while remaining in their own homes,” the report said. “The HECM program is disproportionately labor intensive, and layoffs could decimate a lifeline for senior homeowners during a time of rapid aging in the U.S.”
