There is a growing consensus that the FHA and Ginnie Mae need reform. The key, however, is to strike a balance—one that modernizes operations while preserving their essential role in making homeownership and HECMs accessible to millions of American families.
“All we ask is for this to be done in a balanced manner, which both streamlines operation of these programs and maintains their critical role in making homeownership a reality for millions of American families,” said Scott Olson, Executive Director of the Community Home Lenders of America, told National Mortgage News.
A Chainsaw Instead of a Scalpel
For those who want a government that is both efficient and fiscally responsible, recent developments in mortgage finance raise serious concerns. Many in the industry feel that DOGE—despite its well-intended mission—has become an executioner’s block, slashing through our housing agencies with little regard for long-term impacts.
One would expect collaboration to be the preferred approach in mitigating the disruption caused by widespread DOGE layoffs. HUD Secretary Scott Turner has publicly stated that HUD and DOGE are working together through a joint task force, which reports directly to him. The critical questions remain: how much resistance will Turner offer, and does he have the operational expertise to navigate staff reductions without crippling essential agency functions?
“It’s a Nightmare”
The stress on HUD employees is palpable. A recent union survey found that 80% of staff reported extreme stress levels, with one respondent calling the situation a “nightmare.” The fate of an estimated 40% of HUD’s workforce hangs in the balance. Earlier this month, a quarter of Ginnie Mae’s employees—many of whom were on probationary status—were abruptly let go, leaving the agency with just 150 employees.
One key figure influencing DOGE’s actions is Mark Calabria, the newly appointed Associate Director of Treasury, Housing, and Commerce within the Office of Management and Budget (OMB). Calabria, who previously led the Federal Housing Finance Agency, will likely have significant sway over the direction of housing policy and staffing decisions.
DOGE’s Impact on HECM Lending
At present, endorsements of HECM loans continue without major disruption. Reports are still being released on schedule, as evidenced by yesterday’s HECM endorsement report. However, access to critical granular data has stalled. For example, the last HUD HECM Snapshot report was published in October. This report details essential metrics such as the type of HECMs endorsed, maximum claim amounts, initial principal limits, interest rates, and the originating sponsor. Without this data, lenders are left in the dark, unable to make informed decisions about future lending.
Adding to the uncertainty, the FHA’s Single-Family Production Report—critical for tracking new loan applications (HECM case number assignments)—hasn’t been updated since September. While October’s report briefly appeared online, it was mysteriously removed.
HECM lending depends on timely, transparent data. As the future of FHA, HUD, and Ginnie Mae hangs in the balance, it is imperative that their core functions remain intact. Reforms are necessary—many within these agencies would agree. What’s not needed are reckless staffing cuts that undermine the agencies’ ability to serve first-time homebuyers and seniors seeking HECM loans. The goal should be modernization, not dismantlement.
1 Comment
Disruption without safeguards or a clear plan to improve current operations is precarious. One can reasonably and rationally argue that potentially it is a close relative to anarchy.
Long before the current actions by DOGE, GNMA stated that servicing the RMF HECM portfolio was stretching the limits of its operational capacity; yet the current Administration has every right to test, measure, and treat this claim with a measure of skepticism. A more balanced approach, however, would have been to make a 10% reduction in staff to determine the actual operational staff needs at GNMA. A 25% reduction now, seems far too deep.
As a long-time observer of the HECM program, the current lack of critical data is troubling. Whether this lack of data is a bureaucratic response to staffing cuts or a reasonable shift in staff responsibilities to keep crucial operations moving as normal as possible under the circumstances is an open question. Let us hope that operations at both the GI/SRI and MMI funds are functioning at normal levels. Will HECM endorsement operations be negatively affected in the near future?
The radical moves that are currently on display do not normally end without some level of unintended consequences. Unfortunately, there are few indications from DOGE as to the steps it is taking to minimize the negative aspects of those consequences. The risk of relying on a recently confirmed nominee to head up that function seems less than responsible.