HUD OIG Reports HMBS Program Management Concerns

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Consistent with its mission to safeguard against fraud, waste, and abuse, the Office of Inspector General (OIG) of the U.S. Department of Housing and Urban Development (HUD) recently announced concerns regarding Ginnie Mae’s management of its Home Equity Conversion Mortgage-Backed Securities (HMBS) Program.

On November 15, 2023, the HUD OIG issued the Top Management Challenges Report for fiscal year 2024. In noting the unique risks presented by reverse mortgages, the report stated, “Although the HMBS portfolio at approximately $59 billion is only a small portion of Ginnie Mae’s portfolio ($2.5 trillion), servicing an HMBS portfolio is staff intensive even with a contract subservicer. Periods of rising interest rates have challenged HMBS issuers. This condition is especially concerning since the four largest issuers have approximately 86 percent of the remaining HMBS market. Assumption of another defaulted HMBS portfolio could significantly challenge Ginnie Mae’s capacity.” The report, which is issued annually, discusses the significant management and performance issues facing HUD and suggests actions HUD can take to address such issues. We encourage our clients to stay informed on recent developments regarding HUD and the HMBS Program, as they could have a significant impact on the industry and businesses moving forward.