Following the release of the president’s fiscal year 2026 “skinny” budget request — and a look at the White House’s performance expectations for the Home Equity Conversion Mortgage (HECM) program — the U.S. Department of Housing and Urban Development (HUD) has released its congressional justifications document to explain the reasons for its appropriations requests.
Normally, this document provides detail about the HECM program, its performance outlook and anything the Federal Housing Administration (FHA) might seek to change. This year, however, that’s not the case, according to a review of the document by HousingWire’s Reverse Mortgage Daily (RMD).
In regard to administrative contracts for the Mutual Mortgage Insurance (MMI) Fund — which provides cash to lenders on HECM claim payments for assigned loans — the budget requests $160 million to fund a series of loan programs operating under the MMI Fund, including HECM loan servicing tools.
This is a rare instance where the appropriations request is somewhat higher than in years past, HUD explained. A big part of this request is tied to managing the HECM portfolio.
“Funding for administrative contracts has remained constant at $150 million since 2022,” the document reads. “At the same time, contract expenses have increased with inflation and growth in the FHA-held portfolio of HECMs and partial claim notes.
“Between 2014 and 2024, program account expenditures for management of Secretary-held HECMs and partial claims have increased by $46 million, growing from $3.6 million to $49 million, a 1,272% increase.”
The FHA-assigned HECM portfolio has also grown tenfold since 2013, from 18,000 loans to more than 190,000 today.
“The cost of managing the assigned HECM portfolio has grown even faster, from $1.8 million in 2014 to $36.5 million in 2024. Largely as a result of these factors, total available funding decreased from $174 million in 2021 to a projected $160 million in 2025,” HUD explained.
“The Budget request for $10 million above the 2025 level is necessary for FHA to maintain current service levels through 2026.”
Outside of this, only one major mention of the HECM program exists across the 134-page document — a justification for HUD’s commitment authority for new loan guarantees.
“The 2026 President’s Budget requests $400 billion in loan guarantee commitment limitation, which is to remain available until September 30, 2027,” the document states. “This limitation includes sufficient authority for insurance of all single family forward mortgages and HECMs.
“Total loan volume projected for all MMI programs for 2026 is $315.1 billion. Of that total, $300 billion is estimated for standard forward mortgages and $15.1 billion is for HECM.”
This requested figure matches what was requested last year, and the projected HECM performance is consistent with recently released projections from the White House.
But HUD does not indicate any additional focus or intent to reform aspects of the HECM program — a departure from some of the Biden administration’s stated goals one year ago.
At that time, the congressional justifications for FY 2025 included a series of legislative recommendations that required congressional support to implement.
These included housing counseling for HECM-to-HECM refinance transactions, alongside a removal of the cap on the number of HECM loans that can be insured by FHA.
The lack of inclusion of a cap-removal request, in particular, is a departure from years past since it consistently appeared on HUD’s list of HECM proposals for several years. But Congress has yet to agree to any such measure.
HUD in 2024 also sought to update the actuarial analysis used to set mortgage insurance premiums on HECMs. In 2003, the department satisfied a statutory requirement that it would “conduct an actuarial analysis to determine the adequacy of its HECM insurance premiums with respect to lower upfront premiums for refinances and a single national loan limit, and the combined effects of those two policies.”
HUD also said last year that it wanted to change mandated notices of foreclosure within the HECM program to include outreach methods beyond traditional mail. And the department renewed a legislative request to restore regional lending limits to the HECM program, which the industry and its principal trade association have consistently and vehemently opposed.
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