In his first press conference since being confirmed as Federal Housing Administration Commissioner on May 23, Brian Montgomery reaffirmed FHA’s commitment to the Home Equity Conversion Mortgage program, which, he commented, is one of the few programs that allows seniors to age in place.
HECM program improvements and efforts to update the FHA’s antiquated computer operating system are among Montgomery’s top near-term priorities, he told reporters.
According to multiple press accounts, Montgomery said FHA continues to study the HECM program to identify areas of improvement.
“If you look at it at the 30,000-foot level, interest rates are still relatively low, house prices have returned in most areas, yet here we are hemorrhaging money out of that portfolio,” National Mortgage News quoted Montgomery. “It’s just one of the things that we’re looking at, and why is that?”
In a separate account published by Reverse Mortgage Daily, Montgomery expressed sensitivity for how any program changes could impact seniors’ access to HECM loans and said that FHA is evaluating the back end of the process to determine if reforms are needed post-assignment.
“We need to find that tipping point,” he said. “If you make further changes to [principal limit factors], pricing changes, what is the tipping point to where volume drops, and there are impacts to the [HECM mortgage-backed securities]. I am very mindful of that, but looking at the back end of the process, once the loans are assigned to HUD is the area we are focused on. I am not sure further [principal limit] cuts are going to fix that problem.”
On the technology front, FHA relies on a COBOL (common business-oriented language) computer operating system that was invented in 1959, which is mainframe-based, according to National Mortgage News. Increasingly, more government agencies are moving to a cloud-based system, which offers more security and allows a single operating system to move seamlessly between computers.
HUD has been lobbying for years to receive funding to update its computer systems, but Congress has failed to provide it. Montgomery said FHA is looking at budget-saving solutions, such as borrowing some of the technology infrastructure that the government-sponsored enterprises have built, or collaborating with the Department of Agriculture and Department of Veteran Affairs on shared platforms.
Montgomery previously served as FHA Commissioner from 2005 to 2009, during President George W. Bush’s second term and the first six months of the Obama Administration. Before he was nominated by the current administration, Montgomery was vice chairman of The Collingwood Group, a Washington, D.C.-based advisory firm focused on business consulting, risk management and compliance within the financial services industry.