Hud Extends Reverse Mortgage Feedback Deadline

The U.S. Department of Housing and Urban Development (HUD) is reopening the public comment period for a review of federal reverse mortgage programs, the agency announced Wednesday in the Federal Register.

HUD previously issued a request for information in October, seeking input on the Home Equity Conversion Mortgage (HECM) and HECM Mortgage-Backed Securities (HMBS) programs. The agency said it’s exploring ways to improve senior homeowners’ access to home equity and potential innovations for the programs.

The original 60-day comment period ended Dec. 1. Now, HUD has extended the deadline to Jan. 5, 2026, and said it will consider late submissions when possible.

Some industry groups have already submitted their recommendations. In late November, the Mortgage Bankers Association (MBA) offered seven recommendations to reform the programs. And last week, the National Reverse Mortgage Lenders Association (NRMLA) sent an 11-page letter to HUD and the Federal Housing Administration (FHA) outlining a range of proposals for the HECM and HMBS programs.

Of the numerous proposals outlined in its letter, NRMLA also recommended several changes to improve the HECM financial assessment (FA) process. It specifically wants to reduce paperwork and increasing borrower flexibility while maintaining protections against defaults.

NRMLA wrote that since its introduction in 2015, the HECM financial assessment has helped reduce reverse mortgage foreclosures due to property tax and insurance defaults. NRMLA said it supports “maintaining FA’s effectiveness,” but it asks for “streamlining procedures, reducing documentation burdens, and aligning HECM underwriting with FHA’s forward mortgage program.”

The trade group recommended allowing borrowers to pay off unsecured debt, such as credit cards or personal loans, at closing. The practice, which is already authorized under the 2017 HECM Final Rule, would reduce post-closing defaults and make HECMs more competitive with proprietary reverse mortgage products.

NRMLA also called for simplifying income verification. Current rules require two forms of Social Security verification, but the group suggested allowing a single proof of income, waiving documentation for low-risk borrowers with high FICO scores, and using electronic verification directly through the Social Security Administration.

Other NRMLA proposals included simplified homeowners association payment history requirements from 24 months to 12 months, and waiving the requirement for properties with low HOA fees or borrowers with strong credit histories.

The group also suggested eliminating full retirement asset documentation for borrowers ages 74 and older, except for Employee Stock Option Plans (ESOPs).

Lastly, NRMLA recommended changes to Life Expectancy Set-Aside (LESA) policies, specifically removing the 75% cap on partial LESAs and allowing voluntary contributions after closing to cover future property charges.

“The current 75% rule serves as an overly conservative barrier that unfairly reduces a responsible borrower’s available HECM proceeds without a proportional increase in safety or reduction in risk. NRMLA suggests that FHA eliminate the 75% rule for a Partial LESA to allow more qualified borrowers access to the HECM Program,” its letter stated.