Layla Zulfa
The Trump administration, through Ginnie Mae President Joe Gormley, has conveyed a message of contentment with the existing structure of mortgage insurance premiums (MIPs) for both Federal Housing Administration (FHA) single-family home loans and reverse mortgages. These remarks, made last week, have drawn significant attention from leaders within the reverse mortgage sector, who remain steadfast in their advocacy for a revised pricing model for FHA-insured Home Equity Conversion Mortgages (HECMs). In an exclusive interview with HousingWire, President Gormley elaborated on this stance, indicating that the U.S. Department of Housing and Urban Development (HUD), the parent agency overseeing both FHA and Ginnie Mae, has no immediate plans to alter the current MIPs attached to these loan products.
This statement from Gormley arrives nearly a year after HUD initiated a formal feedback process concerning the future of the HECM and HECM Mortgage-Backed Securities (HMBS) programs. These programs have experienced a notable slowdown in activity in recent years, prompting the agency to explore potential improvements. However, Steve Irwin, president of the National Reverse Mortgage Lenders Association (NRMLA), has reiterated that the trade group is not abandoning its efforts to reform these programs, with a particular focus on the upfront MIP for HECM loans.
A Divergent Approach to MIP Reductions
President Gormley’s comments highlighted a differentiated approach to MIP adjustments across FHA programs. He acknowledged that federal housing officials had actively pursued and successfully implemented a reduction in MIP for FHA’s multifamily lending program, a cut of 25 basis points that took effect in October 2025. However, he emphasized that for single-family loan programs, including HECMs, the administration is “very comfortable with the way it’s set now.” This implies a deliberate decision to maintain the status quo for borrower-facing insurance premiums on FHA-insured forward and reverse mortgages.
In response to Gormley’s assessment, Steve Irwin, speaking to HousingWire’s Reverse Mortgage Daily (RMD), affirmed NRMLA’s continued commitment to advocating for changes in the upfront MIP for federally insured reverse mortgages. The current upfront MIP, which is the lesser of 2% of the home’s appraised value or 2% of the maximum lending limit (approaching $1.25 million in 2026), has been widely cited by reverse mortgage professionals as a significant deterrent for potential borrowers.
"I can certainly understand (Gormley’s) comment and I understand that perspective," Irwin told RMD. "But that being said, I do believe – and the leadership of the association believes – there continues to be opportunities to dialogue with FHA around modernization of the premium structures relative to reverse mortgages." He further elaborated, "We continue to think that there is an opportunity to dialogue with them around more risk-based pricing, and we will continue to advocate for that."
Historical Context and NRMLA’s Proposed Solutions
The impetus for NRMLA’s persistent advocacy can be traced back to HUD’s request for information on the HECM and HMBS programs in the previous year. Following this, NRMLA submitted official comments to the agency in December, detailing their recommendations. At that time, the trade group estimated that approximately 25% of potential HECM originations had been lost since the FHA eliminated risk-based pricing in late 2017. Supporting this concern, HUD data through July of the current fiscal year shows HECM endorsements on track to reach their lowest levels since Fiscal Year 2003, underscoring a sustained decline in program activity.
NRMLA has previously proposed a return to a modified MIP structure. Their suggestion involves reinstating a tiered upfront fee system where borrowers who initially withdraw 60% or less of the principal limit factor would pay a reduced upfront fee of 0.5% of the home’s value. To compensate for any potential actuarial shortfalls in the FHA’s Mutual Mortgage Insurance Fund (MMI Fund), NRMLA suggested that the annual MIP for these borrowers could be increased from its current 0.5% to absorb such losses.
In their letter to HUD and FHA, NRMLA articulated the rationale behind this proposal: "Borrowers are more sensitive to up-front costs than ongoing rates since they do not make mortgage payments. … This proposal would also improve the fairness of the program; homeowners that borrow more, and pose a higher level of risk, will pay more into the MMI fund." Irwin reiterated his support for these comments, emphasizing the association’s commitment to the financial stability of the MMI Fund. "We would never advocate or propose anything that would endanger the soundness of the MMI Fund, and we would understand that everything would have to be modeled appropriately and risks determined," he stated.
Financial Health of the MMI Fund
The FHA’s financial standing offers a backdrop to these discussions. The MMI Fund concluded fiscal year 2025 with a capital ratio of 11.47%, a figure that remained unchanged from the previous year. This ratio is notably robust, exceeding the statutory minimum requirement by nearly six times. Examining the HECM portfolio in isolation, it also demonstrated financial resilience, finishing FY 2025 with a capital ratio of 24.06%, experiencing only a slight decrease from the prior year. These figures suggest that the MMI Fund, as a whole, is in a sound financial position, potentially creating room for adjustments that could stimulate HECM program activity without jeopardizing its solvency.
A New FHA Commissioner and Industry Concerns
Looking ahead, NRMLA anticipates engaging directly with Matt Jones, who was nominated earlier this month to serve as the FHA commissioner, following Frank Cassidy’s departure in June. Jones, currently HUD’s deputy assistant secretary for single-family housing, awaits Senate confirmation for his new role. "I wish him all the best for a successful hearing," Irwin commented on Jones’s nomination. "He is a great candidate for the position, and the association is fully supportive of him. He does understand the HECM program very well. He’s a smart individual, and if and when the time arises to discuss these premium structures further, we would bring them to the commissioner."
However, President Gormley’s pronouncements have apparently not resonated uniformly across the reverse mortgage landscape. A source within the industry, speaking on condition of anonymity and representing a top-20 HECM lender, expressed a more critical perspective. This individual argued that while "the economy and the demographic shift are creating real demand" for reverse mortgages, "HUD and FHA are not prepared to satisfy that demand."
The anonymous source articulated a sentiment shared by many on the front lines of HECM origination: "Joe Gormley may feel ‘comfortable,’ but he may be alone in that sentiment. Every loan originator who has ever tried to close a HECM believes the MIP charge is too high. Every financial advisor believes it’s too high. Most importantly, the consumer believes the MIP charge is too high. Mr. Gormley appears to be the only one who sees a problem with charging a client $20,000 upfront so they can draw $20,000 to replace a roof."
This perspective highlights the immediate financial barrier presented by the upfront MIP. The source further contended that the current structure forces consumers to seek alternatives. "The reality is this, if a client has to pay 2% to obtain the right to draw up to 30% of their home’s value, they will seek out other options. It should come as no surprise that Home Equity Investments (HEIs) and Home Equity Agreements (HEAs) have been popping up everywhere. Even the gains on the proprietary side are the result of FHA’s inaction. Clients would rather accrue 10% interest annually to a lender than pay 2% upfront to a government insurer." This comparison underscores a critical point: the perceived cost-effectiveness and accessibility of alternative home equity solutions are directly influenced by the FHA’s pricing structure for HECMs.
Broader Implications for the Senior Housing Market
The divergence in perspectives on FHA MIPs has significant implications for the senior housing market and the broader financial planning landscape for retirees. The HECM program, designed to allow homeowners aged 62 and older to convert a portion of their home equity into cash, serves a crucial role in supporting aging in place and addressing financial needs during retirement. However, if the cost of accessing these funds through the FHA-insured program becomes prohibitively high, it can limit the options available to seniors, potentially exacerbating financial insecurity in their later years.
The rise of proprietary reverse mortgages and other home equity solutions, as noted by the industry source, suggests a market response to the perceived shortcomings of the FHA program. These alternatives, while offering different structures and potentially different costs, demonstrate a demand for solutions that unlock home equity. The FHA’s current stance on MIPs could inadvertently cede market share to these private-sector offerings, potentially leading to a less regulated or standardized environment for senior financial products.
Furthermore, the administrative comfort with the current MIP structure for HECMs contrasts with the acknowledged need for modernization. The FHA’s own request for feedback last year signaled an awareness of the program’s challenges. The continued stagnation in HECM endorsements suggests that the current pricing model may be hindering the program’s ability to meet the needs of a growing senior population, particularly in an economic climate where home equity often represents a significant portion of retirement assets. The ongoing dialogue between NRMLA and FHA officials, particularly with the incoming commissioner, will be critical in determining whether the administration’s "comfort" can evolve to embrace necessary reforms that could revitalize the HECM program and better serve American seniors.
