HUD Launches Review of Reverse Mortgage System, Invites Public Input
Jonathan V
The U.S. Department of Housing and Urban Development (HUD) is setting the stage for what could become a significant overhaul of the nation’s reverse mortgage system. On October 2, 2025, the agency issued a Request for Information (RFI) titled “Future of the HECM and HMBS Programs and Opportunities for Innovation in Accessing Home Equity.” This marks HUD’s most comprehensive review in years of how reverse mortgages and their associated securities programs operate and serve America’s senior homeowners.
The move underscores the department’s intent to reimagine both the Home Equity Conversion Mortgage (HECM) program and Ginnie Mae’s HECM Mortgage-Backed Securities (HMBS) program. The RFI seeks to gather insights and ideas from lenders, servicers, investors, housing advocates, and the public on how these programs can be modernized to better meet the needs of older adults who rely on their home equity as a key part of their retirement strategy.
A Market Under Pressure
HUD’s review comes at a time when the reverse mortgage industry is facing mounting challenges. The agency’s data shows that HECM loan endorsements have plunged by 59% since 2022, signaling a steep decline in borrower participation. Similarly, activity in the HMBS market which allows lenders to pool and securitize reverse mortgage loans has slowed dramatically. In 2024, the total unpaid principal balance securitized was just $6.3 billion, a level not seen since 2014.
Industry observers say the decline reflects a combination of factors: rising home values that price some seniors out of eligibility, persistently high interest rates, increasing servicing costs, and lingering concerns about program complexity. Together, these forces have sparked fears that the HECM program is drifting away from its original mission to provide older Americans with a reliable, federally backed way to tap into their home equity safely.
“Reverse mortgages were designed to help seniors age in place with financial stability,” said one housing policy analyst. “But participation has dwindled as program rules became more complex and borrower confidence eroded. HUD’s review could be a turning point in restoring that trust.”
What HUD Is Evaluating
In its RFI, HUD outlined 21 key questions designed to spark a broad conversation about the future direction of reverse mortgage policy. These questions are organized into five main themes:
Program Performance, Market Role, and Emerging Risks – Assessing how well the HECM and HMBS programs are functioning today and identifying potential vulnerabilities in the marketplace.
Consumer Interest and Demand – Understanding what’s driving or hindering borrower participation, and how seniors’ needs have evolved in a higher-rate environment.
Origination Volumes – Evaluating barriers to loan origination, from underwriting requirements to marketing and education efforts.
Liquidity – Examining how to ensure a stable secondary market that supports lender participation and investor confidence.
Program Improvements – Seeking recommendations for regulatory, structural, or statutory reforms that could strengthen long-term sustainability.
The questions range from broad policy issues like the “appropriate role” of government-backed reverse mortgages to highly technical topics, such as whether the Life Expectancy Set Aside (LESA) still provides sufficient protection for borrowers’ property tax and insurance payments over time.
By soliciting perspectives from across the housing finance ecosystem, HUD aims to strike a balance between protecting consumers and maintaining market viability. The agency emphasized that ensuring “long-term liquidity and innovation” will be essential as it considers the next generation of reverse mortgage solutions.
Encouraging Innovation While Safeguarding Seniors
HUD officials have suggested that part of this process will involve exploring new ways to access home equity, including partnerships with private lenders or technology-driven products that offer seniors more flexible borrowing options.
Experts believe this could open the door for digital platforms and fintech companies to play a larger role in the reverse mortgage space, provided that strong consumer protections are upheld. “There’s room for innovation,” one senior mortgage executive noted, “but it must be paired with education, transparency, and fair lending safeguards.”
With America’s senior population growing rapidly, and many older homeowners holding a significant share of their wealth in real estate, HUD’s review carries major implications for the broader housing market and retirement landscape.
Next Steps and How to Participate
HUD is inviting public feedback on the RFI through December 1, 2025. Comments can be submitted electronically via the Federal eRulemaking Portal or by mail to the HUD Office of General Counsel in Washington, D.C. The department plans to review submissions before developing potential policy proposals or legislative recommendations in 2026.
This initiative marks one of the most comprehensive reexaminations of the reverse mortgage system in more than a decade. It reflects HUD’s broader effort to reinvigorate federal housing programs to meet the realities of today’s economy where aging in place, financial resilience, and access to home equity are increasingly vital issues.
As one housing advocate summarized:
“This isn’t just about fixing a loan program it’s about rethinking how we help older Americans use their homes to live with dignity, stability, and independence.”For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.
