The Housing and Insurance Subcommittee of House Financial Services examined three Deputy Assistant Secretaries from FHA’s Reverse Mortgage, Multifamily Housing, and Healthcare Programs on May 16. Members had sharp questions for the witnesses who were pushed to defend agency decisions and identify corrective measures in the face of a possible FHA draw on the Treasury. Participating members were Neugebauer (Chair, R-TX), Luetkemeyer (Vice Chair, R-MO), Capuano (Ranking, D-MA), Royce (R-CA), Cleaver (D-MO), Clay (D-MO), Beatty (D-OH), Himes (D-CT), Fitzpatrick (R-PA), Heck (D-WA), Sherman (D-CA), and Ellison (D-MN).
Charles Coulter, Deputy Assistant Secretary for Single-Family Housing faced sharp questions from Rep. Neugebauer on the capital shortfall identified in FHA’s actuarial report and the substantial role of the reverse mortgage program in losses thus and to come. Coulter emphasized the importance of the reverse mortgage option for seniors facing financial hardship, particularly now that private capital sources have fled and FHA is the only option in the market. Coulter identified steps taken already to reduce up-front draws and improve loss mitigation efforts but focused attention on the Congressional action needed to empower FHA to take further needed steps, particularly around underwriting non-borrowing spouses. Reps. Heck and Fitzpatrick noted that their proposed bipartisan bill would provide FHA the need authority to get the program on track. Reps. Royce and Luetkemeyer both pressed Coulter to address local-level proposals to seize mortgages by eminent domain and then refinance through FHA, asking him to mirror the GSE refusal to accept such loans. Coulter shared their concern and offered a formal written response rather than an off-the-cuff policy decision. Rep. Capuano raised further questions about whether separate accounting treatment for the reverse mortgage program would bring clarity and whether the agency could restrict private originators from using actors and game-show hosts as spokespeople on late-night television ads (Rep. Capuano had noticed the ads during his evening viewing).
Marie Head, Deputy Assistant Secretary for Multifamily Housing, presented HUD’s proposal to consolidate its multifamily operations. She, too, faced tough questioning on that and other fronts. Representatives Sherman, Clay, Cleaver, and Ellison each raised concerns about loss of trained staff, local relationships, and valuable asset management capability as a result of consolidation. Rep. Neugebauer pushed for an explanation of FHA’s role in the multifamily market, whether it had expanded beyond its mission, and whether it had focused too much on properties outside its existing portfolio, particularly with refinancing. DAS Head clarified that less than 10 percent of the refinancing came from the GSE portfolio, that the rough breakdown of loans is 25 percent rural, 50 percent suburban, and 25 percent urban, and that 40 percent of the overall business now is refinancing. She also emphasized the need for additional commitment authority so that FHA Multifamily could continue operating through the balance of the year.
Roger Miller, Deputy Assistant Secretary for Healthcare Programs, faced fewer questions overall from his testimony on FHA’s financing of hospitals, nursing homes, and assisted living facilities. Rep. Neugebauer explored whether some of FHA’s loans to hospitals consumed a disproportionate share of commitment authority, noting in particular New York Presbyterian Hospital. Miller explained how the loan relationship began in the 1980s when the hospital was struggling and evolved over time as the hospital improved and merged to its current form. He also noted their $81 million commitment to indigent care.