NRMLA targets lower HECM insurance premiums, fewer second appraisals

Leaders at the National Reverse Mortgage Lenders Association offered updates on key regulatory and legislative initiatives at this week’s NRMLA Western Regional Meeting in Irvine, California.

NRMLA President Steve Irwin, alongside board co-chairs Jim Cory of Guild Mortgage and Mike Kent of Onity Mortgage, spoke about the trade group’s engagement efforts with Congress. They noted that the House appropriations committee passed a funding package for the next fiscal year that ensures the operations of the federally insured Home Equity Conversion Mortgage (HECM) program.

They also said that NRMLA successfully lobbied to have funds for housing counseling assistance included in the package after President Donald Trump’s proposed budget for fiscal year 2027 sought to eliminate it. Counseling is a pre-funding requirement for all HECM borrowers and the current budget for FY 2026 includes $57.5 million in assistance across all types of counseling.

“We have dodged that bullet once again on your behalf and on behalf of the consumers you oversee,” Irwin told the audience.

Second appraisals

The NRMLA officials also spoke to key components of the HECM and HECM Mortgage-Backed Securities (HMBS) programs that are being scrutinized after the U.S. Department of Housing and Urban Development (HUD) issued a request for information in October 2025.

A rule that requires lenders to order second appraisals on a portion of HECM applications is something the trade group has wanted to eliminate for many years. Irwin said recent discussions with HUD and Federal Housing Administration (FHA) officials were more productive in that regard compared to previous efforts.

“This is not the first time we fought the second appraisal,” he said. “This is the first time that they’ve actually listened.”

Second appraisals add significant time and cost to the HECM origination process, lenders say. Estimates on how often they’re required vary. Former FHA Commissioner Brian Montgomery said that prior to the COVID-19 pandemic, they represented 20% to 30% of transactions. Erik Morin, CEO of appraisal management company Atlas VMS, recently told HousingWire’s Reverse Mortgage Daily that roughly 8% to 10% of his company’s business in the past year included a second appraisal.

“A second full appraisal is not only excessively expensive for the consumer, it’s very time intensive,” Kent told the audience. “It drags out the process. It’s very difficult to explain to seniors why yet another appraiser is coming out to their house.”

While the trade group said that collateral risk assessment remains integral to safe and sound reverse mortgage practices, it is calling for automated valuation models (AVMs) to be used more frequently. They noted that in traditional forward lending, Fannie Mae and Freddie Mac already use alternative valuation methods that have collectively saved borrowers billions of dollars.

“You bring into it a certain level of appraisal bias that AI and technology doesn’t really have,” Kent said. “We think by using technology tools to eliminate appraisal bias, you eliminate the problems you may have in the first appraisal that you can have in the second appraisal — and we think it’s cheaper, it’s faster and it’s more efficient.”

Mortgage insurance premiums

Initial mortgage insurance premiums (IMIP) are another prime target for change across the industry. Loan officers and executives say that paying 2% of the property value or 2% of the maximum claim amount (MCA) — whichever is lower — is a hurdle that many borrowers cannot overcome, which has contributed to low origination volumes for years.

“We think that 200 basis points of MCA is excessive, especially as interest rates rise, because it becomes a bigger percentage of the proceeds,” Kent said.

NRMLA has proposed a risk-based structure for IMIP and has suggested a figure as low as 50 basis points for borrowers who want to withdraw 60% or less of their available proceeds. Kent said the trade group is pushing ideas that will have positive or neutral impacts to the FHA’s Mutual Mortgage Insurance Fund.

FHA reported that the MMI Fund ended the 2025 fiscal year with a capital ratio of 11.47%, nearly six times higher than its statutory minimum requirement of 2%. And the HECM portfolio’s standalone capital ratio was 24.06%, meaning that revenue from current premiums are more than offsetting any losses.

Kent said that HUD and FHA officials have been receptive to the concept of lower premiums. He placed the odds of a 50-bps IMIP requirement at “maybe better than 50/50.”

“We’re trying to propose them in a way where it’s kind of an easy lift, where it doesn’t take a lot of work on their end, because time is short, right? This administration has a couple years left — that’s it,” he said.

“Lowering costs to homeowners is one of the central pillars of this current administration, and this aligns with that. We think it comes at a very good time, because the health of the MMI Fund is very solid.”