Acting HUD Secretary Todman Talks Housing, e-Notes, Assumable Mortgages #MBASecondary

(Acting Secretary of the U.S. Department of Housing and Urban Development Adrianne Todman
speaks Monday at MBA Secondary)

NEW YORK–This is an unusual time to work in housing, Acting Secretary of the U.S. Department of Housing and Urban Development Adrianne Todman said here at MBA’s Secondary and Capital Markets Conference and Expo.

“The past few years have placed a series of stressors on the market. Stressors that have been exacerbated by long-standing gaps in our housing supply, and the effect that gaps have had on our housing affordability,” Todman said.

Todman noted elevated interest rates have been a challenge across financial markets. “And the housing market is no exception,” she said at one of her first speaking engagements since being named Acting Secretary of HUD in March. “We know the higher cost of housing and lack of inventory have kept a lot of potential borrowers from entering the market and attaining homeownership. We know this makes the business of housing finance more complex. We also know that the moment before us calls for bold and decisive action.”

Todman said HUD has implemented a set of policies and outlined an agenda that takes into account lessons of the past and prioritizes expanding access to opportunities for homeownership, particularly for people who have historically been denied that access. “In the past three years alone, we have reduced barriers to affordable mortgage credit for those who pay their rent on time, and those who have student loans,” she said.

“FHA has lowered its MIP [Mortgage Insurance Premium] fee, which I think was a big hit last year, making sure that mortgages were more affordable for hundreds of hundreds of thousands of borrowers…We’ve opened up opportunities for people who utilize our programs that have good access to innovative housing solutions, like manufactured housing, and we’ve taken steps to modernize our systems and programs to keep up with the changing market.”

Todman said these changes have had an impact. “The first-time homebuyer rate under the Biden-Harris administration is the highest that it has been in over 20 years,” she said. “So we know our work is ongoing, but we know that we have made an impact.”

HUD’s partners at Ginnie Mae have securitized over $38 billion in e-notes since 2021 under its digital collateral program, which gives borrowers flexibility to pursue loan modifications and take other actions, Todman noted.

“e-notes also increase efficiency for lenders and originators, which means they cost less to originate than paper notes,” Todman said. “In this time of lower mortgage activity, these cost savings are more important than ever. This has been a phenomenal rate of growth and it’s largely been led by our VA lenders because veterans and servicemembers have used e-notes to pursue loan modifications and take other mortgage actions while they’ve been stationed abroad.”

Todman said she wants more Americans and more lenders to benefit from e-notes. So she announced that Ginnie Mae will permit the securitization of e-notes into the same pools as traditional collateral starting in June. “That’s the kind of thing that might not roll off your tongue if you’re walking down the streets here in New York, but for most of this audience, it’s kind of a big deal, so I’m happy to take that action,” she said.

In addition, there has been renewed interest in assumable mortgages recently, Todman noted. “We recognize that it is a complex transaction. And I’ve come to understand that sometimes the juice is not worth the squeeze,” she said. “And so we know we need all of the tools in our toolbox to encourage its use. And that’s why there’s a big announcement that we made about making sure that we’re having servicer fees that meet the level of work that is involved. And we look forward to further conversation about that.”

“So you’ve seen how busy we are to make common-sense decisions during this very critical time,” Todman said. She said she will work with colleagues across the federal government to identify gaps and address them. “…Because I fully recognize given my experience and the work I’ve been doing over the past three years as a federal government apparatus we can and should do better. But here’s what I know: We can’t do it without you, your input and your leadership on these issues as we try to make sure that more homeowners and potential homeowners are able to access our tools and use your products and your expertise.”