On Thursday, Vice President Kamala Harris will formally accept the Democratic nomination for president in this fall’s election. In July, former President Donald Trump accepts the Republican nomination for a third time, and the two candidates will face off in a campaign that is sure to focus on the big hot-button issues in November.
this federal housing administration The (FHA)-funded Home Equity Conversion Mortgage (HECM) program is not one of these hot-button issues, but has a lot of interaction with the political process due to its public-private partnership nature.
As the November 5 election approaches, house lineReverse Mortgage Daily (RMD) is taking a closer look at both candidates’ views and interactions with reverse mortgages.
Donald Trump and reverse mortgages
The four-year term of former President Trump (2017-2021) brought many developments to the HECM program. Led by HUD Secretary Ben Carson and Federal Housing Administration (FHA) Commissioner and HUD Deputy Secretary Brian Montgomery, some of these measures have proven to be important.
While the Obama administration managed to craft final rules for HECM the day before Trump took office in 2017, which eventually took effect in September of that year, the Trump administration’s most direct policy impact on the HECM program came when Carson announced the department’s plans to increase premiums and tighten loan limits on reverse mortgages. This is linked to concerns about the strength of the program and taxpayer concerns about losses in the Mutual Mortgage Insurance (MMI) fund.
“Given the losses we have seen in this program, we have a responsibility to make changes that balance our mission with our responsibility to protect taxpayers,” Carson said in a statement emailed to RMD at the time. “To “To be fair, future HECM loans will not adversely affect the overall health of the FHA Insurance Fund, which supports the financing needs of young, mostly first-time homebuyers through conventional FHA mortgages.”
The impact of these changes, which took effect on October 2, 2017, remains polarizing among reverse mortgage industry professionals. The following year, HUD introduced mortgage risk assessments, which sometimes resulted in the need for a second property appraisal.
These changes caused a significant shrinkage in the reverse mortgage industry, although Trump administration officials maintained throughout the end of his term that the changes had the desired impact on the health of the HECM program.
“While recognizing that HECM’s standalone capital ratio is [home price appreciation]However, the changes made to the Backward Plan in 2017 and 2018 and those made by previous administrations were even more significant than the Forward Plan, helping to push a company that had been struggling in a positive direction to demonstrate sustainability and become profitable. Plan,” Montgomery and his consulting partners wrote for RMD in 2021.
The Trump administration also proposed further HECM reforms late in its term, including some that would not require congressional approval — establishing new HECM service standards and eliminating HECM-to-HECM refinancing.
One of the legislative proposals would have modified the loan limit structure in the HECM program to reflect changes in the local real estate market, but these 2019 proposals were actually overwhelmed by the need to respond to the COVID-19 pandemic in early 2020.
In March of that year, Trump ordered a moratorium on all foreclosures and evictions and extended the order several times, including the HECM program. FHA relaxed appraisal requirements, and HUD delayed requests for HECM dues.
The pandemic will ultimately become the Trump administration’s primary focus on housing before his term expires on January 20, 2021.
Kamala Harris and reverse mortgages
Before becoming vice president, Harris’s interactions with the reverse mortgage industry came primarily from her time as a prosecutor, specifically during her time as district attorney and later as California’s attorney general.
In 2009, then-San Francisco District Attorney Harris indicted former reverse mortgage broker John McTaggart for allegedly stealing from an 86-year-old borrower through an annuity fraud. $140,000 in reverse mortgage proceeds. McTaggart allegedly sent regular monthly checks to his victims to cover up his activities. In early 2010, Harris successfully prosecuted McTaggart and was sentenced to six years in prison.
As California attorney general, Harris worked with the Nevada attorney general on a joint investigation aimed at helping homeowners harmed by misconduct and fraud in the aftermath of the 2008 financial crisis. In 2016, Harris also supported legislation aimed at protecting widowed spouses and other heirs from mortgage foreclosures.
Harris was elected United States Senate In 2016, he ran for the 2020 Democratic presidential nomination and was eventually announced as Joe Biden’s running mate in August of that year. As vice president, Harris did not have any significant interaction with the HECM program during her tenure, but she served as a point person on several occasions for HUD’s other administrative priorities on housing.
Earlier this year, Harris announced a HUD housing and community development plan totaling $5.5 billion in funding. About a month before Biden endorsed her for president, she announced a series of additional grants aimed at increasing homeownership by addressing supply and affordability issues.
Harris also made other housing proposals during the presidential campaign, focusing on supply, affordability and down payment assistance. If she wins in November, the Biden-Harris administration will have to work closely with HUD, FHA and other entities such as federal housing finance agency (Federal Housing Finance Agency) and Ginnie Mae.
As of now, the Biden administration’s biggest reverse mortgage mandate right now is the implementation of Ginnie Mae’s HECM-backed securities (HMBS) program, which stems from liquidity challenges brought about by the collapse of a major lender in late 2022. The election has made this pursuit The final outcome is still unclear.
