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The Trump Effect: A New Era for the HECM?


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Our Name & Terminology May Be Turning Away Potential Borrowers

If there’s one thing that is certain for us in 2017 it is change, and lots of it. A new presidential administration, a new secretary for HUD, the likelihood of rising interest rates, and a potential curbing of the CFPB’s powers. Who ever said the new year would be boring?

The Ascent of Donald Trump

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President-Elect Donald Trump and Dr. Ben Carson tour a neighborhood

The election of president-elect Donald J. Trump exemplified the contempt that many hold for politicians and experienced political operators. Seasoned politicians have proven to be somewhat more predictable. Today we find ourselves no historical precedent to help guide our expectations on what a complete outsider will do as they take the reigns of power. It appears that a political outsider could be leading one of the government’s largest agencies.

President-elect Trump recently announced the appointment of Dr. Benjamin Carson as the next Secretary of Housing and Urban Development. If confirmed, what will Dr. Carson’s priorities be as he steers one of the largest bureaucracies in the federal government with a budget in excess of $47 billion?

Download a transcript of this episode here. “Compassionate Pragmatism


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  1. I agree with just about everything Shannon has presented, job done well my friend!

    As far as a rise in interest rates, I feel it has been long overdue, as long as the increase is NOT a drastic one, which I doubt it will be.

    I am hopeful we will see a great deal of waste and beuroucrasie removed within HUD with Carson at the Helm.

    The CFPB needs more than re-shaping, as far as I am concerned it needs to be done away when the Dodd-Frank Bill is repealed once and for all!

    John A. Smaldone

    • John,

      We generally agree.

      I am not for increased interest rates BUT most of us use LIBOR indices, not CMT so a Fed rate increase will have some impact but it may be slow to kick in. But a small raise is still small.

      I am not so sure what waste or bureaucracy you speak of but Trump seems more focused on growing the economy than ratcheting down on costs (excessive or wasted).

      The CFPB needs to be part of HUD not the Fed. It needs to be subject to the Secretary of HUD. Its power base should come from a committee or counsel. All of this will consume time and political capital. We will see what we will see.

      Enjoy the Holidays!!

  2. I also agree with Shannon’s ideas.

    There is one more thing that maybe a Trump administration might rectify that was not mentioned. The FHA Modernization Act of 2009 authorized HUD to provide lending for Coops. HUD has not acted on this and apparently has no plans to do so. Originating as I do in the New York Metro area where Coops prevail, I am asked on a weekly basis about helping a senior living in a Coop who needs to access some of their equity. I have to say no I can’t help them.

    I’m hopeful that Mr. Trump being from NY and in the real estate market here, will see the value of expanding HUD’s programs to allow seniors living in coops to improve their quality of life with a HECM loan.

    Happy Holidays!

    • Alfie,

      There is no such act as the FHA Modernization Act of 2009 but Section 2122(b) of The FHA Modernization Act of 2008 contained in HERA did add cooperatives to the acceptable properties for HECMs.

      Expanding the HECM program to coops is not the answer to MMI Fund losses in the HECM portion of that fund. Until HECM losses are under control, it is doubtful if HUD has much interest in expanding the program beyond where it is now.

      As to Trump, good luck. Another originator is looking to Trump not just to save the program but also expects him to find demand for us.

      There was a nationally famous wooden structure roller coaster that closed down here in California in the late 60s. In the last few months before its demolition, a few college friends and I went there all but daily. As the ride started the ride supervisor would announce: “Hold on tight.”

      Trump and the Republicans may take the program in a “slightly” different direction than you seem to be anticipating, especially if FHA cleans up the transfers it has made to the HECM program from other MMI Fund programs since fiscal 2010. After January 2017, somehow as to the HECM I expect to hear “hold on tight.” While not expecting demolition of the HECM program, I certainly do expect changes that will not increase demand.

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