The Trump Era & The HECM

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Good News for HECM, Not So Much for Housing Programs

budget2President Donald trump embodies the essence of a political wrecking ball in Washington D.C.- a city known to cling tightly to political traditions of governing and supporting long-standing social programs, despite our ballooning deficits.

While the President weathers opposition from both Democrats and Republicans alike, his administration’s draft 2018 budget for the Department of Housing & Urban Development reflects populist sentiments of a smaller, efficient government with parsimonious allocations for social program spending. Many feared the populist agenda would gut essential HUD, programs, and more specifically, the Home Equity Conversion Mortgage program.

Politico obtained a copy of the Trump administration’s preliminary HUD budget revealing plans to gut $6 billion from several programs including the outright elimination of the Community Development Block Grant, neighborhood initiatives, and a housing program for veterans. Despite these unpopular cuts, the HECM program was spared and even strengthened.

Two changes stand to liberate the HECM – the removal of the annual cap and the erosion of the unchecked powers of the Consumer Financial Protection Bureau…

Big Changes Ahead in 2017

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3 reasons why you should expect big changes in 2017

The political landscape changed with a sudden seismic shift felt across the world. Domestically the impacts of a new populist, small government philosophy may manifest themselves in a variety of ways that will impact reverse mortgage lending this year.

Slashing Domestic Spending:

The Trump administration is contemplating substantial cuts in excess of $6 billion dollars from HUD’s budget, according to documents obtained by the Washington Post. While alarming to some, would such cuts, if realized, substantially impact the Home Equity Conversion Mortgage? The short answer is no as most are speculated to be directed at housing initiatives such as Section 8, community housing projects and assistance programs for elderly low income Americans. Some industry participants however, wonder if continued budget subsidies for the HECM program would place the program in the crosshairs of the federal government’s efforts to reign in domestic spending.

reverse mortgage newsTrump vs. The Fed:

Will Trump regret his comments about the Fed? Throughout his presidential campaign, Donald Trump criticized the Federal Reserve and it’s chair Janet Yellen, of maintaining artificially low interest rates to help Hillary Clinton. In December the Fed raised interest rates on quarter of a percent, the second rate increase since June 2006. Central banks have been reluctant to raise interest rates in the wake of the 2008 financial crash, and home prices have consequently been on a tear. Today, the Fed is projecting three rate hikes this year alone. The impact would be felt by

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The Trump Administration & Reverse Mortgages

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How will the Trump administration approach reverse mortgages?

reverse mortgage newsDoes one of the first decisions made by the Trump administration foreshadow the future of the reverse mortgage program? The administration’s decision to rescind a recent FHA mortgage insurance premium reduction was swift- within one hour after President Donald Trump took the oath of office. How will a business-minded administration approach the Home Equity Conversion Mortgage program?

Mortgage lenders should brace themselves for change. The Trump administration team made it clear they intend to dismantle the Dodd-Frank Act, a complex set of banking and lending regulations that have been criticized for their complexity and hurdles for middle class borrowers in obtaining credit. In addition the Consumer Financial Protection Bureau faces a substantial makeover. While both parties agree that consumer protections are needed, they disagree as to how that goal should be achieved.

Does this mean the Trump administration will be anti-reverse mortgage? By no means. However the ambition to reduce spending and waste should deliberate on the unintended consequences inherent in policy changes, specifically for today’s aging homeowners. With most retirees having less than $50,000 in savings the need to finance one’s longevity using their home has never been greater. Housing has become the lynchpin upon which the majority of American’s wealth is built.

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