Biden Budget Proposal provides insight into the new administration’s Reverse Mortgage Priorities


President Joe Biden’s administration presented its federal budget proposal to Congress on Friday afternoon for fiscal year 2022, which was underscored by a figure of $ 6 trillion with a plethora of new spending programs aimed at stimulating the post-impact economic recovery in the United States Accelerate the COVID -19 coronavirus pandemic.

However, the legislative and tentative proposals contained in the Department of Housing and Urban Development (HUD) Congressional Justifications for the White House FHA Fund-specific budget proposal help provide some insight into the new administration’s prospects on the mortgage Get Home Conversion (HECM) program, and where its strengths and weaknesses lie in relation to the prospects of the previous administration.

Crucially, in the latest federal budget proposal, the $ 180 million application for the Mutual Mortgage Insurance Fund (MMI) concerns the Federal Housing Administration (FHA) management contract costs. an extension of the Good Neighbor Next Door (GNND) program; and a new HEAL (Home Equity Accelerator Loan) pilot project. This represents an additional $ 50 million year over year that the FHA initially attributes to the increased cost of the FHA mortgage services, largely singling out the HECM services.

Biden budget for MMI Fund, HECM program

Most of the increase in the number requested for the MMI fund appears to be due to higher costs associated with HECM maintenance, according to the Congressional Justification Document published by the HUD in conjunction with the Administration’s budget.

“The main cause of the increase is the growing cost of maintaining the secretary-held HECM portfolio,” the document said. Additionally, the mortgage service portfolio held by the secretary continues to grow, partly due to the increased volume of partial claims in response to COVID-19 and disasters. The FHA expects to devote significantly more resources to servicing these mortgages and selling the properties as they become available. “

In addition, the budget includes a $ 400 billion limit on the loan guarantee, which “includes sufficient powers to insure single-family forward mortgages and HECMs,” the document says. That number remains unchanged from the proposal in the Trump administration’s last budget proposal last February.

Comparison with previous administration

One place where the Biden government differs significantly from its predecessors is in HECM-related legislative proposals for the MMI fund. In the 2021 budget proposal, the HUD, led by Secretary Ben Carson, proposed various legislative remedies for the HECM program.

This included the introduction of regional HECM credit limits; a “spouse survival” provision to exempt lenders who would otherwise be required to immediately expel a living spouse; an update to the actuarial analysis formulated in 2001 that the FHA uses to determine the adequacy of its HECM insurance premiums; the permanent lifting of the limit on the number of HECMs that can be insured by the FHA; and a waiver of the HECM advisory obligation in order to give HUD the authority to commission the advisory service for all HECM transactions.

In direct contrast, the document attached to the BUD-HUD budget document contains no legislative proposals for the HECM program within the MMI fund, although the new administration considers the increased costs associated with HECM maintenance to be driving the need for an additional US $ 50 million -Dollars in the EU consider budget of the fund.

Another area that has an impact on the HECM program is the HUD Housing Advice Bureau, and the Biden administration appears to value this office’s services more than their predecessors in relation to the raw dollars requested. In the 2021 document, the Trump HUD requested $ 45 million for housing advisory programs, which was $ 8 million less than in 2020. In the case of the Biden HUD, the new request is almost double that at $ 85.9 million as high as the last request from the previous administration.

The Biden HUD is also requesting an additional $ 20 million from the Trump HUD for grants to housing counseling, fraud / fraud detection / prevention and training, and is requesting $ 61.4 million for the Trump HUD’s 40.5 million application U.S. dollar. Both current and past administrations requested $ 4.5 million for administrative contact services, including funding for HECM tools for housing counselors.

In addition to the full application in the Office of Housing Counseling, there is a $ 20 million application for a new legal assistance program that will provide contact and support for eligible, low-income tenants in historically underserved populations predominantly from the housing sector. priority should be given to instability caused by the effects of the pandemic.

HUD Secretary Marcia Fudge

Some of the original relief measures put in place by the Trump administration were carried over to the Biden administration, including a renewed extension of foreclosure and eviction moratoriums and the ability to conduct only external assessments. However, HUD Secretary Marcia Fudge described in a statement where HUD’s priorities remain under her leadership and how the President’s budget proposal reinforces those priorities.

“With the fiscal 22 budget, we’re flipping through decades of divestment and disregard for our country’s housing crisis, putting housing where it belongs – at the center of our efforts for a stronger, fairer America,” said HUD Secretary Marcia Fudge in a statement for the publication of the budget proposal. “The household is sending a clear signal that HUD will no longer be on the sidelines as millions of Americans struggle with housing and are excluded from the opportunities that a good home offers. The budget for Fiscal Year 22 changes and enables the HUD to lay the foundations for stronger and fairer housing infrastructure, helping communities thrive, and giving everyone a fair shot to get ahead. “

NBS measures already taken to correct problems

While the Trump administration tabled a legislative proposal last year to address issues related to HECM scenarios for non-borrowing spouses (NBS), the Biden HUD has already taken its own separate steps from the legislative process to address this issue .

A few weeks ago, the FHA announced four new major protections for eligible NBS under a reverse mortgage transaction, including expanding the criteria used to start a grace period for HECM loans whose case numbers were assigned on or after August 4, 2014, including one Scenarios in The primary borrower has been living in a healthcare facility for more than 12 consecutive months, but the NBS has stayed at home. Separate safeguards have also been introduced for HECMs with assigned case numbers in front by August 4, 2014, including new due and payable criteria.

The new NBS regulations have been largely welcomed by members of the HECM service industry, including representatives from Celink and Reverse Mortgage Solutions (RMS) as well as the National Reverse Mortgage Lenders Association (NRMLA), based on the reach of RMD.

The FHA’s HECM care has long been a contentious issue in debates arising from the health of the reverse mortgage program within the MMI fund. In an interview with RMD earlier this year, former HUD Assistant Secretary Brian Montgomery described the need to resolve HECM maintenance issues.

“[I]It is no wonder that the industry and the FHA must always work together on a wide variety of issues, including reducing the cost of maintaining the assigned portfolio or finding ways to improve the property sale process, ”Montgomery told RMD in February. “Certainly there is an interest in the industry in having service technicians keep service at 98%, and I can understand their point of view.”

Earlier this year, NRMLA submitted comments on the HECM service to the HUD, and HUD also previously revised the single-family mortgage service and damage mitigation policies on both the front and back of the business, including codifying new reverse mortgage policies as well as the total or partial waiver of certain Mortgage Letters (MLs) applicable to the HECM program.

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