Our industry continues to evolve as lawmakers, regulators, and industry leaders navigate our rapidly changing political climate and its impact on federal staffing. February has brought several significant changes, including legislative delays, regulatory advocacy, and enhanced consumer protection efforts.

Hawaii’s State-Run Reverse Mortgage Proposal Faces Delays

First, a bill proposing a state-managed reverse mortgage program in Hawaii has been put on hold due to legislative challenges. Initially introduced as a solution to help senior homeowners access home equity in a more controlled environment, the bill has failed to advance past critical deadlines. Lawmakers cited administrative hurdles and concerns over state financial liabilities as primary reasons for the delay. The proposal, which would offer a state-backed alternative to private reverse mortgage lenders, will not be reconsidered until at least 2026. Reverse mortgage professionals in Hawaii can breathe a sigh of relief for now.

NRMLA Advocates for HUD Leadership Stability

Next, is our new HUD Secretary. To ensure regulatory consistency, the National Reverse Mortgage Lenders Association (NRMLA) joined 22 other advocacy organizations urging the Senate Banking Committee to approve Scott Turner’s nomination as the next Secretary of the Department of Housing and Urban Development (HUD). Turner’s was ultimately confirmed on February 5th- a development welcomed by the National Reverse Mortgage Lenders Association. NRMLA’s endorsement underscored the importance of stable leadership at HUD, which oversees the Federal Housing Administration (FHA) and the Home Equity Conversion Mortgage (HECM) program. 

Enhanced Consumer Protections in Los Angeles

The LA fires have brought loan servicing concerns to the forefront. A recent improvement in reverse mortgage servicing software has been implemented to safeguard borrowers in Los Angeles from unnecessary foreclosures. The feature, which was introduced in late 2023, enhances communication between loan servicers and borrowers to prevent misinterpretations that could lead to loan default. 

The change comes after reports of seniors facing unexpected foreclosure due to misunderstandings about loan terms and repayment obligations. This software update is a step forward in protecting homeowners from predatory practices and ensuring that reverse mortgage agreements remain transparent and manageable. 

DOGE’s Impact on the CFPB and HUD Data & Staffing

Recent developments indicate that the Department of Government Efficiency (DOGE) is influencing staffing decisions at both HUD and the Consumer Financial Protection Bureau (CFPB). Reports note DOGE is focused on staffing levels and streamlining operations, reducing bureaucratic inefficiencies, and ensuring that federal agencies can effectively regulate FHA-backed loans such as reverse mortgages. That ‘streamlining’ may include a complete closure as evidenced by what is essentially the shutdown of the Consumer Financial Protection Bureau (CFPB) earlier this month.

Shortly after DOGE descended on the agency’s Washington headquarters employees were told to cease work and approximately 70-100 of the agency’s employees were laid off. Since that time, Since then, the CFPB’s official X account has been deactivated, and the homepage of the agency’s website now displays a “404: page not found” error message. 

Trump’s Executive Order (EO) freezing the hiring of any new federal employee coupled with existing layoffs is likely to the agencies that supervise and track key HECM metrics. The EO states that the federal hiring ban can only be lifted once agencies have communicated with DOGE their plans to slash their workforces. 

The concern is whether HUD’s present and future staffing levels can support the management of the HECM program and the timely distribution of key data. Case and point, we have had no HECM case number assignment  (CNA) data since September. The October Single-Family Production Report which includes HECM CNAs was available until it was removed earlier this month. When we’ll see that report and November’s release is unknown. 

Final Thoughts

These developments highlight the shifting landscape of reverse mortgages, challenges, and advancements shaping the industry. While legislative progress in Hawaii has stalled, advocacy efforts at the federal level and technological improvements in servicing platforms indicate ongoing efforts to improve the accessibility and security for reverse mortgage borrowers.