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.
Trump 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
There are three areas subject to the budget when it comes to HECMs. The first is normal operations which have historically never been paid for by MIP. Second, is any cost overruns from the projected losses from the book of business for the budget year in consideration. Finally, there are the counseling subsidies.
Of the three, the discretionary piece is the counseling subsidies. Will the budget be so tight that there will be no counseling subsidies for years to come? Nothing says these are coming but the budget has yet to be submitted.
I would like to see focus on servicing and liquidation of the reverse mortgage. Some of the reverse mortgages I have originated are now being reconciled and it seems to be another horror story brewing. IE Financial Freedom — just horrible! Also would like to see more emphasis for a financial planning standpoint taxes and deductions in particular- strategies and benefits.
I always enjoy your videos! Keep up the good work!
John Schlobohm 914-433-4646