A Pause for HECM Changes?
Executive orders. This practice of exercising executive authority has become increasingly frequent and controversial in recent presidential administrations. In 2013 HUD was granted the authority to in effect, issue ‘executive orders’ under FHA’s expanded powers. President Trump has promised to cut federal regulations dramatically. Will the administration’s executive orders curb the rule-making authority of FHA?
The HECM Stabilization Act of 2013 granted FHA the Congressional authority to enact reforms to the Home Equity Conversion Mortgage program as needed to ensure the program’s longevity.
The Trump administration’s recent executive order mandates that all agencies to keep additional regulatory costs at zero, unless required by law. Under a regulation-cutting administration HUD may find itself hamstrung in enacting their recent set of HECM rules which were due to be enacted on September 19th this year. These additional rules included the authority to reduce first year distributions from 50%, a 95% property acquisition threshold, and an 11% cap on closing costs for purchase transactions.
Reverse mortgage lenders may soon get a…
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The HECM regulations to be instituted later this year may be dead in the water since they were not implemented under the authority of the Secretary as found in 12 USC 1715z-20(h)(3).
The authority granted to the Secretary of HUD under the Reverse Mortgage Stabilization Act of 2013 as now codified in 12 USC 1715z-20(h)(3) does not seem to be subject to executive orders since they were granted to the Secretary by both the President and Congress.
However, to be immune from the executive orders the HUD Secretary must have determined in his own discretion that the changes “are necessary to improve the fiscal safety and soundness of the program authorized by this section….” If the rule is simply to improve H4Ps, for example, so that they are easier to meet the demands of Realtors, such changes would be subject to Executive Orders since they are not “…necessary to improve the fiscal safety and soundness of the…” HECM program.
Yet other rules in the to be implemented regulations could be subject to executive orders if they were first issued under 12 USC 1715z-20(h)(3). This could require the elimination of two other regulations unless they can meet the standards of 12 USC 1715z-20(h)(3). The next eight months will be an interesting ride.
Astute observations Cynic. Thank you for the citations as well.
The first sentence of the final paragraph should be changed to read: “Yet other rules in the to be implemented regulations MAY NOT be subject to executive orders if they were first issued under 12 USC 1715z-20(h)(3).”
Cynic. Are you referring to the web page verbiage or the PDF of the transcript? Is this a grammatical error or a suggested edit of content?
Shannon,
It is the first sentence of the final paragraph of my first (February 6, 2017) comment above.