How will the Trump administration approach reverse mortgages?
Does 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.
Dysfunction: abnormal or impaired functioning of a person, organ, or in our case Home Equity Conversion Mortgages. Is our market truly dysfunctional? If so, what corrections can we make to better expand our reach to eligible homeowners?
In October 2010, the HECM Saver was introduced giving borrowers considerably lower upfront FHA insurance premiums in exchange for lower lending ratios or principal limits. Three short years later the Saver was eliminated from the Home Equity Conversion Mortgage Program. Ironically, it was this now-eliminated program that spurred considerable interest in the HECM within financial planning circles. Today, some retirement experts are calling again for a low-cost reverse mortgage.
Creativity unlocks potential markets and opens up possibilities. It also makes you a target of critics. In recent years the long overlooked principal limit growth factor (or as many refer to it as the line of credit growth rate) has garnered a second look by financial professionals and our industry as a potential means of managing risk in a retirement portfolio.
Sacred cows. Those tenets or beliefs that have been long held above reproach and which are seen as immune from criticism. For the Home Equity Conversion Mortgage, one benefit has been largely left unscathed, that is until now. 
