As the Department of Housing and Urban Development reviews the multitude of comments it received on its most recent proposed changes to the Home Equity Conversion Mortgage (HECM) program, there is no timetable for when the agency might take any action on these proposals.
HUD is currently in the process of reviewing the variety of responses it has received on its proposals from reverse mortgage lenders, servicers, secondary market investors, senior consumer groups, among other industry stakeholders. At the close of the public commenting period on July 18, the agency garnered a total of 85 public comments.
When prompted by RMD as to when the industry can expect an update on the rulemaking process, a HUD spokesman said the agency is currently reviewing public comments and is unable to forecast its next steps.
The rule, which HUD first issued in May, intends to codify and reinforce several recent HECM reforms that have been implemented by the Federal Housing Administration over the past several years, while also introducing some new rules for federally-insured reverse mortgages.
In the nearly three months since HUD introduced the rule, reverse mortgage industry personnel have voiced concerns for certain proposals, predominantly HUD’s intent to cap lifetime interest rate increases on adjustable-rate HECMs to 5%.
Many industry members also expressed their opposition to the proposal that would amend the definition of “property charges” to include utilities as part of the Financial Assessment. Under this proposal, a borrower’s failure to pay such utilities would result in a lien, thereby potentially triggering the reverse mortgage to become due and payable.
“We respectfully request that, if adopted as proposed, the FHA make clear that utility charges not be included in the expenses of the calculation of borrower obligations for purposes of the LESA under Financial Assessment,” wrote the National Reverse Mortgage Lenders in its comment submitted to HUD.
Consumer groups, such as AARP and the National Council on Aging, also urged HUD to reconsider its proposal on including utilities as property charges, though they took different stances with other proposals.
As the reverse mortgage industry and senior consumer groups await further action from HUD, the agency is tasked with deciding whether to proceed to issue a final rule based on its review of the submitted comments.
Based on the results of its review, the agency may choose to issue a new or modified proposal, withdraw the proposed rule entirely, or take no action on the proposal, according to HUD’s rulemaking process.
Written by Jason Oliva