HUD’s Proposed Reverse Mortgage Rules Under Review, But For How Long?

A series of controversial proposals for the Home Equity Conversion Mortgage (HECM) program introduced last year by the Department of Housing and Urban Development (HUD) are still under regulatory review, but it is unclear when the reverse mortgage industry might finally see some meaningful change—and whether such change could arrive before a new administration moves into the White House.

HUD made industry headlines last May when it proposed a set of new rules aimed at strengthening the HECM program, including changes to the origination and servicing processes.

The proposed rule, which serves to codify HECM reforms implemented in recent years by the Federal Housing Administration, also intends to add several new consumer protections, some of which industry members argued could lead to “catastrophic” consequences for the future of the HECM program, if enacted into law.


After a conventional 60-day public comment period on the proposal, which closed mid-July 2016, HUD opened another commenting period as the agency sought additional feedback on one particular proposal that would require mandatory loan assignments to HUD once the HECM loan balance reaches 98% of the maximum claim amount.

Four months have passed since the closing of this final comment period, which ended September 12, 2016. Since then, HUD has been mum on the details for when the reverse mortgage industry could expect to see any of these proposals turned into new HECM program rules.

Because the agency is still in the rulemaking process, HUD is currently prohibited from discussing any particulars on the proposals, a HUD spokesman told RMD in response to an emailed request for comment.

After a comment period closes and public comments have been reviewed and analyzed, HUD must decide whether to proceed to issue a final rule based on the proposed rule, or take any number of other possible actions, according to the agency’s Rulemaking webpage.

Such actions may include issuing an interim rule, which is a rule for effect but for which public comment is generally taken; issue a new or modified proposal; withdraw the proposed rule; or take no action on the proposal.

A search into the Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs reveals that the proposal, titled “Strengthening the Home Equity Conversion Mortgage Program to Promote Sustained Homeownership,” is in the Final Rule stage and is currently pending regulatory review. The OMB lists the received date for the proposal as November 21, 2016.

While it is unknown just when these proposals could take effect for reverse mortgages, the impending inauguration of President-elect Donald Trump next week looks to complicate potential timelines even further.

“The presidential transition and change in administrations creates some uncertainty about the timelines for publication and it is unknown whether HUD will be able to finalize the rules before the January 20th inauguration of the new President,” wrote the National Reverse Mortgage Lenders Association in a recent update. “If internal consideration of the rules continues into the next administration, it could take time for the new staff and leadership to review their contents before moving forward to finalize them.”

Written by Jason Oliva

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  • FA when implemented should have stayed the way it was. Every time we turn around some new rule is being proposed to supposedly protect the consumer, that is nothing but political rhetoric. This is the way to justify regulators and the CFPB!

    The proposed rule they talk about that is supposed to serve in a way to codify HECM reforms implemented in recent years by the Federal Housing Administration is a dangerous joke!

    I agree with those that are saying that this could lead to a catastrophic consequences for the future of the HECM program, if enacted into law, think about that one?

    John A. Smaldone

  • “The proposed rule, which serves to codify HECM reforms implemented in recent years by the Federal Housing Administration, …, if enacted into law.”

    The language in the quotation is terribly confusing. A proposed rule can get codified but not as enacted law. It seemed Jason was talking about administrative changes HUD proposed recently then he seemed to switch proposed legislation. Enacted law is the result of the President signing a bill passed that the House and the Senate passed or the President failed to veto. Since the content appears to be about rules proposed by FHA, it seems these administrate rule proposals rather than legislative ones.

    While the conclusion about any final new rules was elusive, it was informative and with the exception of “enacted into law,” well presented.

  • A lot of negative comments below. The reverse mortgage program has saved my parents retirement.

    The bank owns the home
    Heirs won’t inherit anything

    We found comparison website, click quote save dot com, that found us a lender who charged $0 upfront fees (savings of $6k).
    There was no haggling involved just tell them you don’t want to pay any upfront fees.
    The title/ownership remains in my parents name and if home values increase I will inherit the remainder of the equity.

    My parents are saving $24k/yr by not having a mortgage payment, and I don’t have to worry about their financial situation. They don’t need my assistance, everyone wins.

    If home values decreases or they live for another 30 years I’m perfectly happy not inheriting any $ or the home. I just wanted them to have a comfortable retirement.

    Don’t believe all the negative comments without doing your research first. Like any other service and industry there are good lenders out there.

    Thank you all, and best of luck.

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