Senators Still Waiting on Reverse Mortgage NBS Clarification from HUD

More than two months ago, a bipartisan pair of senators wrote to the Department of Housing and Urban Development over a confusing line about reverse mortgages in President Trump’s proposed 2018 budget. They’re still waiting for an answer.

Sen. Catherine Cortez Masto, a Nevada Democrat, and Sen. Marco Rubio, a Florida Republican, haven’t heard back from HUD Secretary Ben Carson about an interesting linguistic quirk regarding non-borrowing spouse protections for borrowers, according to the New York Times. 

In the budget document, the Trump administration appeared to make a change to the definition of “mortgagor,” amending a passage in the National Housing Act to emphasize that it does not apply to “the successors and assigns of the original borrower under a mortgage.” Additionally, the document removed a line that expanded the definition of “homeowner” to apply to spouses, as RMD reported at the time.

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Concerned about the potential effects that such a subtle change would have on elderly homeowners in their respective home states, Rubio and Cortez Masto wrote the letter on May 31, addressing their message to both Carson and White House budget director Mick Mulvaney.

“Given the gravity of potential changes to this law, we therefore request a written response outlining the rationale underlying this proposed change,” the senators wrote. “We also urge that you continue to ensure that widows do not face eviction in these circumstances.”

The Times points out that a decision to roll back non-borrowing spouse protections, which were introduced in 2014 and 2015, was particularly curious given that the industry’s top trade group, the National Reverse Mortgage Lenders Association, had not asked for the change.

NRMLA president Peter Bell confirmed the group’s stance in an e-mail to RMD Tuesday.

“NRMLA believes that the current existing NBS rules are adequate,” Bell said. “We have not requested any changes.”

Even if the change was merely an oversight or an error, any updated language could have an immediate and potentially severe impact on the Home Equity Conversion Mortgage program.

“Our sense is it is bad drafting, but when bad drafting goes through, it can lead to bad policy,” National Consumer Law Center staff lawyer Alys Cohen told the Times. “And you can lose control of things once you have new language.”

The Times piece also gives a brief history of the reverse mortgage program, from controversies surrounding advertising to the potential benefits of the loans for “those over age 62 who want to stay in their homes and owe little to nothing on a mortgage.”

“Many predict that with home prices rising again and a growing number of baby boomers reaching retirement age, there will be a revival in this market as the elderly look to supplement their living expenses,” the Times concludes.

Read the full piece at the New York Times.

Written by Alex Spanko