Election 2020: Joe Biden, Kamala Harris and Reverse Mortgages

Earlier this year, RMD took a look at several presidential candidates and their stated policy positions, and how they could interact with the reverse mortgage business. These efforts were undertaken while the Democratic presidential nominating process was still taking place, and featured profiles of candidates like businessman Michael Bloomberg, Senators Elizabeth Warren and Bernie Sanders, as well as incumbent President of the United States Donald Trump.

Last week, the Democratic National Convention officially nominated former Vice President Joe Biden and California Senator Kamala Harris as the party’s presidential and vice presidential nominees, respectively, and the duo will go on to face Trump and Vice President Mike Pence in November’s general election. Now that Democratic nominations are finalized, RMD is taking a closer look at the reverse mortgage-relevant positions taken by the campaign.

Biden has not specifically commented on the record about his stance regarding the Home Equity Conversion Mortgage (HECM) program, though his 8-year stint as vice president during the Barack Obama administration gives some insight into how he could approach matters of policy relevant to the reverse mortgage product category. A housing plan released by his 2020 campaign can give some additional indication of the philosophy he could have for housing matters related to seniors.

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Joe Biden as vice president

Much like other political endeavors related to the reverse mortgage program in the past and future, in 2012 the then-deputy assistant secretary of the U.S. Department of Housing and Urban Development (HUD) Charles Coulter told an industry audience at the National Reverse Mortgage Lenders Association (NRMLA) Annual Meeting in San Antonio, Tex. that the priorities of the Obama-Biden HUD were on positioning the Home Equity Conversion Mortgage (HECM) program for further longevity.

“We’ve reached a point in the [reverse mortgage] industry where we do need to make some changes,” Coulter said in 2012. “The HECM program is a valuable product and we’re committed, but need to make changes to ensure they’re valuable over the long term.”

The following year, one of the more influential occurrences to take place for the reverse mortgage industry came in the form of the Reverse Mortgage Stabilization Act. The law as passed established additional requirements to improve the fiscal safety and soundness of the HECM program, and opened the door to allowing the HUD secretary to make program changes via mortgagee letter.

President Obama signed the bill into law on August 9, 2013 at a ceremony attended by sponsor Reps. Denny Heck (D-Wash.) and the late Mike Fitzpatrick (R-Penn.), as well as then-HUD Secretary Shaun Donovan and NRMLA CEO and then-president Peter Bell. At the time the bill was signed, reverse mortgage lenders largely lauded the move, though with some reservations related to the full scope of its effect.

Later that same month, news emerged about HUD’s desire to consolidate the then-two concurrent HECM offerings: “HECM Standard” and “HECM Saver,” into a single, unified program. The news was made official the following month with the publication of two mortgagee letters, which also brought changes to initial mortgage insurance premiums and principal limit factors, while also introducing the financial assessment.

Biden’s 2020 platform: housing

Now, as Biden has been officially nominated by the Democratic Party to serve as its candidate for president in the upcoming election, his stated platform could give some further insight into the housing-related actions that Biden could take if elected. The majority of the Biden-Harris housing plan is focused on increasing access to affordable housing for low-income individuals, as well as an expansion of the Community Reinvestment Act (CRA).

Some of the Biden-Harris housing platform is focused on reversing policies of the Trump Administration, including the rollback of the Obama era Affirmatively Furthering Fair Housing Rule which required communities receiving certain federal funding to examine and identify housing patterns to address potentially discriminatory effects. The Trump administration suspended this rule in 2018, and Biden seeks re-implementation according to his platform.

For seniors, the Biden-Harris housing platform calls for expanded access to supportive housing and services for both the elderly and people with disabilities.

“A Biden Administration will increase the availability of supportive and accessible housing for seniors and individuals with disabilities, including through the Supportive Housing for the Elderly and Supportive Housing for Individuals with Disabilities programs,” the platform reads.

Leveraging home equity is not a component of the Biden-Harris housing platform. So far, the only 2020 presidential candidate to explicitly cite home equity — and reverse mortgages, specifically — in a political platform was Democrat Michael Bloomberg, who dropped out of the race in early March before endorsing Biden.

Older americans, investors

In its separate plan specifically for older Americans, the Biden campaign states its intent to allow more seniors to age in place by expanding access to in-home care options for Medicare and Medicaid beneficiaries.

“The Biden Plan will protect Medicaid funding and make sure the program gives those on Medicaid who need long-term care the flexibility to choose home- and community-based care,” the platform reads. Biden also intends to create tax relief to “solve the long-term care challenge,” including through the creation of a $5,000 tax credit for informal caregivers which the campaign has modeled off of legislation supported by AARP.

The Biden campaign has also proposed instituting taxes on wealthy Americans to prevent the Social Security trust fund from becoming insolvent, which current estimates say can happen as soon as 2035 and which would cause benefit payments to be reduced. Recently, Sen. Mitt Romney (R-Utah) promoted bipartisan legislation to try and address this issue.

For investors, a Biden administration is likely to bring an increase in the federal government’s regulatory posture, according to analysis by business information website Financial Planning.

“In particular, the Obama administration’s fiduciary rule could make a comeback and the SEC’s Regulation Best Interest, criticized for its broker-friendly approach, could be revised,” the site writes. “Should Trump win, advisors can anticipate a more Wall Street friendly approach to regulation for another four years.”

Additionally, changes to the 2017 Tax Cuts and Jobs Act (TCJA) signed into law by President Trump would also be likely in a Biden administration, particularly in the campaign’s stated desire to return to a top marginal tax rate of 39.6% for income over $400,000, which was the level prior to the TCJA’s passage, according to Financial Planning.

Kamala Harris: efforts as a prosecutor

Official Senate portrait of Senator Kamala Harris. U.S. Senate | CC0
Senator Kamala Harris (D-Calif.)

Vice presidential candidate Kamala Harris has not had many direct interactions with reverse mortgages during her political career, but she had a few during her time serving as a city district attorney and later as California’s state attorney general based on previous instances in which her name has appeared in coverage from RMD.

In 2009, then-San Francisco District Attorney Harris indicted former reverse mortgage broker John McTaggart for allegedly stealing $140,000 in reverse mortgage loan proceeds from an 86-year-old city resident as part of an annuity scam, which included McTaggart allegedly sending regular monthly checks to the victim to mask his activity. In January 2010, Harris successfully prosecuted McTaggart, who was sentenced to six years in prison.

As California’s attorney general, Harris allied with her counterpart in the state of Nevada in a joint investigation alliance to assist homeowners who were harmed by misconduct and fraud in the mortgage industry in the aftermath of the 2008 financial crisis. In 2016, then-Attorney General Harris also supported legislation which sought to protect widowed spouses and other heirs from mortgage foreclosures.

Harris was elected to the U.S. Senate in 2016, succeeding Barbara Boxer as California’s junior senator. She ran for the 2020 Democratic nomination for president before suspending her campaign in December 2019, and was officially announced as Biden’s running mate on August 11.

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  • “In its separate plan specifically for older Americans, the Biden campaign states its intent to allow more seniors to age in place…”

    I think with respect to reverse mortgages this would mean a rollback or work-a-round for some provisions of the RM stabilization act.

    I’ve seen a number of hecm borrowers who’ve reached the MCA with substantial equity remaining, but can’t qualify for a hecm refi under the current rules. Some can qualify for a proprietary, but at dramatically higher cost.

    “The majority of the Biden-Harris housing plan is focused on increasing access to affordable housing for low-income individuals, as well as an expansion of the Community Reinvestment Act (CRA).”

    I read this as regulatory mandate upon the lenders similar to what we saw before the 2008 crash. What will be the penalty this time if enough RMs are not being originated in “underserved” communities?

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