While the sheer amount of cacophonous noise has enveloped the American political landscape even more than usual as citizens prepare to cast – or drop off – their ballots, the reverse mortgage industry will take notice.
Obviously whomever is the victor in this year’s presidential election will have the power to shape the industry for years to come, but while candidates for many different offices up and down the ballot may be embroiled in sometimes bitter partisan battles, a strange source of compromise exists: the reverse mortgage industry.
An encouraging House subcommittee hearing
Just over a year ago, this was put on display very plainly. In a hearing for the U.S. House of Representatives Housing Finance Subcommittee on Housing, Community Development, and Insurance, lawmakers on Capitol Hill had the opportunity to ask direct questions about whether or not the federally-sponsored Home Equity Conversion Mortgage (HECM) program had value for American seniors, and for taxpayers.
What emerged then was a surprising show of conciliation and compromise between normally confrontational political adversaries. Subcommittee ranking member Rep. Lance Gooden (R-Tex.) is one such example, giving a measure of public support to the reverse mortgage program that is not often seen among national politicians.
“I’d like to take a moment to acknowledge the importance of reverse mortgages in general, and specifically HUD’s Home Equity Conversion Mortgage program for our aging population,” Gooden said in his opening statement at the September 2019 hearing. “The HECM program was created to allow seniors to access their real estate equity, while making it possible to stay in their homes. Even today, its primary goal is guided by the good intention of allowing seniors to age in place, and protecting a post-retirement lifestyle without the need of selling their home.”
Similarly, Democrats in the House majority offered similar statements of understanding about the value that the HECM program provides. Rep. Maxine Waters (D-Calif.), known in political circles for being something of a liberal firebrand in the already contentious House chamber, described at the hearing her own journey of understanding regarding reverse mortgages.
“There have been years where I have been concerned about the [reverse mortgage] program, and wondering whether or not it was doing what it was supposed to do,” Waters said at the time. “And again, let me reiterate that I do recognize that it has value that must be protected, and value that must be extended so that we make sure we’re providing the kind of safety and security that our seniors need and deserve.”
The posture of the reverse mortgage industry itself also plays a central role in the amenability that politicians of both parties have toward the program.
“We’ve come a long way, and we’ve come that long way I think because more broadly, people recognize its value in part due to some of the changes that we’ve made, and in part due to [the industry’s] willingness to advocate for it and propose additional changes,” said Rep. Denny Heck (D-Wash.), who crafted a piece of reverse mortgage legislation at the time but is now competing this week for the position of lieutenant governor in Washington state.
A unique public-private partnership: best of both worlds?
On a very basic level of political analysis, Republicans are skeptical of government relief programs if there are competing activities in the free market that can accomplish the same goals for American consumers, without costing money to taxpayers. Democrats, on the other hand, are always wary of the market’s participation in financial relief because of the potential that exists for bad actors to take advantage of consumers for the sake of profit.
The reverse mortgage program as sponsored by the government is a very unique public-private partnership, which exists as a way to offer seniors additional options in enhancing their cash flow from market participants, while also retaining sponsorship by the federal government when a senior borrower gets a HECM loan, which most reverse mortgage borrowers are getting. It takes from both sides’ general philosophies when it comes to consumer protection, acting as something of a compromise between the partisan divide.
The idea of the public-private partnership and compromise between those two predominant, basic ideologies is observed on a regular basis by Steve Irwin, president of the National Reverse Mortgage Lenders Association (NRMLA). NRMLA often interacts with the government at multiple levels, and since the core HECM reverse mortgage product is one that aims to provide relief to the very real problems facing American retirement, Democrats and Republicans alike can find things to agree on about the reverse mortgage program.
Reverse mortgages: something to like for both parties
“The looming financial challenges of an aging population is certainly front-of-mind for the candidates running for the majority of offices,” Irwin told RMD at HEQ: The Future of Home Equity in Retirement. “I think you will find that both parties’ platforms speak to retirement and retirement security, and it’s part of what our government relations effort [entails] is to inform and educate how the responsible use of home equity for the right person at the right time under the right circumstances can mitigate the financial risks of retiring today.”
That reality doesn’t really make reverse mortgages a “hot-button” political issue which engenders an abundance of fierce partisan debate, but the issues of retirement can at least begin to be addressed by the moderate approach to market activity and government action that the reverse mortgage program provides.
“I would posit that through the HECM program, HUD is offering a really unique public policy solution to the looming financial challenges of America’s aging population,” Irwin said at HEQ.
HECM will get attention from incoming administration
However the election goes, there will be demonstrable consequences for the HECM program. If the president wins a second term, we may see some additional movement on proposals that the administration made about shoring up what they perceive to be deficiencies, and HUD and FHA personnel – like FHA Commissioner Dana Wade, or Assistant HUD Secretary Brian Mongomery – will be able to continue building on the work they’ve done to stabilize the HECM program inside the Mutual Mortgage Insurance Fund (MMIF).
If the former vice president wins, then he will likely want to pursue some major changes to the policies which directly affect American seniors, so change on the front of the reverse mortgage program would be likely from the top down. HUD Secretary Dr. Ben Carson, Commissioner Wade and Assistant Secretary Montgomery would most likely not remain in their positions, and HECM will inevitably be taken up by leaders with different priorities than the incumbents.
That shouldn’t diminish the fact that Democrats and Republicans can find something to agree on about the HECM program, however. So, while we may all be tired of the seemingly endless election cycle that is about to reach its culmination, those in the reverse mortgage industry should take at least a little bit of solace in the fact that the business – and its driving philosophies – can be a source of something that seems increasingly scarcer in modern political discourse: bipartisan compromise.