With Washington Still Busy, Major Reverse Mortgage Movement Remains Unlikely

While signs of improvement and recovery from the worst of the COVID-19 coronavirus pandemic are starting to feature more prominently across the United States, federal politicians in Washington, D.C. are consumed with a raft of proposed legislation aimed at strengthening the post-pandemic recovery period along with competing ideas between the Democratic and Republican sides of the aisle in Congress.

In addition, a surprising turn of events in November placed the House of Representatives, Senate and White House effectively under the control of Democrats, changing parts of the legislative equation with respect to the scale and scope of proposed programs, which could mean that once again important legislative issues related to the reverse mortgage program could fall by the wayside.

This is according to a panel discussion on 2021 legislative priorities in Congress which took place at the National Reverse Mortgage Lenders Association (NRMLA) Virtual Policy Conference recently.

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How dynamics have changed

At the NRMLA Virtual Annual Meeting just a few weeks after the general election in late 2020, Scott Olson with Olson Advocacy based in Arlington, Va. – a lobbyist who works on behalf of NRMLA – described how Democrats had an “uphill climb” when it came to winning two outstanding Senate seats in Georgia in a special election slated to take place in January, 2021. Olson was well within reason to assess the race in this way, since Georgia had not had a Democratic Senator since 2005 when Sen. Zell Miller – who himself primarily supported Republicans at the end of his career – retired from his seat.

However, the special election turned out differently as both Democrats – Rev. Raphael Warnock and Jon Ossoff, respectively – defeated the Republican incumbents and placed the Senate in even control between Democrats and Republicans at 50 seats each. In the event of a tie during a vote on the Senate floor, Democratic Vice President Kamala Harris would be called upon to break the tie likely in the favor of Democrats, effectively giving the chamber Democratic control for the first time since 2015.

The results in Georgia are just one component of conventional political wisdom that seems to have gone out the proverbial door in light of the COVID-19 crisis, Olson says.

“Obviously, the COVID crisis and the change in administrations has slowed things down considerably,” he said at the NRMLA Policy Conference. “Normally the State of Union would be in January. This year, it’s in April. Normally a full budget would have been introduced already, and the House Appropriations Committee would have had extensive hearings already and be marking up 2022 spending bills in the next few weeks. Instead, this process is set back at least a month or two. But that doesn’t mean that big things aren’t happening.”

Because Democrats have gained control in both Congressional chambers as well as the White House, President Joe Biden and Democrats in Congress have aggressively pursued relief legislation – such as the American Rescue Plan Act – as it now moves on to provide legislation for infrastructure spending and a change in income tax brackets on wealthy Americans to offset the costs of such sweeping plans.

What this could mean for reverse mortgages

In terms of what all this movement could mean for mortgages more broadly and reverse mortgages specifically, once again it comes down to a question of political bandwidth. At a similar presentation at the NRMLA Annual Meeting & Expo held in Nashville, Tenn. at the end of 2019, industry experts posited that the then-forthcoming presidential election and the resulting political gridlock would push mortgage-related issues to the side.

It was difficult to predict that a pandemic would come to America’s shores, or how debilitating the COVID-19 coronavirus pandemic would be for the country as a whole back then, but the combined pandemic and polarized political posture leading into the election meant that gridlock extended into and beyond the electoral contest. Since pandemic issues are starting to ease up but still largely remain, mortgages are likely once again to take a backseat, including reverse mortgages, Olson explains. This is on top of issues related to the hierarchy of the government’s housing sector.

“Staffing at HUD and FHA has been somewhat slow,” Olson says. “We don’t even have a nominee for FHA Commissioner or for president of Ginnie Mae, much less a confirmed person for those positions. So, the failure to have a leadership team fully in place quickly, inevitably makes it harder to see quick and decisive action [from] federal agencies on key issues. Turning to Congress, we’ll be watching the authorizing committees, as always: House Financial Services and Senate Banking, watching them closely.”

Because of the persistence of pandemic-related issues being compounded by the lack of confirmed leadership at HUD, FHA and elsewhere, having active discussions take place surrounding mortgage-related issues becomes more difficult than would normally be the case.

“It’s harder for the committees – particularly the authorizing committees like Senate Banking and House Financial Services – to pursue the normal rigorous regime of hearings on a broad range of topics, and then moving legislation through individual bills, which then in turn makes it less likely that anytime soon we will see action on major programmatic changes in these housing programs,” Olson explains. “And then finally, in the Appropriations Committee – which we have to pay attention to because we need their annual authorization to do new loans for HECM each year as part of the spending bills that they fund – the process, as I mentioned, has been delayed, which makes it a little more likely to wind up and sort of go on autopilot.”

Additionally, the focus on spending initiatives will naturally be on the larger proposed legislation emanating from the White House to accomplish its goals related to infrastructure spending and tax changes, meaning there will be less room to scrutinize appropriations bills, he explains.

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