The U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) are working to coordinate with the White House and the U.S. Department of the Treasury to determine how borrowers of Home Equity Conversion Mortgages (HECMs) affected by the COVID-19 coronavirus pandemic can have assistance provided to them through the Homeowners Assistance Fund, a channel provided by the passage of the American Rescue Plan Act of 2021. This is according to FHA Deputy Assistant Secretary (DAS) for Single Family Housing Julienne Y. Joseph.
Speaking at the National Reverse Mortgage Lenders Association (NRMLA) Virtual Summer Meeting this month, DAS Joseph described how reverse mortgage borrowers may be able to access some of the allocated funds going forward, an intent already described by officials in the Joe Biden administration just prior to the passage of the sweeping stimulus bill designed to provide relief to Americans still struggling with the economic impacts of the ongoing pandemic.
Seniors as part of the American Rescue Plan
The legislation contains $10 billion to create a Homeowners Assistance Fund to be distributed directly to states, tribal lands and other territories to provide assistance to people struggling with housing costs. This Fund can be applied to some of the primary fees that HECM borrowers are required to keep up with, as previously detailed for RMD by a Biden administration official.
The Treasury Department and HUD consider seniors to be among vulnerable homeowners the Fund is designed to assist, Joseph explained.
“HUD is actively involved in working with the Department of the Treasury and the implementation of President Biden’s $9.96 billion dollar American Rescue Plan […] to provide relief for our country’s most vulnerable homeowners, which includes our seniors,” she explained. “I’m also heavily engaged in providing as much relief as possible under our authority, we’re really trying to do that. [With] the bandwidth and the capacity that we have, we really want to make sure that we’re able to assist those borrowers who are really struggling right now.”
Part of the process for developing a more focused response for seniors broadly and HECM borrowers specifically has been information compiled about such situated homeowners by NRMLA itself, which the association has made voluntarily available to the appropriate departments in the federal government, Joseph said. This will be one of the tools that HUD and FHA will leverage in order to develop a focused response, and distribute that information accordingly.
“We’re grateful for the voluntary information compiled by NRMLA on COVID,” Joseph explained. “It’s been invaluable to us, and we’re going to utilize that information to compile statistics that were provided to the Treasury [Department]. And in turn, we’re going to distribute those to the States. It’s our hope that the states use that information to better design programs to account for the distressed HECM borrowers. That’s our plan.”
On the information that the association has provided to FHA, NRMLA President Steve Irwin described what was shared in an interview with RMD.
“NRMLA has been coordinating and collaborating with a variety of consumer advocacy groups to size pandemic-related defaults, and to ensure relief through the Homeowners Assistance Fund program for HECM borrowers who may have found themselves in default,” Irwin said.
Advice to the reverse mortgage industry
When NRMLA President Steve Irwin asked DAS Joseph what the association, its membership or the reverse mortgage industry can do to better facilitate collaboration between product stakeholders and the policy personnel who oversee the HECM program, Joseph offered encouraging and pragmatic perspective about the collaborative opportunities she foresees between government and the reverse mortgage industry.
“Continue doing what you’re doing, because [reverse mortgage professionals] are the educational resource,” she said. “Being a policy advocate, the information and the perspective that you all offer is unlike any other type of originator. […] Your voices are extremely powerful. You all serve a niche demographic. There are people who rely on you. And though we as policymakers have a responsibility for doing what we feel is best for the industry, you […] have that real-life practitioner perspective.”
Joseph, who herself worked at one time as a reverse mortgage originator, describes having an understanding of the kinds of perspectives that industry participants can help provide to those making the policy that the industry must abide by. Because of that perspective, it is helpful for HUD and FHA to know how originators and other stakeholders honestly feel about government policies toward the HECM program and whether or not they are effective, she explained.
“My suggestion to you is [continue] telling us what works and what doesn’t,” she said. “That is the most impactful [for us]. At the end of the day, we can have theories and proposals, but if they are not able to be implemented or if they’re not successful and [fail to] breed positive results, what good is the policy if it’s not enforceable?”
Feedback which is constructive continues to be an efficient way for FHA to engage with the reverse mortgage industry, since there is only so much that theorizing about a policy and its potential impacts can provide to the people actually formulating those directives, Joseph said. An ongoing dialogue is mutually beneficial.
“Continue giving us that constructive feedback that says, ‘this is what you got wrong, this is what you did right,’” she said. “’Don’t take a hatchet, take a scalpel. And these are the things that need to be adjusted, in order to be able to help the communities that we want to serve.’ So that would be my suggestion.”
Citing some of her time working at the Mortgage Bankers Association (MBA), Joseph explained that the voice of actual originators is one that should not be discounted by those creating policy, she said.
“Even from my time at MBA, the one thing that I can speak to is just the power of the voices of the originators,” she said. “There’s nothing more powerful than that, because, again, you are the direct line to the consumer. So my suggestion to you would be to continue to share with us, and to criticize us. Telling us what we want to hear isn’t necessarily helpful. Continue to provide us with that real life feedback to make us better.”