Reverse Mortgage Change

Reverse Mortgage Change. Reverse Mortgage Change. Trump’s Reforms Unlikely to Bring Short-Term Reverse Mortgage Change.

President Donald Trump’s long-predicted executive actions targeting the financial industry made a major news splash on Friday, but key players in the reverse mortgage space and beyond are still waiting to see how the president’s plans will affect lenders and borrowers.

“It’s still too early to know how this could impact our industry,” said Jenny Werwa, director of public relations for the National Reverse Mortgage Lenders Association, adding that the Washington, D.C.-based trade group was holding off on an official comment.
Reverse Mortgage change.

“It’s still too early to know how this could impact our industry,” said Jenny Werwa, director of public relations for the National Reverse Mortgage Lenders Association, adding that the Washington, D.C.-based trade group was holding off on an official comment.

But Benjamin K. Olson, a partner at the Washington, D.C. law firm of BuckleySandler, LLP and a former Consumer Financial Protection Board official, downplayed the actions’ immediate effect on the mortgage market: “I think it’s going to be unlikely that this generates dramatic change in the short term,” Olson said.

The executive order doesn’t mention the 2010 Dodd-Frank Act by name, but the president’s intention to roll back key provisions of the legislation were clear: Earlier in the day Friday, Trump had commented that his administration would be “cutting a lot out of Dodd-Frank,” and he had previously termed the bill “a disaster” in January.

The sweeping package of regulations — named after its co-sponsors, former Rep. Barney Frank of Massachusetts and former Sen. Chris Dodd of Connecticut, both Democrats — was a major legislative victory for President Obama, who made financial reform a key focus of his 2008 campaign and first term in the wake of the most recent recession. Among its provisions was the creation of the CFPB, regulations requiring banks to hold larger amounts of cash and government securities at any given time, and the institution of the “Volcker rule,” which prevents banks from making certain types of higher-risk investments.

Trump’s executive action sets out a list of his administration’s “core principles” for financial regulations, including a stated desire to avoid taxpayer-funded bailouts, a focus on stimulating economic growth, and “empowering Americans to make independent financial decisions” — a clear reference to the “fiduciary rule,” which the president addressed in a separate memo also signed Friday.

The rule, issued by the Department of Labor, would vastly expand the pool of financial advisors that are considered fiduciaries, who must meet higher ethics standards that require them to act in the best interests of their clients and provide clear information about all fees. In his memo, Trump said the regulation, slated to go into full effect in April, “may not be consistent with the policies of [his] administration,” and directed the Labor Department to study whether its implementation would prevent access to certain retirement products and lead to a spike in litigation regarding retirement investments.

It’s important to note that Trump’s actions don’t actually reverse any existing rules or regulations; they merely call on various agencies to examine their potential effects and report back to the president with any findings. Olson, who served as the deputy assistant director for the CFPB’s Office of Regulations, said that while the Dodd-Frank rollback could have a significant impact on other pieces of the financial landscape, many of the key mortgage-related provisions of the CFPB regulations are enshrined in federal statues, and no radical easing of regulatory burdens could be made without an act of Congress.

Appearing on CNBC’s “Squawk Box,” Consumer Bankers Association president Richard Hunt welcomed Trump’s call to review Dodd-Frank, casting the legislation as an artifact from a previous era.

“Our banking system in the United States is night-and-day different than it was before 2010. We’re much better capitalized, much better leveraged,” Hunt said, claiming that U.S. banks have enough capital to withstand two to three further financial crises.

“There needs to be significant changes, no doubt about it,” Hunt said. “We need to make sure people can start borrowing again like they once did.”

Rep. Maxine Waters, meanwhile, attacked the measures in a statement released shortly after Trump signed the orders on Friday.

“Why doesn’t the President explain to the people of Ohio, Pennsylvania, Michigan, and Wisconsin how delaying and repealing rules that protect seniors’ hard-earned savings from unscrupulous financial advisers is a good thing?” the California Democrat asked rhetorically, further stating that Trump’s actions would “send us right back to the dark days of 2008.”

Written by Alex SpankoPublished inCFPB, Legislation, News, NRMLA, Reverse Mortgage