The Bane of The HECM Reverse Mortgage: More Onerous Regulations

The collapse of the U.S. Economy has left an indelible lesson for regulators to ponder. The fact that the financial industry and the mortgage industry cannot be trusted to police themselves should  not be forgotten any time soon. 

 For years the Federal Reserve, under Chairman Greenspan, championed  the broader  approach that markets are self correcting entities and do not need governmental interference. This approach was built upon the notion that unbridled  greed can be tamed and directed toward the greater good of  ever expanding markets. When this model collapsed, the mirage of self correcting markets revealed  the stark delusional sophistry  of an institution that was suppose to know better.

Many believe that Congress will not be fooled again. I beg to differ. The plutocracy that is endemic in Washington will make sure that certain laws get passed; regulations get promulgated. But by Washington standards, it will be business as usual.   The reform will  not affect any vested interest.  It  will only affect the "little guy".

In this case the “little guy” means the  HECM reverse mortgage industry.  In comparison to the mortgage industry as a whole, the HECM reverse mortgage industry volume represents but a pin head of closed loans. Therefore the frustration of the big boys (Fannie, HUD, Federal Trade Commission, Comptroller of the Currency, etc) will come down hard on our burgeoning industry.

A sea of laws, rules and regulations with their galaxy of unintended consequences will wind up hurting those who are the subject of this protection. Demagogic politicians will continue their clarion call for  “morenessness”- more rules, more laws, more regulations, more punishment. They will push this agenda until the mix of perfect laws chokes the industry into submission.  As long as those policy makers substitute their judgments for the decisions that the industry should be making, it will severely limit the amount of individuals that will be helped.

The next post will discuss the HECM reverse mortgage industry’s usurpation of the use of the power of attorney.

Comments

[Reverse Mortgage Information]

Hi

great information