Congress Passes Law Modernizing Retirement System One of the few bipartisan issues Congress can agree on is improving the U.S. retirement system. On December 30, the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act—a bill featuring more than 100 provisions aimed at modernizing and improving key aspects of the U.S. retirement planning system—was signed into law by President Joe Biden. SECURE 2.0 builds on other improvements signed into law during the Trump administration. Among the key takeaways, SECURE 2.0: • Incentivizes small businesses to offer employee retirement plans by making the setup process easier and less costly; • Raises the age consumers must start taking money out of their retirement accounts from age 72 to 73 beginning January 1, 2023, and further increases it to age 75 beginning January 1, 2033; and • Creates a national lost-and-found registry and system for retirement account identification. Americans can work for a lot of companies over a span of 40 to 50 years. People who are approaching retirement have potentially significant wealth spread around multiple recordkeeping platforms from prior employers. This system will help identify every penny consumers are entitled to. Jamie Hopkins, one of the top retirement experts in the United States and a former NRMLA speaker, published a video summary you should check out at https://youtu.be/6yz9WUTmPuc. Urban Institute Offers Solutions for Improving HECM Program We were all saddened by Reverse Mortgage Funding’s bankruptcy this past fall. In late January, the Urban Institute published an op-ed that proposes policy changes to the HECM program to guarantee its long-term financial stability and to protect other companies from meeting the same fate. The op-ed explains how Ginnie Mae requires issuers of HECM mortgage-backed securities (HMBS) to buy out loans from a HMBS pool once they reach 98 percent of the maximum claim amount. Issuers assign eligible loans to the Federal Housing Administration (FHA), which takes over all financial responsibilities for the loans and reimburses the lender for the buyouts. The op-ed authors—housing experts Jim Parrott and Laurie Goodman and former Ginnie Mae President Ted Tozer—highlight that “the challenge lies not with the assignable loans but with the one in five loans that are not assignable. FHA will not accept the assignment of any loan with delinquent taxes or insurance payments, forcing the servicer to sort through and resolve any outstanding borrower obligations first.” It can take months and years to bring a loan current to the point where it’s assignable while the costs for holding these loans on the issuer’s balance sheet keep adding up. In other words, lenders with sizable portfolios of seasoned loans that are approaching 98 percent of the maximum claim amount face tremendous liquidity challenges, say the authors. “The most effective step policymakers could take to address the problem is for the FHA to accept the assignment of all loans automatically upon buyout,” says the op-ed. “This would remove the prohibitive costs of holding nonassignable loans and reduce the costs of holding assignable ones by reducing the time it takes to be reimbursed.” In addition, allowing HECM servicers to continue servicing loans once they have been assigned “would prevent the costly and cumbersome transfer process and leave the loan in the hands of those better equipped to service them, reducing costs to the servicer and the FHA alike.” These proposals align with policies that NRMLA has been advocating for. You can read the op-ed at https://bit.ly/3XI1IqR. NRMLA Comments on Appraisal Reconsideration Proposal On January 12, the Federal Housing Administration (FHA) announced plans to create a process that people seeking FHA financing can use to request a review of their appraisal if they believe the results may have been skewed by racial bias. Hey, Members Hey, Members continued on page 10 REVERSE MORTGAGE / MAY–JUNE 2023 9
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