Respect for an older borrower’s agency begins with an understandable choice, not merely a longer list of products. HUD’s January 19, 2017 HECM final rule required lenders to explain all FHA-insured products, features and options, including those outside their own offerings. The ethical value of that design is access to information; it is not a guarantee that a particular lender will supply every option. [2017-01044]

Information also needs an accurate account of risk protections. In May 2016, HUD proposed one-percentage-point annual adjustments and five-point lifetime limits for annual adjustable HECMs, with a five-point lifetime bound for monthly adjustable loans. The January final deferred those changes. Describing a contemplated protection as already adopted would undermine the informed choice that disclosure is meant to support. [2016-11631][2017-01044]

Care for borrowers does not erase financial constraints. HUD described an existing preapproval assessment of credit history, cash flow and residual income. That process could require funds to be reserved for certain property charges. A required Life Expectancy Set Aside on a fixed-rate HECM could only be fully funded, making the reserve a substantive part of the loan arrangement rather than a reassuring label. [2017-01044]

The publication scheduled September 19, 2017 effectiveness. At this January point, the responsible reading keeps information duties, existing assessments and deferred proposals distinct. People can value both borrower autonomy and protection against foreseeable obligations without assuming that either aim has been achieved. The paired HUD records explain the framework, not measured foreclosure prevention or a consensus about its merits. [2016-11631][2017-01044]

Source documents

  1. Federal Housing Administration: Strengthening the Home Equity Conversion Mortgage Programhttps://www.govinfo.gov/content/pkg/FR-2017-01-19/html/2017-01044.htm
  2. Federal Housing Administration (FHA): Strengthening the Home Equity Conversion Mortgage Programhttps://www.govinfo.gov/content/pkg/FR-2016-05-19/html/2016-11631.htm