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BETH ZORC
ACTING GENERAL COUNSEL
AT THE NATIONAL ASSOCIATION OF REALTORS REGULATORY ISSUES FORUM
CHICAGO, IL
NOVEMBER 3rd, 2017

It's a great pleasure to be here.

I know Secretary Carson addressed many of you here today at your Midyear Legislative Meetings in Washington.

I've found that audiences tend to be somewhat less excited to hear from me, the Acting General Counsel of HUD, than from Secretary Carson, for some reason.

Nonetheless, I am happy to join you today to fill you in on some of the many developments at HUD and across the nation since you heard from the Secretary in May.

First of all, I'd like to thank the National Association of Realtors, President Brown, and Chairman of the Regulatory Issues Forum, Brian Sears, for inviting me here today.

NAR and HUD share the common goal of helping credit-qualified Americans attain the security, stability, and independence that comes with homeownership.

I know Secretary Carson is very excited to continue our work towards that goal with all of you.

I'm pleased to report that this Administration has hit the ground running at HUD.

We've built an amazing leadership team, with diverse backgrounds.

Some are new to government and some are returning.

But all are dedicated to our mission with great energy.

That's a vital quality, because there are a lot of challenges that we've had to tackle right out of the gate.

In the wake of Hurricanes Irma, Harvey, and Maria, HUD has been hard at work in the Gulf States, Puerto Rico, and the Virgin Islands.

Alongside our counterparts at FEMA and other state and local relief agencies, we are helping Americans who lost their homes to rebuild and restore their communities.

Even before the storms made landfall, the HUD team was on the ground, working to ensure affected communities would have the resources needed to rebuild.

Many HUD employees have volunteered to travel to the Gulf States to assist individuals and families in need.

However, there is much work ahead.

HUD will be coordinating closely with state and local authorities to review their plans for using Community Development Block Grant Disaster Relief funds, as they become available, in the best possible way.

We are also providing other resources for Hurricane victims, including relief for FHA insured borrowers.

We have already extended our original 90-day moratorium on foreclosures for FHA-insured properties in certain Presidentially Declared Major Disaster-affected areas.

In addition, FHA provides lenders with additional loan forbearance and modification options for borrowers in disaster affected areas.

Secretary Carson and Deputy Secretary Patenaude have committed the full support of HUD to those affected by these disasters.

While we're engaged in recovery efforts, we also have a big responsibility to those who depend on HUD all year ‘round.

So we're working on plenty of long term reforms that have been a long time coming.

One such reform, regulatory reform, has been a signature initiative of the Administration.

On January 30, 2017, ten days after Inauguration, President Trump issued Executive Order 13771, entitled "Reducing Regulation and Controlling Regulatory Costs."

This EO requires certain Federal Agencies to issue two deregulatory actions for each regulatory action.

Additionally, the incremental costs associated with regulatory actions are to be fully offset by the savings of deregulatory actions.

The President issued a second EO on regulatory reform in February.

Executive Order 13777, entitled "Enforcing the Regulatory Reform Agenda", directs each agency to establish a Regulatory Task Force to evaluate existing regulations and identify those that merit repeal, replacement, or modification.

The Regulatory Reform Task Force is led by a Regulatory Reform Officer, or RRO.

Consistent with this EO, HUD has established a Regulatory Reform Task Force, and earlier this year, the Secretary asked me to be the RRO.

This group is dedicated to streamlining, improving and updating HUD's regulations.

One of our first acts was to issue a notice in the Federal Register soliciting public comments on ways HUD could reduce burdensome regulation.

We received 299 unique comments in response to this notice, including one from the National Association of Realtors.

In the remainder of my remarks today, I will address some of the issues identified in NAR's comment letter, in particular, those concerning FHA.

FHA offers several very important programs that allow credit-worthy borrowers underserved by the private market the opportunity to buy a home.

It is, of course, important to be mindful that we must balance this goal with our fiduciary responsibility to ensure that the FHA Fund remains financially sound.

In response to our Regulatory Reform notice, NAR asked HUD to reduce costs for borrowers by lowering annual mortgage insurance premiums.

Shortly following President Trump's inauguration, one of the very first actions taken by this Administration was to suspend the planned reduction in premiums.

This step was taken so that we could analyze the impact such a reduction would have on the FHA Fund's capital ratio, which is statutorily required to remain above two percent.

This action was prudent and reasonable.

We are continuing to analyze the impact that a reduction in premiums would have had and expect to include that analysis in our Annual Report to Congress, which will be issued in mid-November.

The results of our analysis and other information contained in that report will be important factors in considering any changes to mortgage insurance premium level and structure going forward.

You have also expressed concerns with Property Assessed Clean Energy or PACE loans and their potential for negative impact on the FHA Fund.

HUD released a Mortgagee Letter in July 2016 which provided that some delinquent PACE assessments would have priority status over FHA's own interests in the event of borrower default.

Secretary Carson has expressed concern regarding the taxpayer risk created by this policy.

He is also concerned that it is not in line with policy established by the FHFA prohibiting Fannie Mae and Freddie Mac from purchasing loans with PACE liens that take precedence over the first mortgage.

We have also taken note of the fact that legislation is pending in both the House and Senate to address concerns that disclosure requirements for PACE loans are far less comprehensive than those for traditional mortgages.

Considering these factors, HUD is carefully reviewing prior program guidance.

Of course, it should not go without saying that the evaluation of these and many other FHA issues will be greatly aided by the arrival of the nominee for FHA Commissioner, Brian Montgomery.

Brian's decades of experience in the housing sector will lend remarkable value to our team.

Having served as FHA Commissioner under President George W. Bush, as well as for the first six months of the Obama Administration, Brian fully appreciates the vital and dynamic role FHA plays in the housing market.

We know his considerable expertise will play a tremendous role in the FHA program effectively serving the American people.

I thought I might close by mentioning Secretary Carson's commitment to the Administration's goal of housing finance reform.

Because of HUD's fundamental housing mission, and because our FHA mortgage insurance program and our Ginnie Mae mortgage-backed security guaranty are large and vital components of the housing finance system, HUD will be an active participant in this critical dialogue.

Of course, the details of housing finance reform have yet to be written.

But Secretary Carson believes there is a broad agreement that there is an opportunity for reform to ensure a well-functioning housing finance system for future generations that expands the role of the private sector and reduces taxpayer exposure.

We must approach these questions comprehensively to avoid unintended consequences.

Since I came aboard at HUD, I've had the great privilege to work with a brilliant and talented team, under the leadership of one of the smartest and most charismatic Secretaries HUD has ever had.

I have appreciated hearing the recommendations from the industry, including NAR, on ways we can improve how HUD works.

And as HUD's Regulatory Reform Officer, I am certain that I will continue to hear your thoughts on ways HUD can streamline our regulatory burdens to improve housing in America.

Thank you again for inviting me to speak today.