NOT BATTING 1.000

Over the last few months, I have posted a fair share of entries on the endless stream of regulations that Washington’s administrative agencies tend to promulgate, and the high degree of deference they  usually receive from the courts.  But even the mighty Administrative State does not bat 1.000.

In a case already widely commented on in legal circles, a HUD regulation on reverse mortgages was recently struck down.  A reverse mortgage happens when an elderly homeowner receives a certain amount of money in exchange for giving the bank a mortgage on their homes.  That “loan” is typically satisfied out of the estate after the homeowner dies, including the sale of the property.

Under the HUD regulation, lenders (and HUD itself as a guarantor) had been claiming the houses belonging to now deceased borrowers even though their spouses still lived in the house, if the spouse was neither on the mortgage nor on the deed.  The spouses argued that the law under which HUD operated did not allow the Agency to decree such a rule. The Court agreed.

Most regulations hold up to scrutiny, but not all.  Navigating the regulatory waters requires knowing how to sail around most obstacles, of course, but also which ones may be vulnerable.