The estate tax is not the issue. The estates of very few HECM borrowers will ever be subject to this tax; its current credit structure prevents this. No, the real reason is the apparent need for these representatives to show why they need to be reelected; so they grandstand and find an easy target.

It is hardly reasonable for the head of an agency with such grave responsibilities to be asked to write specific regulations for such a minuscule portion of the financial markets in the first twelve months of operations. In fact it is a totally irresponsible demand wasting his time on a program that is doing just fine.

Let's hope the Senate will do the right thing. It is time we begin to constructively respond to the bad press that has unloaded in waves on the industry. Reverse mortgages are misunderstood and make an easy target not just for lawmakers but even more importantly, the press.

Say it ain't so.

On October 1, 2009, we saw principal limits reduced due to a squabble in the Administration in large part because of the ability of the OMB to influence the HECM credit subsidy request.

For years, HUD used the approximate 4% rise in home values to compute the credit subsidy for the HECM budget request. Then Congress wanted them to seek advice from real estate consultants about a more appropriate home appreciation rate. HUD did as requested and the rate they obtained produced a slightly lower negative credit subsidy so again there was no need for a subsidy. This fiscal year due to HERA, HECMs fall into a new budget category with the opportunity for the OMB to put in its two cents. So some economist decided that even the Congressional approach needed adjustment. Well you know the result, a 10% reduction to principal limits.

Now we have a super duper government regulator who is required to write regulations for the reverse mortgage industry whether that person determines that the regulations are necessary or not. What if that person decides to reduce principal limits still further because if that was done, the potential losses to seniors for the mischievous actions of originators would be less tempting and less detrimental to seniors and it would also reduce the risk of loss to HUD still further? Or this individual decides that there should be not just a set aside but escrow accounts for taxes and insurance equal to approximately five years of payments?

So what Congress is asking this regulator (who will be overburdened with getting the financial markets and financial service industries back together and under proper regulation and who probably is very unfamiliar with HECMs) to do is within one year write new reverse mortgage regulations. While I trust HUD, will this new regulator listen to any advice HUD might give? Normally, the overseeing regulator would be authorized to direct HUD to write regulations with the new regulator approving them. Congress is doing something much different.

In one culture the symbol used for war is two women in a kitchen. I really have a hard time believing that merely adding more regulators and more regulations will achieve anything other than “ruin the broth.” I hope you are right and my prediction is wrong,– IF this bill or something similar to it ever becomes law.

Now our legislators think they understand their obligations to seniors by continually destroying a program that was a seniors salvation.

Something that was so simple and pure, something that gave our seniors hope has and is turning out to be a nightmare for them and us.All we are trying to do is a good job, enjoy our profession as we help seniors live a better life. They will not let us do the job we are capable of doing.

When will it end? Most of us in the reverse mortgage industry have more passion for our seniors and are more protective of them than any politician ever thought of. We are the one's have the concern for seniors, we want to see a senior live a life of quality. Who do they think they are and what do they think they are doing. How did we ever get things turned around so badly?

John A. Smaldone

For our Spanish speaking bretheren I hereby dub The_Critic as idiota de la semana!

Feliz Navidad!