The reverse mortgage industry let out a sigh of relief when Minnesota’s Governor vetoed a bill which would’ve hurt the reverse mortgage industry and seniors living in the state. The person who spear headed the introduction of SF 489 was Minnesota’s Attorney General Lori Swanson.
Ms. Swanson was not happy that the bill was vetoed and wrote an editorial piece for TwinCities.com. In Reverse-mortgage hype is coming — we’d better be ready, she writes, “With the chill in the real estate finance market, some of the same lenders and brokers who once sold toxic subprime mortgages are now aggressively pitching reverse mortgages to our senior citizens.”
Swanson adds that federal policy makers have taken action in recent years to “push” the sale of reverse mortgages. Her evidence is that last year Ginnie Mae began developing a secondary market for reverse mortgages and refers to a speech given by one of its executives at a conference.
Her reasoning for drafting the bill was in reaction to what happed in the mortgage industry over the last year. She fears that, “Bad reverse mortgage lending practices will bring catastrophe to the individual senior citizens who deserve better than to have their nest-eggs pilfered by high-pressure sales tactics.”
She adds, “the bill is measured in approach and it does not interfere with a healthy, productive free market. It would, however, protect senior citizens from fraud and abuse.”
Ms. Swanson, all of us in the industry want to protect seniors as well, but calling your bill a “measured” approach just isn’t true. When you state that the bill doesn’t interfere with a healthy, productive free market… you’re wrong.
If passed, the bill would’ve driven up the costs of the loan for all seniors and possibly driven lenders to stop offering reverse mortgages in Minnesota. How you missed this is beyond me, but luckily, Governor Pawlenty vetoed the bill and now you can take the time to learn about reverse mortgages and do what you originally set out to do… protect seniors.