Attorney General’s Bill Vetoed, Says Reverse Mortgage Hype Is Coming

image 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.

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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.

Reverse-mortgage hype is coming — we’d better be ready

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  • You can click on the article’s link and post a comment.
    Ms. Swanson gives plenty of good stuff to rebut in the article. Hopefully, some of the comments will find there way to the MN reading public.

  • Ms. Swanson took an accurate assessment of the reverse mortgage market by a Ginnie Mae executive and made it into a “hype.”

    Let’s assume that the Ginnie Mae assessment is a “hype” (It’s not because it is common knowledge to anyone who is familiar with the rudiments of aging, demography, and housing in the US), when has “hype” become a crime in America? If “hype” is a crime, then every politician in America (including the Honorable Attorney General) should be out of business.

  • I agree with Kevin. Like most government agencies, bureaucrats think that you solve a ethics/fraud problem by making another form to sign or another regulation to implement, instead of PUTTING PEOPLE IN JAIL for their wrongful conduct. They tend to take a shotgun approach, rahter than a rifle approach.

    Wrongdoers must be punished, and there must be a mechanism that’s vigorously enforced to get the crooks out of the business.

    The current approach is a little like registering/ banning guns for law-abiding people when the criminals aren’t going to get or use “legal” guns anyway.

    Maybe we could contract with the Saudis for outsourced penal enforcement?

  • To The Financial Services Industry. While you are cutting off the hands of local politicians, the bigger threat is from the White House. The proposed Consumer Financial Protection Agency (CFPA) will not only upset you but also your own federal representatives. They are going to be even more miserable than you because they may see contributions from businesses drop precipitously. Why because, according to a representative sample article from the not-so-right leaning New York Times:

    “Administration officials would not require Congressional action and would be adopted by regulators.”

    Why send all that money to congresspeople when they have lost their power?

  • Obama wants the donations he is a Chicago Democrat machine member.This whole administration just wants to ruin our economy. They will push bad stuff hoping for pol contribuions. This will be a long 4 years but hoefully that will end the Chicago Dems future.

  • I disagree. I think this administration is like a well meaning, but inexperienced plumber, who is rushing in to try and fix problems and systems that have accumulated over a 50-year period, or more. Our house could get flooded as a result, but I don’t think they “want to ruin our economy”. It is wearing blinders to think the system doesn’t need some fixing; it’s how it is done that is the trick,

  • Critic

    I agree with you. As to the last paragraph comment. She is a typical AG and politician; she wants to become the governor. (Is that stating the obvious.) Sometimes a politician is just a politician.

  • To clarify the previous, the link in the RMD article to the Twin Cities.com indicates the article is no longer active. The article is available for purchase only.

  • The article was available yesterday (6/17/09) but I could not find it today. Yesterday I posted this comment:

    “Ms. Swanson is not comparing apples and oranges, she is making a fruit salad out of half-truths, scare tactics, unreasonable comparisons and hyperbole. The bill she supported would have done harm to seniors, not helped them. The few abusers could be dealt with with existing laws or a better thought out one with teeth that would have corralled and punished deceptive advertising.
    By putting impossible conditions on lenders (they would have needed a crystal ball to determine a seniors MOTIVES, yes motives, for doing a Reverse mortgage). I believe it is a government’s role to create a level playing field and protect its citizens from deception and fraud, not to second guess their right to participate in a commercial venture.
    Oh, I am not in the Reverse Mortgage industry, I just like my personal freedoms.”

    There were only a total of five comments to the article; I think there should have been more.

  • Something coming to the broker world in Florida might make sense…..the new model includes having ALL brokers take a new required exam, a backround check with fingerprinting, and from what I understand, each individual will be assigned a lifetime number that will follow them forever within the lending industry. This will label the bad apples, regardless of re-locating to a new state, or starting/ joining another company, etc. thoughts?

  • A statewide central registry, as we have in the securities business, could be good for tracking the movements of the miscreants (registering securities products still is state by state, and is very time consuming and expensive).
    In contrast, currently, in the insurance business, there are 50 insurance departments, and raises no small amount of money for the state treasuries. This produces a lot of extra costs and regulatory differences in the securities and insurance businesses which we all pay for with higher fees and costs.
    Florida is no paragon, at one point you had to get licensed for insurance in different counties. I am not a fan of diminished liberties and government interference, but I sometimes think things like a universal identity card and tracking (perhaps with fingerprinting) of licensed professionals (you figure out that one) are becoming necessary because no one has yet invented an anti-terrorist or an honesty pill.

  • In Illinois we have already been fingerprinted, background checked and had to pass a two hour computer exam on all mortgages not just reverses. Our licenses are good for a year and each year we must pass a CE course.I guess were ahead of the game but I know I am a professional> I get tired of politicians disparaging the reverse industry.

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