Senate Hearing Examines Reverse Mortgage Industry Problems and Solutions

Senator Claire McCaskill held a Special Committee on Aging Field Hearing this week to examine reverse mortgage industry problems and possible solutions.  McCaskill feels that while this can be a useful tool for some, many elderly homeowners are prime targets for predatory lending schemes in a rapidly growing industry said a press statement.

During her speech, she expressed her concerns about lax oversight that is leaving seniors vulnerable to predatory practices leading to fraud and victimization.  “Not only are seniors the victims of reverse mortgage fraud, but taxpayers are also, because taxpayers insure the mortgages. I am deeply concerned about these issues,” said McCaskill.

During her opening statement she said:


I am pleased to have with us today, Daniel Claggett from the National Consumers Law Center, who is shortly will release a report that documents many Reverse Mortgage abuses and warns seniors of scams to avoid. I applaud the center for its important work on behalf of our seniors and look forward to the report.

After reading Claggett’s prepared statement, nothing he says documents specific events of reverse mortgage abuse.  Calggett does say that there is an urgent need for more resources at the federal and state level to protect consumers from reverse mortgage abuse, but he doesn’t mention any actual cases.

The National Consumer Law Center will be releasing a report in the coming weeks
that will detail needed protections and improvements in the reverse mortgage market. These recommendations will include:

  • Strengthening borrower counseling, which to date remains inconsistent and
  • Banning yield spread premiums, which incent brokers to make loans more
    profitable for lenders and investors at the expense of borrowers.
  • Regulating proprietary reverse mortgages
  • Improving data collection on reverse mortgages and other equity conversion
    products that are not currently reportable under the Home Mortgage Disclosure Act.

NRMLA’s Peter Bell took part in the hearing and I thought his prepared statement did a great job addressing McCaskill’s concerns, especially regarding how reverse mortgages can potentially be a source of problems for seniors.

Comptroller Dugan, Inspector General Donohue and others have all pointed out that seniors are vulnerable, that scams and fraud are frequently perpetrated against older folks and that reverse mortgages can potentially be a source of problems. However, no one has identified any incidence of widespread malfeasance specifically in reverse mortgage cases. In fact, there’s been virtually very little.

We have been polling state attorneys general offices, bank regulators and FTC and found the incidence of complaints about reverse mortgage lenders to be minimal or non-existent. We received a similar response to an inquiry to the Conference of State Banking Supervisors. Several weeks back, I had the opportunity to address a conference of the chief consumer complaint officers from all of the federal bank regulatory agencies, including the FRB, OCC, OTS and FDIC, as well as several state regulators, hosted by the Federal Reserve Bank of Kansas City. When asked during a panel discussion, the representative of each agency reported that they had few, if any, complaints about reverse mortgages.

I am not denying that there are entrants to the reverse mortgage business who’d we all be better off without. Every business has its share. But, by and large, there is a community of properly-motivated, responsible companies making reverse mortgages available across the country. Servicing seniors is their priority. Those are the companies that consumers should be drawn to.

At the same time, we must recognize that once a senior has gotten a reverse mortgage, no matter how protected she or he might have been during the loan origination process, there is now access to what could be a substantial amount of money – potentially attracting others looking to swindle the homeowner. These are societal problems; they’re not reverse mortgage problems. Laws are in place to protect seniors from elder financial abuse. We must all work together to enforce the laws, catch and convict any culprits who take advantage of seniors.

You can see all of the hearing documents here.

Join the Conversation (0)

see all

This is a professional community. Please use discretion when posting a comment.

  • I'm really miffed. I tried to wade through the loooooong opening statements in this hearing. That's not why I am miffed, however, it's because you guys never told me what I found in McCasskill's statement, to wit:
    “Let me explain: like the subprime market, lenders and originators in the reverse mortgage market reap large commissions but face very little risk while writing these mortgages.”
    Here that “reapers”.
    Maybe someone should write and tell her how you are helping the economy by spending the reapages? on fancy cars and such.
    Finally, all those large commissions probably beat he dough some politicians squirrel away in their office freezer boxes; so be proud, they aren't helping the economy (hear that Sen. Dodd).

    • Unfortunately, Senator McCaskill's perception of the reverse mortgage market is less than realistic. As you can see by reading the testimony of those who actually took the time to research the extent of unethical business practices perpetrated on seniors in this industry, Senator McCaskill's claims cannot be taken wholly at face value.

      That being said, I encourage you to seek out real facts regarding the issue about which you are concerned – namely, the commissions received by those in the reverse mortgage industry. I think that you will find your anger greatly dissipated. Two facts that you may find interesting are:

      1) HUD sets the maximum origination fee at 2% and disallows the junk fees that are seen on other mortgage products. If you compare a HUD settlement statement from a conventional loan product with a HUD settlement statement from a reverse mortgage, you will find that the total amount of the origination fees does not differ as drastically as you might suppose – if at all.

      2) The specific cost that causes the total closing costs on these loans to be higher than on conventional mortgages is NOT the amount charged by the lender, but is the premium that is paid to HUD in order for them to insure the loan.

      In summary, the amount of money paid to the originator of a reverse mortgage loan (which is who Senator McCaskill claims receives such inordinately high commissions) is directly in line with the amount of money paid to the originator of a conventional loan.

      • Whoops! This is what happens when you don't proof read… Correction: HUD sets the maximum origination fee to the LESSOR of 2% or $6k and disallows junk fees, etc, etc. I forgot to mention the dollar amount cap.

      • Tobkin,

        You came close.

        The maximum HECM origination fee that a lender can charge is the greater of 1) $2,500 or 2) 2% on the first $200,000 of the maximum claim amount (the lesser of the value of the home or lending limit, now $625,500) and 1% of the maximum claim amount above $200,000; however, in no case will a lender be permitted to charge more than $6,000 as an origination fee on a HECM.

      • Thank you for clarifying some of the additional complexities of the HECM origination fee guidelines. I was afraid that an overload of details might overshadow my point, which is why I chose to provide a simpler summary. 🙂

        In actuality, the guidelines are slightly more complex than described even in the preceding clarification. For anyone who would like more explicit details on the guidelines for HECM origination fees, please review:

      • Tobkin,

        While it is good you point readers to the actual Mortgagee Letter, I do not believe that my explanation results in any different amounts. Please clarify if I am wrong.

        Although it should make no difference in the computation, please remember the current lending limit is $625,500 not $417,000 as shown in ML 2008-34.

      • Oh, not at all! I'm sorry if that is what I appeared to have implied. I just know that there are people who like to have as much information as is available or who like to have something more than someone else's word to go on. So I thought I'd provide a resource that I had readily available.

        Again, I apologize if my comments appeared to be criticizing your information!

  • I simply don't buy the fact that seniors are stupidly waiting to be taken advantage of. Rather, this product is the LAST product that you can get seniors to simply “sign up' for,……seniors are wary, smart, and question everything. For those of us who consider themselves ethical, I ask you – even if you were trying to get an app signed for the wrong reasons, how many of your past customers were that “easy”??!?!?!

    I give great kudos for pointing out that there is simply no data to support these claims and expectations of frauadulent activity…..

  • What “Large” commissions–am I missing something? We have just taken a commission cut–thanks to AARP's input! Some of these politicians really should do their homework before they speak! They never have the facts & just want to “stoke” a non-existent fire with their inaccuracies! Nothing more than a power grab!

  • Once again, people who know nothing about the product out there complaining about us and all the money that we make. I won't deny it, i h ave earned a very good living while offering Reverse Mortgages. When I average out the hours vs. earned dollars, I am usually at the same pay level as a good administrative assistant. I do this because I love the product and helping the seniors. I work very hard for my money,and serve my clients well, not just until the loan is closed, but until it is over. This is the majority of the LOs that I know that have dedicated themselves to this product. I just wish the real facts were out there!

  • orignators took their hair cut and have the commissions capped at 6k. Maybe govenment should give the example and protect the seniors by capping MIP at the same.

    • Matt,

      Unfortunately if the MIP were capped at $6K, there would be no HECM program. Why we were not permitted to keep the cap at $7,255.80, who knows? It is as though AARP and Congress do not believe that there are no increased costs to business. I guess money is not the only reason we are in this business. Maybe someone should investigate why we are.

  • I thought that Peter Bell's comments were spot on…

    What we are seeing is typical political posturing. It's more beneficial for the politician to say “I have been championing the cause of seniors and have worked tirelessly for years to protect them” than to worry about silly facts.

    I know I'm not blowing anyone's mind away with that previous comment, but if you boil it down to the basics, that is what McCaskill and others are doing; building up fodder for their next re-election campaign.

  • I agree with everything Interested wrote. Senator McCaskill is like so many other policy makers in that their basic operating philosophy is, “Please do not confuse me with the facts”. I have to beleive that Peter and other NRMLA staff members have provided McCaskill a plethora of information, data, testimoniials from satisfied reverse mortage borrowers, and so on, but she has ignored it all. McCaskill is guilty of sensationalizing misinformation, much like Schumer did with Indy Mac Bank. The only problem is that much like Schumer, McCaskill has the power to do a lot of damage to a wonderful product.

  • The big fees being earned?? Funny that the top lenders in this industry are at break-even or experiencing losses. HUD knows this because they require yearly audited financials.

    If the fees were so great the business would be profitable.

    • Are you saying Wells Fargo, B of A, and other major lenders, submit separate audited financial statements on their HECM operations only? Because if not, I do not know how HUD would have access to such data.

  • >>Not only are seniors the victims of reverse mortgage fraud, but taxpayers are also, because taxpayers insure the mortgages.

    Last I heard, it was the senior homeowners themselves paying the insurance premiums – not taxpayers.

    • rainmand,

      You are right if the program really ends up paying for itself. However, if the HECM program eventually ends up as a permanent and net subsidy, taxpayers will be paying for it. And ultimately in any scenario, taxpayers are the insurers of last resort. Some claim it is that way right now.

  • Reverse colleagues,
    The writing is clearly on the wall.We can no longer leave the defense of our industry and livelyhood in the hands of NRMLA and the like.(although they do a admirable job)There must be a way our voices can be heard both collectively and individally as both an industry and a voting constituency. we need to begin to speak the language of politicians.Can we also hash out some Ideas about gathering letters from satisfied, happy, relieved reverse mortgage clients that testify of the RESULTS and IMPACT the reverse mortgage has made on their individual lives? ANY IDEAS?? I'm fearful that if we leave our destiny in the hands of others the result could be a slow boil to death. While I'm greatful for the involvement of the few I believe the time to get proactive is now! Comments…

  • This has gone to far.

    WithMLA reporting “We have been polling state attorneys general offices, bank regulators and FTC and found the incidence of complaints about reverse mortgage lenders to be minimal or non-existent.”

    “I am pleased to have with us today, Daniel Claggett from the National Consumers Law Center, who is shortly will release a report (WHAT IS THIS) that documents many Reverse Mortgage abuses and warns seniors of scams to avoid. I applaud the center for its important work on behalf of our seniors and look forward to the report.”

    What is this…I have evidence here in my hand but I wont show it to you but the Reverse Mortgage industry is guilty. THIS IS MCCARTHYISM AT ITS WORST!!!!!!!!!!!!!!!! WHO'S POCKET IS THIS SENATOR IN!!!!!!!!!!

  • Colleagues,

    I can't believe what I just read in reference to the special senate hearing held by Senator Claire McCaskill. I don't even know how to address all the points brought up. This is almost an insult to our intelligents. The cutting of the UPB fee's are a laugh. Does she know how much our fees were cut when the increase in lending limits went into affect? I saw some folks mention the fee we are on now, I wish you were right but it was wrong. Our origination fee is 2% of the first $200,000, then it goes to 1% over the $200,000 up to a maximum of a $6,000 fee. As far as the UPB premiums, they are at a low, especially with live pricing and trying to second guess the market.

    The committee is so off base, they show their lack of not only intelligents but common sense. This special committee meeting held with the people who were their, enforces my position. We need people like us at these meetings so we can tell it like it really is. Yes, at least Peter Bell was their and he did a great job but that is not enough. We should have had two or three of us their with Peter. The people need to start hearing from us, the one's who are in the pits daily. We who suffer along side of seniors ready to go into foreclosure with no Fed funds to help them out. They need to understand what a good loan officer goes through for their senior clients.

    No, Claire McCaskill is wrong. Predatory lending is becoming more prevalent because of people like her and FNMA as well as other agencies and the states. What has happened hear people, we have allowed HUD to take a back seat and all the so called know it all's take control. We don't have our great HUD regulated Reverse Mortgage like we had three to four years ago. This infuriates me and I know it does most of you out their. We seem to be handicapped and our voices not being heard. Our experience and all the years in the business along with the high standards most of us have, means nothing.

    Our seniors are suffering the most. The people who think they are protecting them are same people who are hurting them and slowly taking away one program that truly has helped them. I don't know what more to say.

    Have a good day,

    John A. Smaldone

    • Mr. Smaldone,

      I need to address your statement on origination fees so that Tobkin does not have the impression I am picking on him. Please see my reply to his own reply above.

      In another thread you asked if anyone disagreed with your view that HECMs should be the standard for proprietary reverse mortgages with exceptions and that no state government or regulator other than HUD should have any control or say so over reverse mortgages. Let me make it clear, I do not agree with your premise.

      Again I believe your heart is in the right place but I do not agree with your premise about HECMs. For example, officials at HUD have said more than once that they do not want to oversee proprietary reverse mortgages. They would like to see HECMs a much smaller percentage of all reverse mortgages. So let's start with an unwilling regulator.

      The HECM is designed to be for the less affluent. It has a high cost insurance component. Its rules and regulations are constructed with that cornerstone. To unravel the complexities of this cornerstone out of the HECM structure seems monumental and ineffective.

      The MBA started with a great idea, a state model act. Unfortunately they created it in a way that seems doomed. They needed to bring in the influential state legislators and work with them to create it.

      Again it is not your heart that is at issue; it is the idea that the HECM model is the answer to so many issues. This would be a great debate in another forum. There are many issues to be discussed including the SAFE ACT — its structure and oversight as it applies to reverse mortgages.

  • Tom all

    The internet is really amazing sometimes. (No I don't Twitter or Facebook.)
    I just heard about a 300 page amendment to a house bill that was submitted the night before a vote. Those against this type of last minute, non-studied, type of addition to a House bill are asking people to call their reps. at:

    When you get to this site they direct you so you wind up with your rep's tel. # and all you have to do is call and say you support, whatever, in this case H. Res. 554.
    Point is we all have to be more proactive, like Vince said, in supporting our rights and letting our elected officials know we are angry (when justified, like in the case of McCaskill's mistakes). I hope at least the Missouri RM people called her office and/or wrote her.

  • Peter Bell wrote in his comments:

    “At the same time, we must recognize that once a senior has gotten a reverse mortgage, no matter how protected she or he might have been during the loan origination process, there is now access to what could be a substantial amount of money – potentially attracting others looking to swindle the homeowner. These are societal problems; they’re not reverse mortgage problems. Laws are in place to protect seniors from elder financial abuse. We must all work together to enforce the laws, catch and convict any culprits who take advantage of seniors.”

    I don't know how legislating against reverse mortgages will stop a man who is suffering from mini strokes and requires round the clock care from going off to Vegas with his caretaker and a girl friend for the weekend and blowing his pension check. Of course the caretaker then is paid for out of the stepson's savings. The stepson with POA works with his stepdad to get a RM to stop the hemorraging of his own savings and to allow his stepdad the dignity of living his life in his own home.

    So should the government legislate away his right to go to Vegas? I don't know. Clearly that is a personal problem of the stepdad and his need to have a certain quality of life or possibly a “societal problem” of gambling which the reverse mortgage has nothing to do with. The reverse mortgage is allowing aging in place for the stepdad just as the program has always intended, without bankrupting his stepson.

    The clear issue is that seniors fall prey to predatory marketers and others the same way that the young fall prey to advertisers who sell beauty in a bottle and muscles the size of Arnold's or cereal that will get you into a bikini for the summer. That has nothing to do with what a reverse mortgage provides the senior and nothing to do with how the responsible lenders (and the majority of us are) market reverse mortgages. Most of the seniors I work with are intelligent, well read and know what they want (including the stepdad who went to Vegas). Are they to be considered as wards of the state who must be padlocked securely away in case they do anything foolish?

    I do foolish things all the time. So does the young girl or boy who buys magic pimple cream. Should I or they be padlocked away from doing those things? Big Brother, Big Mother, Big Father, Big Donkey, Big Elephant, call it what you like. What slippery slope are we going down when we begin to legislate what ways senior citizens can spend their own money on things which are legal to the rest of the voting public?

  • Louise

    BTW: I hear Reno is nice this time of year.
    I have a question for you and any other smart RMer. Here's the basis: it seems most of the abuse to seniors is because they get a lump sum payout.
    As Willy Sutton said: “I rob banks because that's where the money is”.
    So what if you had a product that after paying off any mortgage balance due, would only offer the tenure option. Sure, there is less money, but also less temptation for the Willy's of the world, be they family or strangers.
    I'm saying this would be an alternative product, the old types would still be available. Maybe this could be combined with the HECM lite some people proposed in earlier posts.

    • Hey dduck 12!

      I am glad to hear Reno is nice.

      Actually, the example I gave of the Vegas entourage involved the putting in place of a loan for a term of years to allow for the monthly expense of 24 hour care. The tenure payments would not have worked because his monthly health care expenses are over $7,000. However, a lot of borrowers are getting the closed end fixed right now because there is so much more cash available to them after paying off their current mortgage because of the lower interest rate. (Blame Fannie Mae and higher margins on the ARMs.) Unfortunately that puts the cash in their pockets at close of escrow, and we all know how cash burns a hole in the pocket.

      As you say other posts have mentioned, there are some interesting twists being developed by FHA/HUD right now that we should stay tuned for that are possible remedies, but will they be addressed any time soon? Who can possibly predict? I am still tap dancing with co op owners about when the HERA 2008 Mortgagee Letter on co ops will come out. (Blame all that housing legislation in the last year. I do.)

  • >>So what if you had a product that after paying off any mortgage balance due, would only offer the tenure option.

    I never thought of that … and think it's a terrific idea. I can't place homeowners in the monthly adjustable HECM anymore because the 5.56 fixed provides them with so much more money – and that's exactly what the “bad guys” need to do their dirty deeds. It'd be nice if homeowners could receive optimum benefit without having to convert all their available equity into cash when their loan funds. That'd keep the bad buys away.

  • Mr. Veale,

    I appreciate your view and have a lot of respect for you. I don't entirely agree with you. However, you do make a good point about HUD policing the proprietary loan. My intent was to get across to everyone that we use FHA underwriting guidelines and HUD regulations to set the standards for proprietary loans.

    I did not necessarily mean that HUD be the police force overseeing the product, however I think they should be the agency handling this task. I am mainly referring to having uniformed guidelines. What other suggestions are there for governing the product guidelines and controlling predatory activities. The HECM product is being abused more than ever. We have predatory activities occurring with HECM's at a rate I have never seen before.

    As far as the states taking a roll in coming out with their own regulations and laws controlling the proprietary product, I don't agree with that. I can see 25 to 30 states having different set of rules and guidelines. Now if the MBA was successful in bringing all states in with one uniformed state model act, that would be something else.

    The industry needs to get back to a more uniformed method of doing business. James, look at what the Reverse Mortgage industry was like four years ago compared to today. Did we have the predatory lending problems to the degree it is today? Did we have the confusion that FNMA has created with live pricing? I could go on and on. I say this, are we better off today in our industry than we were four years ago. Are we, as professionals in our field happy with what is taken place in this industry today? Is the senior better off today, I don't think so. I feel FNMA could have done other things to control their market risk rather than impose live pricing on the industry.

    Lets say HUD is not the answer for overseeing the proprietary product and policing predatory activities, who or what agency is? I would like to render my opinion on one other statement you made about the HECM. You said the HECM is for the less affluent. Now that we have the $625,500 max lending limit, how can you say that. I had an Attorney in Newport Beach, California who owned a home free and clear, the home appraised out at $850,000. He took out a Reverse Mortgage on his home and bought a $285,000 Boat. Why did he do that? He bought the Boat outright, no payments on the Boat, no payments on the Reverse Mortgage. He was not less affluent, he was just a pretty smart Attorney. You are right, the cost is high, the MIP alone can wind up being half the closing costs. This is why the HECM has always had the highest LTV.

    Mr. Veale, we all have our opinions, that is good. I may disagree with you on these few issues, however, I have read many of your comments. I share your philosophy and I agree with most of your comments. I have learned a lot from you and look forward to learn a lot more. Just like you said, my heart is in the right place, just as yours is sir. By the way, you are right, their are many issues to discuss, like the Safe Act, its structure and oversight as it applies to Reverse Mortgages. You have a safe and Happy Fourth of July.

    Best regards,

    John A. Smaldone

    • Mr. Smaldone,

      Like you, I have spoken with members of Congress and leading FHA officials about this program as well as leaders in our own industry. Yes, there is no question you are right the affluent do benefit from the current lending limit in particular but the program was never designed to do that. There are several examples including back in 2005, one gentleman who owned a debt-free multimillion dollar home used a HECM to buy a car he always dreamed of.

      I believe among all of the more than 500,000 homeowners who have taken out HECMs, few are attorneys living in Newport Beach in $850,000 homes. The HECM program was designed to help those that FHA helps best, the less affluent. If the predominant number of those that were helped were affluent, no doubt there would be a needs based test or some other qualifier legislated to reduce those numbers; some are suggesting, however, that needs based testing may become a reality within the next year or so.

      I know you want things to be as they were in 2005 but time will not go in reverse. We need to deal with things the way they are. Why are things so different? Principally it is because we do not have the home appreciation in this country we had back then. One of my favorite sayings is: “Appreciation covered a multitude of sins.” That cannot be seen any clearer than in the subprime demise.

      One of the impacts of the subprime debacle is that Fannie Mae and Freddie Mac in their greed were left holding a bag of questionable mortgages. As a result the federal government took over both of these GSEs and Congress by provisions in HERA instructed both to get rid of the bulk of the mortgages they are holding, over the next few years. HECMs do not fit the parameters Fannie Mae needs and seeks. They are the worst of all mortgages for Fannie Mae since they grow over time and thus reduce their legislated and mandated capacity. Mortgages whose balances due reduce over time through principal amortization are much more preferable.

      By trying to find other investors for HECMs, Fannie Mae is acting responsibly and credibly; they are not picking on seniors. Believe me, I do not like the results but until HECMs are viewed by the investment community as a desirable investment, we will be seeing higher and higher margins over time.

      As I suggested in a RMD article on March 31, 2009 there is a way to lessen the impact and that is through the use of TARP (or even MIP) funds with a slower margin ramp up for consumers but a market value for the HECM that will bring positive investor attention to new HECMs. The result would be that later HECM borrowers would be paying the difference between margins charged and the sales price of those HECMs through margins exceeding those required by investors thus providing a premium on these latter HECMs. For a full explanation, please the March 31, 2009 article.

      Another way to lessen the impact on margins is to request that Congress permit Fannie Mae to buy an unlimited number of HECMs that will not impact the Fannie Mae cap. Some have also suggested that Fannie Mae could simply categorize HECMs in another asset class on their balance sheet. While their suggestion may be valid, I am not certain about the accounting policy issues at Fannie Mae that permits HECMs to be classified in one asset class or another.

      While HERA brought several great changes to HECMs it also brought at least three difficult problems. The first is how to implement the unexplained cross selling rules. The second is the disastrous reduction to maximum origination fees. The final is the mandate placed on Fannie Mae. Let’s hope Fannie Mae will be buying HECMs now and in the future; otherwise, we will be subject to the whims of the investment community and HECM origination could wind down to a crawl.

  • Mr. Veale,

    Good evening. You present your case very well. I understand where you are coming from with the HECM as far as who's needs it serves best. We have to realize since the lending limit has increased to the $417,000 level and then to $625,500 it has widened its scope to reach various classes of seniors.

    The problem with most proprietary programs in the past were the low LTV calculations. This did put the product out of reach for those with homes of values of $700,000 or less.

    Your second paragraph has a lot of merit. Yes, if you look at all the HECM loans made over the years, you are right. The HECM was designed for those that FHA help the best, the less affluent. One point you may be missing is that the lending limit increases have not been in effect for that long. When the national limit went to $417,000 this started to open up a different intellectual level of the borrower. When the $625,500 limit went into effect, this opened up the door to the more affluent. In one sense you are right when you look at all the HECM loans funded but when you look at what has taken place over the past 18 months or so, we have a different Ball game.

    Sure I would like things the way they were in 2005, I am not that naive to think we can turn the Clock back. You are right, the drastic drop in home values make it imposable to return to 2005, in some way. Yes, appreciation does cover a multiple of sins, I like that.

    What we can have and bring back to the industry is some of the uniformed standards of regulations and laws that everyone can live by. We have an almost panic environment in this industry today. We have legislators and committee chairman along with uninformed news casters publicly stating we are the next sub-prime industry. They are, nationally putting the fear of God into our seniors. They make us out to mongrels who are perpetrating more fraud and predatory lending on seniors than the sub-prime industry did. When it is all said and done, we have such a low percentage of complaints against Reverse Mortgages than any other product.

    As far as one of the impacts of the subprime debatable zoning in on FNMA and FREDDIE's greed and leaving them holding the bag with questionable mortgages, I could not agree with you more. As far as the government taking over these agencies, it should of been done a long time ago.A great deal of the problem started 14 years ago when the sound credit standards were thrown out the window and any one was able to start borrowing. You don't think FNMA's special deals desk didn't negotiate wild commitments around the country with lenders. Then when they securitized these loans in what I call, Salt and Pepper securities, they went to a Moody's and an AIG and had securities rated way above the rating they should have. Now we had highly rated securities with insurance features on them. Look at all the securities FNMA and FREDDIE as well as Wall Street sold overseas to China, Russia and you name it. It all came back and tumbled on top of us. The same government that is supposedly trying to bring FNMA and FREDDIE back to life are the one's who helped put them their!

    The Reverse Mortgage may not fit FNMA's model today because of the mess they created for themselves. At one time they wanted to dominate the Reverse Mortgage industry. It is funny that today a loan that the principle only grows over time reduces their legislated and mandated capacity. If homes start appreciating again at a decent clip, does this mean that FNMA can now change its strategy and their legislated capacity shall increase? The environment we are in today is so upside down, I don't know how we will get out of it. Their are more opinions, more solutions more fears than the markets can handle.

    Yes, we sure do need other investors and quickly. I do not entirely agree with you that FNMA is acting 100% responsibly and credibly. I don't feel they are picking on seniors but the sudden moves and decisions they have made in the past have devastated many seniors around the country. Many seniors have gone into foreclosure. because of the margin increase Bomb dropped on the industry. I know FNMA had no choice but to raise margins but not the way they did it. This was done without warning. Most of the industry was taken so off guard the time alone to adjust to what FNMA did crippled many seniors around the country.

    In reference to the use of TARP funds and even the MIP is a logical assumption. However, look how much of the TARP funds have been abused. Look where much of the funds have gone. Are we to think because new guide lines are being implemented with TARP funds it will cure all the problems and these funds are going to be regulated and overseen with the highest degree of scrutiny, I don't think so. James what you suggest is a good plan, maybe it would work if you had control over it. I don't disagree with your article of March 31st, it was presented very well and makes sense, if we had those that could implement and enforce.

    Now what you say in your paragraph about congress permitting FNMA to buy an unlimited number of HECMs that will not impact the FNMA cap, has merit. So does the re-categorizing of HECM's in another asset class on their balance sheet. You do bring up a very valid point about if the accounting policy issued at FNMA would allow HECMs to be classified in one asset class or another.

    Your last statement the major problems HERA brought to the table. Cross selling, the disaster in the reduction of the maximum origination fees and the mandate placed on FNMA. you are 100% right on this one, lets hope FNMA will be buying HECMs. However, what you said about the HECM not fitting FNMAs model any more alludes to your conclusion. We may be at the whims of the investment community and HECM originations could come to a crawl. Lets hope this does not happen. This will hurt our senior homeowner population beyond my thinking.

    I will say this Mr. Veale, you are a very formidable debater, you wore me out tonight. You do have a very good handle on the problems at hand. I don't agree with you on everything you present, that is evident by my reply to you. Maybe we are both right in our own way. Have a safe Fourth and that goes to all of you reading our debate.

    Mr. Veale, my best regards sir,

    John A. Smaldone

  • Mr. Smaldone,

    We may not always agree but one thing is true, this industry will suffer a huge loss if you ever leave it. Enjoy the 4th. You deserve it.

  • Sen. McCaskill must know that the reverse mortgage is safe, that there isn't a lot of money in doing them…

    And she must intentionally be grandstanding for her own benefit, at the expense of our seniors well-being, both financially, and emotionally, musn't she?

    She must know a great many of the things she says are not true as well.

    Peter Bell has gone to great pains to educate her, yet she keeps on with her “scare message.” Why?

    I don't find this at all helpful for our seniors, and that is who is supposed to be important here, not the senator's political career.

    Let's get our priorities straight, senator.

  • Sen. McCaskill must know that the reverse mortgage is safe, that there isn’t a lot of money in doing them…rnrnAnd she must intentionally be grandstanding for her own benefit, at the expense of our seniors well-being, both financially, and emotionally, musn’t she? rnrnShe must know a great many of the things she says are not true as well. rnrnPeter Bell has gone to great pains to educate her, yet she keeps on with her “scare message.” Why?rnrnI don’t find this at all helpful for our seniors, and that is who is supposed to be important here, not the senator’s political career. rnrnLet’s get our priorities straight, senator.

string(117) ""

Share your opinion