Reverse Mortgage Amendment Passes the House with Overwhelming Support

Financial Services Bill H.R. 4173 passed in the House of Representatives this afternoon by a vote of 223-202.  Included with it was the Reverse Mortgage Amendment proposed by Congresswoman Jan Schakowsky (D-IL) and Congresswoman Dina Titus (D-NV).  The Amendment passed overwhelmingly by a vote of 277-149, indicating bi-partisan support.

Rep. Schakowsky released a press release this afternoon saying, “We have an obligation to protect our seniors from malicious fraud and prosecute anyone who means to do them harm… Many seniors are turning to reverse mortgages and they need to feel safe and secure in their decision. We must do everything in our power to ensure the fidelity of the system and shield our parents and grandparents from being cheated or misled.”

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With the passage of the bill, the Consumer Financial Protection Agency was approved and given the authority to regulate reverse mortgages, one of a number of characteristics in the extensive financial services bill.  In order to become law, the bill still must pass the Senate and be signed by the President.

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  • Now they can go home and crow how they are going to get the crooks on Wall Street and Main Street, preying on grandma. Never mind the House Ethics Comm. is fumbling around and should be investigated by _________. Oh hell, there's no one to do that. Never mind.
    Have a good weekend.

  • Will they also look at stabilizing how much seniors can receive? That would help seniors the most. Don't get me wrong! The stories from the OIG were hair-raising. But doesn't the law currently on the books deal with these criminals?

    The biggest problem comes in restitution. Who will repay the seniors who were robbed by unscrupulous salespersons? Can the good Gongresswomen of Illinois and Nevada guarantee that the legislation they promote will get the money back from the robbers to the seniors who were robbed?

    I hate being placed in the same category with the slime that ripped off seniors and FHA/HUD. Actually I am not fond of breathing the same air. But I am more interested in hearing that Congress would seek to make the victims whole than I am in hearing about what new stranglehold of regulations are being instituted and what agency will hold the whip over us.

    • Louise321,

      I have met with a Congresswoman but have no idea what a Gongresswoman is. Can you explain?

      While you may lack spelling software, you do not lack passion.

      • Dear Cynic,

        Obviously, Congresswoman begins with a “C” and Gongresswoman begins with a “G”. I am sure that was not a Freudian slip although more and more this reminds me of the old Gong show with lawmakers ringing the gong and using the hook at every turn.

  • Where was the MBA or NRMLA in this? Wow!!!!

    It seems it is far more popular in Congress to regulate reverse mortgages than it is to prevent the mortgage mess of the past from happening in the future. The total losses in the entire history of the reverse mortgage industry are not a speck in the oceans of losses in the forward mortgage industry. The proven malfeasance in our entire history does not come close to the losses of the Madoff mess even if you limit the losses Madoff caused just to seniors.

    Our problem is image. I am tired of hearing about waves of bad press not having lasting impact.

    For those who do not live near the ocean that may make sense but for those of us who do, seasonally large waves do much damage and cost insurance companies, homeowners, and property owners significant losses. It was not the normal action of the waters surrounding New Orleans that did such horrific damage; it was the huge amount of wind and water from Katrina. The fear in New Orleans today is not from normal times, it is the memory of Katrina, the stories of prior storms, and the fear that even much smaller storms can be as destructive since so little is being done to prepare for them. I have watched a canyon about 10 miles northwest of Pasadena, CA grow year by year for over fifty years. Normally there is no water in that canyon but when it rains it brings trees, boulders, and large quantities of water from the surrounding mountains that cut huge holes in the walls of that canyon.

    I do not know what Dennis Rodman is doing today and I can hardly remember his outstanding basketball career but I do know based on several waves of bad publicity, I would worry if my grandchild attended a basketball camp he might participate in. With just one spate of bad news what is our impression of Tiger Woods now?

    Good news rarely offsets the damage from the waves of bad news. Dennis Haber once suggested that we create a core of responders to bad news. We need that core. If the MBA or NRMLA are deaf to these pleas then ones like Jeffery Lewis, Dennis Haber, Atare Agbamu, Sam Collins, or Shannon Hicks should take up this cause.

  • What is “bad” about this news? If the Law , when and if passed, protects Seniors from those who prey on their FHA HECM proceeds, where is the harm to the RM Industry? As long as those in the RM Industry always put the Senior's best interest at the fore-front, we'll survive and prosper.

  • The Critic has a great point — every wave of badnews, no matter how false or exagerated, leaves a mess to clean up in public perception. It seems our politicians would rather make a storm in the RM teacup than create waves with the “forward” mortgage worlds big players. I've often wondered the same thing, where is NRMLA in all this. I've never understood NRMLA's tatic of “lets assume all the exageration is true, agree to let Congress and FHA pass and set up draconian rules and regs over RMs as well the process and procedure, rather than correct the record. When I look at NRMLAs board, I have to admit I have my doubts about how concerned they are about the little producer.

  • I've heard that NRMLA is “in bed” with Barney Frank (I hope not litterally) and will never push to hard (once again I hope not literally) against his agenda.

  • While I agree that seniors need to be protected from unfair and deceptive practices, I am little befuddled with Congresswoman Titus' comment “Protecting our seniors from unfair and unclear financila products is long overdue. Reverse mortgages need to be clearly and closely monitored and regulated in an effort to ensure seniors do not lose their home and quity they have built up through a lifetime of hard work”… Obviously, Ms Titus is not familiar with the workings of a reverse mortgage. No one is going to lose their equity- however, you cant buy groceries with equity! Estate Tax- that is what this boils down to… Lets hold on to as much possible!

    • Ms. Schmitz,

      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.

  • Thanks to The_Critic combined with Louis321 I think we could change the name of this blog from Reverse Mortgage Daily to the Daily Idiot.

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

    Feliz Navidad!

  • They will not let up on the reverse mortgage industry, will they?

    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

  • jamesaneslon,

    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.

    • Two women in a kitchen? How about 10 or more regulating agencies claiming authority over the HECM reverse mortgage program? I say more because every state we operate in has their own regulatory bodies. I would say if two women in a kitchen equal war (lol) then what we have on our hands is a global conflagration.

  • Ms. Schmitz,rnrnThe 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.rnrnIt 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.rnrnLet’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. rn

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