Study Aims to Show Reverse Mortgages Offset Medicaid Spending

A recent industry study aims to change the conversation when it comes to reverse mortgages. By providing a greater context for the reverse mortgage industry, the study positions reverse mortgages as part of the solution to the larger problem of a mounting federal deficit that hovers around the $14 trillion mark. By encouraging seniors to cash in on home equity before relying on entitlement programs for their health and long term care needs, the study asserts, the use of reverse mortgages can cut down substantially on government spending.

The study, conducted by John Mitchell, CPA, owner of Reverse Mortgage USA (formerly known as 1st AA Reverse Mortgage, Inc.) and board member of Coalition for Independent Seniors (CIS), finds that through reverse mortgages, Americans could save billions of Medicaid dollars each year. Mitchell’s hope in completing the study is for it to be shared with members of the industry as well as Congress, state government officials and the Office of Management and Budget, and for it to show that reverse mortgages are part of the solution when it comes to the national deficit.

“Our industry’s destiny is controlled by Congress and therefore we must have political support,” says Mitchell, who was recently active in conjunction with CIS in getting reverse mortgage participants to engage in a letter writing campaign to Congress, which he says helped the industry to avoid another principle limit reduction that could have been devastating.

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“Clearly, the message for the reverse mortgage industry had to be that reverse mortgage saves Medicaid dollars. What could be a better message than that, given the current evolving mood in Washington, D.C.?” Mitchell says. “I knew we needed to  quantify the savings and put facts behind it. I also knew time was of the essence. The industry needs something supporting its value proposition now, not one, two years from now.”

The study is based on the premise that three major entitlement programs—Social Security, Medicare, and Medicaid—account for approximately 58% of the federal government’s annual budget and cites National Council on Aging data that shows 81% of America’s 13.2 million households age 62+ own their own homes. In addition, 74% of those senior homeowners own their own homes, free of a mortgage. That amounts to nearly $2 trillion in home equity that is exempt from Medicaid eligibility limits and is usually protected against Medicaid estate recovery, the study says.

“Increased use of reverse mortgages for long-term care could result in savings to Medicaid ranging from about $3.3 billion to almost $5 billion annually in 2010, depending on the future take-up rate for the these loans,” according to the study. “This represents 6% to 9% of the total projected annual Medicaid expenditures. These savings result from the additional cash available to borrowers that would delay or eliminate the need for Medicaid.”

It will change the conversation about reverse mortgages, says Mitchell. “Rather than reverse mortgages being perceived as potentially a drain on the government in a time when the government is going in the direction of shrinking, we can be part of the solution…This country spends almost $400 billion a year on Medicaid, and the unfunded liability is even greater than that. We have the perfect product to take Medicaid from being a inheritance protection program and shrink it back to its originally intended purpose—which is to provide long-term care for the truly needy.”

View the study in its entirety.

Written by Elizabeth Ecker

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  • While John Mitchell is someone I personally respect, I must take exception to the article in several areas. While the letter writing campaign may have been helpful, it was the introduction and justification of the Saver program by HUD as a provider of profits to the program which kept the principal limit factors for the fiscal year ending September 30, 2011, from shrinking beyond the reductions in the factors which were introduced on October 4, 2010, (except at the reduced expected interest rate floor and below for specific ages). If there had been no Saver introduced last year, reductions to principal limit factors for this fiscal year would have been far more severe. Let’s give credit where credit is primarily due, i.e., to HUD.

    It is important for the industry we have the capability and mechanism in place to do letter campaigns but its impact on the current year budget is perhaps at best overstated. The organization could be very helpful in future such endeavors. I hope it is their purpose to work closely with NRMLA on such matters.

    Stephen Moses has long espoused many of the things that John mentions. It was very interesting to speak with Atare Agbamu and Stephen Moses at the Los Angeles NRMLA Convention a few years ago on this very concept. The Coalition should consider joining forces with Stephen and others who promoted using HECM proceeds to help reduce Medicaid costs.

    There is also a segment of society which believes in the protection mechanisms provided by Congress and the states through the current Medicare program. While we are attempting to penetrate that part of the senior market with Savers and Standards, we are also advising Congress to strip those who participate in the Medicare program of what they consider protected assets. Does this study promote the idea that government should mandate how seniors utilize loan proceeds?

    The Clinton Administration introduced a LTC incentive in 2000 into the HECM statute. It was to have the dual function of subsidizing the cost of LTC when using HECM proceeds and as a societal matter reducing Medicaid costs. Even though it was law, HUD successfully fought implementing the provision until a Democrat Congress and Republican President revoked the provision [12 USC 1715z-20(l)] through HERA in July 2008 [Section 2122(a)(6) of PL 110-289].

    I am not convinced this is a fight our industry should be taking the lead or a position on. It just seems odd that we could be alienating the very seniors who will want HECMs to provide elder care at some time in the future. Further what is the plan? Will it impact seniors already in the Medicaid program? If not, why not? Will it be an all or nothing proposition or will there be a gradual ramp up? There is too little information to determine if this idea is worthy of industry support.

  • While John Mitchell is someone I personally respect, I must take exception to the article in several areas. While the letter writing campaign may have been helpful, it was the introduction and justification of the Saver program by HUD as a provider of profits to the program which kept the principal limit factors for the fiscal year ending September 30, 2011, from shrinking beyond the reductions in the factors which were introduced on October 4, 2010, (except at the reduced expected interest rate floor and below for specific ages). If there had been no Saver introduced last year, reductions to principal limit factors for this fiscal year would have been far more severe. Let’s give credit where credit is primarily due, i.e., to HUD.

    It is important for the industry we have the capability and mechanism in place to do letter campaigns but its impact on the current year budget is perhaps at best overstated. The organization could be very helpful in future such endeavors. I hope it is their purpose to work closely with NRMLA on such matters.

    Stephen Moses has long espoused many of the things that John mentions. It was very interesting to speak with Atare Agbamu and Stephen Moses at the Los Angeles NRMLA Convention a few years ago on this very concept. The Coalition should consider joining forces with Stephen and others who promoted using HECM proceeds to help reduce Medicaid costs.

    There is also a segment of society which believes in the protection mechanisms provided by Congress and the states through the current Medicare program. While we are attempting to penetrate that part of the senior market with Savers and Standards, we are also advising Congress to strip those who participate in the Medicare program of what they consider protected assets. Does this study promote the idea that government should mandate how seniors utilize loan proceeds?

    The Clinton Administration introduced a LTC incentive in 2000 into the HECM statute. It was to have the dual function of subsidizing the cost of LTC when using HECM proceeds and as a societal matter reducing Medicaid costs. Even though it was law, HUD successfully fought implementing the provision until a Democrat Congress and Republican President revoked the provision [12 USC 1715z-20(l)] through HERA in July 2008 [Section 2122(a)(6) of PL 110-289].

    I am not convinced this is a fight our industry should be taking the lead or a position on. It just seems odd that we could be alienating the very seniors who will want HECMs to provide elder care at some time in the future. Further what is the plan? Will it impact seniors already in the Medicaid program? If not, why not? Will it be an all or nothing proposition or will there be a gradual ramp up? There is too little information to determine if this idea is worthy of industry support.

  • This makes perfect sense- it would keep more folks off the dole. Shouldn’t they be rewarded for such? The basis of which was shared with a group of us by one of the designers of the program at a NORC meeting in DC about 3 years ago- she said representatives from the Federal Govt set out to take some of the pressure off SS, Medicare and Medicaid by opening the option of allowing for homeowners to take equity from their home.

  • This makes perfect sense- it would keep more folks off the dole. Shouldn’t they be rewarded for such? The basis of which was shared with a group of us by one of the designers of the program at a NORC meeting in DC about 3 years ago- she said representatives from the Federal Govt set out to take some of the pressure off SS, Medicare and Medicaid by opening the option of allowing for homeowners to take equity from their home.

  • If you’ve ever read any of Ken Scholen’s books from the early days of the HECM pilot program, you learn very quickly that HUD’s involvement and the HECM insurance of the HECM program are both directly linked to the Federal policy goals of using the HECM program as a means to keep retirees living at home independently via their own assets and not enrolled in safety net programs like Supplemental Social Secuity, Food Stamps, and Medicaid.

    Barbara Stucki recognized reverse mortgages as a means of funding retirement healthcare expenses, especially since the few restictions of Line of Credit draws (there were no Fixed Rate HECMs at the time) were so much more liquid that any insurance policy claims process. The borrowers could draw funds to pay for pre-emptive and preventative or supportive care or home modifications (like sit showers, rails, ramps, wider doors) at will instead of having to wait for a health challenge to develop and worsen before they could file an insurance claim after the fact.

    But recently and unfortunately, major Long Term Care (LTC) insurance carriers like John Hancock have recognized that, as expensive as their LTC policies were and while they were still currently profitable, the rising claims curve was not sustainable. The policies were still underpriced for the growing claims experience due to some inaccurate actuarial lapse ratio assumptions brought over from the life insurance side of the business.

    The point? Long term healthcare costs are a big issue for retirees, but both in-force and existing long term care policies are being significantly altered to reduce the daily rate and term of claims payable as we speak. When big carriers with deep pockets bail or retrench like this, all the smaller carriers respond similarly.

    So, now, to provide the same protection against premature spend-down of retirement assets due to healthcare costs, the insurance professional may now have to put a Short-Term Care policy for acute expenses in combination with a life or annuity-based hybrid with an LTC riders or contractual payouts for the more long duration potential expenditures. That means the insurance guy has to do more homework for the borrower to create the same level of protection, and these products can require more up-front insurance premium. With home values and PLFs low and rising rates, there is more pressure on the reverse mortgage to achieve ideal funding levels.

    There is another way that a reverse mortgage can assist with retirement healthcare costs, and that I used well before the HECM Saver came along to appeal to the free-and-clear reverse borrower. If resources for payng retirement healthcare expenses are scarce and/or the borrowers have health or financial underwriting insurability issues, but the home is high in equity, the borrower could take an initial draw to cover only the financed closing costs. This left the remainder of the Principal Limit in the Line of Credit, The borrowers could (and several did) opt to repay the financed closing costs over a period of a few years, and oing so restored their access to the full Principal Limit for future draws. Once they reached this point, they have only the minor monthly service fee accruing interest toward the Max Claim Amount, and which they could also periodically pre-pay or not.

    Reverse mortgages are a funding tool like any other loan. Sometime their flexibility lets them serve the borrowers needs alone; sometimes another financial instrument or concept is needed. Jeff Lewis of Generation Mortgage is the only person in the industry talking about the need to preserve that flexibility for the sake of the HECM program and the borrower, and he seems to realize that this is a separate and far bigger strategic bigger issue than the cross-selling arguments that threaten it.
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    • Mr. Peters,

      Again and again, the issue of cross-selling comes to the surface. The question is why. [In this comment when referring to insurance and insurance sales people, financial products and financial product sales individuals along with securities licensees are also included.]

      Generally three principal reasons are given in support of the eliminating cross-selling prohibitions and restrictions. The first is concern that someone involved with the origination of the HECM when looking over a financial plan could somehow interfere with its implementation. The second is that the insurance producers overlook reverse mortgages since they cannot get a commission in the process. The final reason is that some in the industry can only make sense out of staying in the industry if they are permitted to cross-sell. The first reason has been promoted by several RMD readers over the last three years. Mr. Lewis embraced the second reason at the latest NRMLA conference. The third reason is generally believed to be well founded hearsay.

      Coming from a professional environment where many professionals work together with very competitive interests and sometimes several million dollars at stake, the first argument is hard to shallow. The second argument makes most insurance sales professionals appear to be little more than greedy people who do not have the best interests of their customers in mind. The third reason is an important business consideration but does not answer the concern of why cross-selling should in principle be permitted. If insurance sales people are permitted to cross-sell, it would seem real estate sales professionals who sell real estate in a manner which requires a license would be permitted to provide HECMs. Yet those who so eloquently argue for insurance fail to do the same when it comes to real estate.

      Although I do not agree (on very narrow and technical statutory grounds) with the ten calendar day waiting period encompassed in the proposed Fed rule, it nonetheless seems very reasonable (far more reasonable than the real estate rule). The proposal clarifies the issue and allows for fairly unrestricted cross-selling after a reverse mortgage transaction “cooling off” period. The question remains whether or not the CFPB will simply adopt the Fed proposal.

      Mr. Peters, what is your position on the proposed Fed rule? If you oppose it what are your grounds? It is very difficult to understand why the double commission is so crucial to the concept presented by Mr. Mitchell. Since you so strongly support cross-selling, perhaps you can explain why preventing the same individual or entity from making two commissions when it comes to a protected class or why a restricted period such as that proposed by the Fed is so wrong.

      Thanks.

  • The Heart-Rending Co-op Reverse Mortgage Conversation:

    Regarding the article on “Study Aims to Show Reverse Mortgages Offset Medicaid Spending,” some 429,000 American senior stock-cooperative dwelling owners would like to be part of this “reverse mortgage conversation.” Should we have a need—unlike our condominium neighbors—we have been unable to access the equity in our stock-cooperative dwelling investment going on three years. Here’s just a small part of the impact caused by the federal government ignoring our condition:

    Although in our Laguna Woods Village community we are only 6,000 residents, this means over 12,000 dwelling owners suffer economic damages too. Their families also victims of the Great Recession fallout. Nationwide the economic toll could fall on millions. Unfortunately, the study below ignores our reverse-mortga plight. Reverse mortgages may well save older-adult Medicaid dollars but it does much more. To mention only one thing, accessing dwelling equity through a reverse mortgage relives anguish and saves foreclosures. Also, Medicaid is primarily used by low-income householders, for which stock-cooperative dwelling like our were developed.

    Our HECMs for CO-OPs GROUP at Laguna Woods CA has contacted not been idle. For almost a year, our representive has contacted the White House, the secretary of Department of Housing and Urban Development, indirectly the leader of the House of Representatives, our local congress person, local HUD officials and numerous lenders without avail. We ask, “Where is our political support?” “Why are our aged 62 and older ‘truly needy’ being ignored?”

    Submitted by:

    BARBARA B. HOWARD ChangeManager@comline.com
    Cofounder HECMs for CO-OPs GROUP at Laguna Woods CA

    • Ms. Howard,

      On many levels, I agree with you. It is sad that the manner of ownership should cause you and othe co-op owners the inability to participate in the HECM program; however, it is a fact and for good reason.

      You are right that you need to find political support. Without a political solution which reduces the risk to the HUD MMI Fund, there appears to be no way to change the outcome. It seems co-op owners will need to pay more FHA insurance than others, receive lower proceeds, or in some other way have to deal with the increased risks co-ops would bring to the HECM program.

      Here is hoping you can find the answer.

    • Ms. Howard,

      On many levels, I agree with you. It is sad that the manner of ownership should cause you and othe co-op owners the inability to participate in the HECM program; however, it is a fact and for good reason.

      You are right that you need to find political support. Without a political solution which reduces the risk to the HUD MMI Fund, there appears to be no way to change the outcome. It seems co-op owners will need to pay more FHA insurance than others, receive lower proceeds, or in some other way have to deal with the increased risks co-ops would bring to the HECM program.

      Here is hoping you can find the answer.

      • 04.05.11
        Disqus
        James E. Veale, CPA, MBT
        RMD Re: Study Aims to Show Reverse Mortgages Offset Medicaid Spending

        Hello James,

        Thanks for your encouraging/discouraging response. Know all about the higher rates, less return. But when a co-op owner is in the condition of needing Medicaid that hardly matters. They’re hanging on with their teeth just to stay in the home. As a former certified HUD and RE agent selling RMs, think I know most RM pros and cons.

        Almost worst thing about this condition is that it degrades the value of all 12,000 dwellings in our community. The very worst? These co-op owners are literally a stone’s throw from the same model condo owners who have TWO RM packages available.

        Again, thanks for the encouragement. Good luck in your profession.

        Best,

        Barbara

        BARBARA B. HOWARD ChangeManager@comline.com
        Cofounder HECMs for CO-OPs GROUP at Laguna Woods CA
        Conflict Change Manager for over 30 years.
        M.A.: Behavioral Science & Sociology
        B.S.: Business and Management
        Published: Conflict Management in Gerontology

        P.S. Do you advise some to consider an RM as a good investment instead of drawing down some better paying retirement account? Understand some CPA calculate that equation.

      • Ms. Howard,

        To be clear, I am also a Sr. VP of a reverse mortgage lender, a real estate broker, and a CSA. I apologize but I do not know what you are saying when you write: “…a former certified HUD and RE agent….” Obviously I know what a RE agent is since I was also a licensed CA DRE licensed salesperson for about eight years but I am not aware of any certification related to HUD unless you were also a mortgage broker, not just an originator.

        Any reverse mortgage is a bad investment since it does not produce income. It produces cash flow. For the financially needy, the HECM Standard can be a great product if the borrower uses it judicially.

        For the more affluent, the HECM Saver can be a better product especially if the need is due to seasonal cash flow issues or short-term (which can be defined in many ways) cash needs where the borrower does not need maximum proceeds or necessarily a fixed rate product. For example we are currently working with an active octogenarian who has been adjudicated an heir on a rather large estate. The state had confiscated the estate assets under escheat because the decedent died intestate. The state Controller has informed her that all estate funds will be released to her near the end of this year. In between the prospect has substantial cash needs which she would like to take care of now. For her a Saver is an excellent answer.

        There is an odd view of reverse mortgages that a borrower is trading in the home for “income” which as you know is false. Since this is a mortgage, like all mortgages, many become confused about the product due to the unusual features of many reverse mortgages. Too many times reverse mortgages are presented as some type of equity product rather than what they truly are, nonrecourse mortgages.

    • Ms. Howard,

      On many levels, I agree with you. It is sad that the manner of ownership should cause you and othe co-op owners the inability to participate in the HECM program; however, it is a fact and for good reason.

      You are right that you need to find political support. Without a political solution which reduces the risk to the HUD MMI Fund, there appears to be no way to change the outcome. It seems co-op owners will need to pay more FHA insurance than others, receive lower proceeds, or in some other way have to deal with the increased risks co-ops would bring to the HECM program.

      Here is hoping you can find the answer.

    • Ms. Howard,

      On many levels, I agree with you. It is sad that the manner of ownership should cause you and othe co-op owners the inability to participate in the HECM program; however, it is a fact and for good reason.

      You are right that you need to find political support. Without a political solution which reduces the risk to the HUD MMI Fund, there appears to be no way to change the outcome. It seems co-op owners will need to pay more FHA insurance than others, receive lower proceeds, or in some other way have to deal with the increased risks co-ops would bring to the HECM program.

      Here is hoping you can find the answer.

  • Mr. Veale,

    I’m trying to find all the things I supposedly said that you take issue with, but I’ve had no luck so far. I do not mention cross-selling at all except at the conclusion where I clearly distinguished between the borrower’s ability to make free use of their reverse mortgage proceeds for other financial instruments as a completely separate issue than cross-selling. Nothing I said could be construed as a defense of cross-selling, yet you somehow reached that launching point and took the discussion off-topic with you.

    But in doing so, you helped make my secondary point – that the noise over cross-selling threatens to overcome the far more important discussion of the need to preserve the borrower’s access to other tools (subject to all suitability and/or fiduciary guidelines), the nature and use of which most CPAs and attorneys and lenders and Loan Officers and certainly consumer advocates and legislators are generally ignorant. We sometimes need to be able to bring other trusted financial professionals into the discussion (and they need to sometimes bring us in) to best serve the interests of the borrowers. This professional, non-cross-selling collaboration and/or referral process is under direct threat now in your own state of California.

    My only goal was to talk about the Federal policy goal and role that the HECM program was intended to play, and to show some ways that reverse mortgages and other financial instruments can coexist quite well and, as originally intended and designed, serve to minimize enrollment in Federal entitlement programs.

    • Mr. Peters,

      Last month when I heard Mr. Lewis speak, he was concerned about cross-selling and how it was restricting the growth of HECMs. So by referencing the positions of Mr. Lewis on the cross-selling topic, you drag in issues you may or may not be aware of. Mr. Lewis was bothered by the fact that the hypothetical insurance salesperson could not earn a commission from recommending a HEMC and so was more likely to find other less desirable methods of securing necessary financing. I assumed you were aware of what he said out here specifically on the cross-selling topic since you praise his realization and positions on the subject without restriction.

      It is odd how you address the referral issue here in California. Since June 2006, reverse mortgage originators have been prohibited from selling annuities or referring borrowers to those who sell annuities for the purchase of an annuity. Then in late 2009 the waters got muddied further; now there is a California reverse mortgage provision which prohibits reverse mortgage originators from referring customers to those selling any insurance product (except for those specified which are generally related to the home) and all financial products. Please see California Civil Code Section 1923.2(i)(1)(B).

      You seem to be referring to the fact that the California insurance code MAY be amended (AB 793) so that insurance companies can no longer employ those originating reverse mortgages and would prohibit insurance producers from referring customers to reverse mortgage originators. Except for insurance producers referring their customers to reverse mortgage originators, there has been no threat to the referral process at all for over eighteen months here in California; it is prohibited.

      While there is absolutely nothing wrong with viewing the written positions of Mr. Scholen as having great worth, I do not share that view. Authors have a strong tendency to write according to their own perceptions, wishes, understanding, prejudices, and bias. In making legal determinations particularly in the area of taxation, courts generally ignore such writings; I ascribe to that position. If Congress or HUD believed in the things Mr. Scholen passionately presents, then they had the opportunity to codify them and failed to do so, a rare practice of allegedly passionate regulators. In fact HUD refused to implement the HECM/LTC insurance provision until it could be repealed close to 8 years later.

      While Dr. Stucki gave voice to some very wise, judicious, and beneficial uses of HECM proceeds, I find no compelling reason to overly laud them. Those concepts failed to change law, regulations, or rulings. Few if any of the counselors connected to NCOA make mention of these extremely beneficial uses of HECM proceeds.

      Nostalgia has value in convincing others to your view but it does not address how to deal with the value of retaining the cross-selling provisions of HERA or how to improve them so that they have more value. Unless you are proposing ways to restrict the use of proceeds, they are great ideals but hardly the stuff of pragmatic legislation. The bigger and broader view will have little benefit if legislators keep those who can bring substantial help to seniors apart. While I generally agree with the HERA cross-selling rules, I find little value in stopping the referral process specifically addressed in the California Civil Code on reverse mortgages and AB 793.

  • Hi Mr, Veale, thank you for the additional comments, I think they reveal us both as speaking from experience with some grounding and that makes for a better discussion.

    Re California, I was referring to AB 793.

    I think you’ll find we may be much closer on the cross-selling entanglements than not. Shared compensation and the other sorts of quid pro quos described in RESPA are out, the problem is still how to define an acceptable degree of non-compensated association between the referrer and the referee.

    I believe that HUD’s unhappiness at the Clinton-era HECM-LTC linkage was primarily that a purchase of a qualifying LTC policy with the HECM proceeds would entitle the borrower to a refund of some of the HUD MIP. I have no doubt that this created some technical heartburn from HUD over the impact to the Mortgage Insurance fund. On top of that, I don’t imagine that HUD wanted to get into the business of deciding that LTC policy A qualified for a MIP refund and LTC policy B did not, but I’m not aware that HUD opposed the concept of using the HECM proceeds in this manner.

    • Mr. Peters,

      I do not believe that RESPA applies unless you are indicating that some kind of compensation is being paid between prohibited parties. Of course that is not the only law which limits compensation “for leads.” I still hear rumors of lead compensation with non-licensed individuals being contingent in part or full based on closings. But none of that is of concern in this comment.

      As to cross-selling in the reverse mortgage arena, that seems to be much closer to undue pressure than entanglementwhen applied to many seniors. The issue comes down to one of too many decisions being forced on a senior at one time. Could such actions result in creating contractual incompetence in too many situations? For many otherwise very functional seniors, the answer is clearly yes. I am saying this not as a CPA, CSA, etc. I am speaking as someone over 62 who is very clear about the reverse mortgage process and the pressure it imposes on some seniors.

      As to HUD, call it what you may but HUD never proposed even a single idea on how to change the law so that those who could benefit from LTC insurance purchases could do so acceptably and receive a reduction in upfront MIP. While it is great to point to ethical considerations when speaking about the formation of law, it has no place when it comes down to its implementation. In a Republic, law trumps ethical considerations, not vice versa; laws can be changed. If HUD was concerned about its enforcement, why was there no Congressional proposal to amend it other than its revocation under HERA, almost eight years later?

      Please do not misunderstand. I do not believe that LTC insurance is necessarily a good product for most HECM borrowers. Saying it positively, LTC insurance is a great product for some HECM borrowers. In fact most affluent seniors make a huge mistake by not getting LTC insurance, even if they need a HECM to do it. Like HECMs, practically speaking, LTC insurance is not for everyone. But this provision was little more than a LTC insurance stimulus package on the backs of HECM borrowers, plain and simple. HUD could have mandated lenders and counselors warn seniors that LTC insurance may NOT be in their best interests even with the upfront MIP discount and have disclosures with much stronger wording, warning about suitability in light of their financial situation.

      Wrapping up, HUD was wrong not to implement the law no matter what its concerns. In a Republic, the constitution is first, then law trumps all. If the HUD personnel did not want to implement a law they should have resigned. Unlike the condo issue, there was no practical issue that would have created any problems with implementation. If Congress or the White House had indicated the LTC provision was a mistake, then legislation could have corrected or revoked the provision. Instead HUD did nothing when this was clearly the law of the land. While some might consider the HUD acts as courageous, my view is far, far more negative.

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