Reverse Mortgages Take Center Stage in Upcoming Congressional Hearing

Reverse mortgage industry participants as well as non-affiliated housing experts will testify before members of Congress Wednesday in a hearing titled, “Oversight of the Federal Housing Administration’s Reverse Mortgage Program for Seniors.”

The hearing will include input from lenders including National Reverse Mortgage Lenders Association President and CEO Peter Bell and Generation Mortgage and Coalition for Independent Seniors Chairman Jeff Lewis. They will speak before the House Financial Services subcommittee on Insurance, Housing and Community Opportunity.

“This hearing will examine the federal Home Equity Conversion Mortgage product and lead to recommendations to improve a financial service tool that is helping our seniors cope with the expense of retirement while staying in their homes longer,” Lewis said in a statement.

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Additionally, counseling representatives including Money Management International Director of Housing Daniel Fenton and Barb Stucki, Vice President, Home Equity Initiatives, National Council on Aging.

AARP representative Lori Trawinski, Senior Strategic Policy Advisor, Consumer and State Affairs Team for AARP’s Public Policy Institute is scheduled to give testimony, as are two housing industry experts: New York Law School associated professor Houman Shadab and George Mason University professor of real estate finance, Anthony Sanders.

From the Department of Housing and Urban Development, Charles Coulter, Deputy Assistant Secretary for Single Family Programs, will represent FHA.

Those participating are expected to provide insight into the current state of the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM) program, as well as recommendations toward improving it and cautions.

The hearing is scheduled for Wednesday, May 9 at 2 o’clock, PM Eastern.

Written by Elizabeth Ecker

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  • What they lack is an independent actuary or other professional who understands the MMI Fund and the future impact of home appreciation rates on that fund.  While the GI fund is important, it is less so when considering the future impact of new endorsements on HUD.

    Since this is a House committee hearing, this means Republicans will try to score points on its impact to the budget, both positively and negatively.  Expect the negative views of Senator Tom Coburn to be represented as anit-FHA insurance. Also expect Democrats to go into some form of rant on cross-selling, lower average age of borrowers, protections for seniors, and an emotional alarm about future liabilities with rather meager evidence of any kind even though it is readily available.  The AARP issues should be front and center, especially non-borrowing spouses and 12 USC 1715z-20(j).

    If the House wanted a realistic view of HECMs, they invited the wrong industry leaders.  I do not believe that either Peter or Jeff (in particular) can admit that the growth in the industry is “in reverse” and will stay there for at least another fiscal year before turning around.  It is simply not in the blood of either one of these guys, particularly Jeff.  How will they handle the loss of four major players?

    The hearing should be interesting.

  • Congressional hearings! I cringe whenever I hear that. Now reverse mortgages are going to take center stage. It is not that we won’t have good representation testifying because we will. look at the line up of who will be coming forth to testify, good people that will no what is needed to be said!

    My fear is how the the members of congress on this panel will interpret what they hear?

    Jeff Lewis made the statement that the purpose of the hearing will lead to recommendations to improve a financial service tool that is
    helping our seniors cope with the expense of retirement while staying in
    their homes longer. I have to ask the question, is Jeff hoping this is what will occur?

    My concern is that the hearing may only lead to more regulations and hardships being imposed on the industry, like in the past. Time will tell but we need to follow closely what the out come will produce from these hearings??

    John A. Smaldone
    http://www.hanover-financial.com

  • Wealthone, thank you for the cited site.

    And John, you are right to be concerned.

    Here is a summary of the recommendation made by the NYU professor based on his written testimony as cited by Wealthone:

    “Accordingly, Congress should not expand the HECM program and should consider decreasing the loan amounts borrowable under the program. Doing so would likely not pose a long-term problem for borrowers seeking reasonably priced reverse mortgages and would help to ensure that taxpayer funds are not used to subsidize risk taking by the financial institutions involved in reverse mortgage markets.”
    What historical evidence does the good professor provide as to his historical evidence?  If what the professor indicated is true, then why did B of A, Wells, Financial Freedom, and MetLife leave the industry?    To some degree each left over the sad state of affairs in the tax and insurance default situation.  If that situation is not one associated with risk, what is it?    

    Even if there were no risk from tax and insurance defaults to lenders, would any lender provide substantially the same amount of proceeds on the same terms without FHA insurance?  Someone is dreaming and this time it is not our leadership.  However, this kind of recommendation plays right into the hands of those adhering to the lines taken by Senators Coburn, McCaskill, and Kohl.  It looks like some in Congress know how to shop for opinions.

    • Cynic,

      You bring up very good points. I am glad you elaborated on the subject at hand. You only reinforce my concerns and fears. This spells party time for my favorite, McCaskill!

      Thanks for your comment.

      John A. Smaldone

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