Housing Task Force Sees Merits of Reverse Mortgages

A new bipartisan commission is launching a task force to take aim at critical aging issues over the next year. And for the most part, they are positive about how reverse mortgages factor into the aging in place puzzle.

Acknowledging that the U.S. faces a “real crisis” in meeting the housing and health care needs of its ballooning senior population in coming years, the Bipartisan Policy Center’s new Health and Housing Task Force will embark on a one-year effort to devise policy recommendations focused on enhancing long-term services and supports for the nation’s elderly.

Demographics fuel the Task Force’s establishment, especially as 73 million Americans are projected to be age 65 and older by 2030; with nearly 9 million age 85 and older, the BPC noted in a press call Monday morning. Furthermore, of those reaching age 65, about 70% will require some form of long-term services and supports.

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While various reports cite seniors’ unwavering desire to remain in their homes for as long as humanly possible, their homes are often ill-suited to permit them to do so. It is through this disconnect where reverse mortgages, which have historically touted their ability to facilitate these desire, claim their role in the broader aging in place picture.

“[Reverse mortgages] are appropriate for some people in some circumstances,” said Henry Cisneros, task force member and former secretary of the Department of Housing and Urban Development (HUD). “We don’t start with the view that reverse mortgages are dangerous for people and should be avoided.”

Cisneros, who has been a proponent for reverse mortgages in the past, is joined on the Task Force by fellow former HUD Secretary and former U.S. Senator Mel Martinez, and former U.S. Representatives Allyson Schwartz and Vin Weber.

Acknowledging certain people may have been negatively affected by reverse mortgages as a result of bad judgements in the past or influenced by “unscrupulous players,” the commission generally views the loans play a role in helping seniors age in place, but only if used in the right context.

“A reverse mortgage is a useful tool to generate capital that people have stocked up over a lifetime in the equity of their home, but it has implications,” Cisneros said. “There are serious things to think about, but it is a tool that deserves a place if properly utilized.”

In a previous report from February 2013, the BPC touched on the topic of reverse mortgages, urging steps be taken to ensure consumers understand the mechanics of these loans, including their benefits and potential risks.

Though it is unclear if the Task Force will target reverse mortgage policy recommendations, the BPC’s Commission on Retirement Security and Personal Savings is looking into the topic of reverse mortgages in a report which is slated for release this sometime this Fall.

“It [reverse mortgage] is a toll in the toolbox,” said former Senator and HUD Secretary Mel Martinez, on contribution of reverse mortgages for aging in place. “As with any other financial tool, there always needs to be a fit for the need as opposed to the opportunity. Good consumer financial empowerment is paramount in any financial transaction.”

Building on the work of the BPC’s Housing Commission, and simultaneously with its Long-Term Care Initiative, the Health and Housing Task Force plans to seek cost-efficient ways to meet the health and housing needs of the burgeoning senior population.

Among its goals will be finding cost-effective ways to modify homes and communities to make independent living viable for seniors; identify barriers to home- and community-based services and supports through Medicaid; highlight best practices from states for integrating housing health and long-term services and supports; as well as seek opportunities for further collaboration between HUD and the Department of Health and Human Services.

“Finding cost-effective ways to meet the needs of our aging population will be a major focus of our work,” said task force member and former U.S. Representative Allyson Schwartz. “We intend to find efficiencies to make aging in place both possible and affordable.”

During the first quarter of 2016, the Task Force expects to produce specific policy recommendations both for Congress and the Administration, while additional recommendations will assist state policymakers, as well as health and housing providers, link their shared goals to improve health outcomes, cost-efficiency and quality of life for American seniors.

Written by Jason Oliva

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  • The task force is made up of decent people for the most part. It is true that our seniors in the U.S. are facing a “real crisis” in meeting the housing and health care needs
    of our expanding senior population in coming years.

    However, this is not something that has not been known for many years now, why all the concern all of a sudden and why sett up a task force now? This should have been done years ago the same way we should have been prepared to handle the foreclosure scare of today with the reverse mortgage.

    Instead, HUD, FHA and the Federal bureaucrats move in a panic pace to implement all the new rules and regulations, they act as if they are tripping over each others feet! Look at the NBS issue, look at the FA ruling. All this amounts to is a complete lack of vision for future problems and planing, the lack of being prepared and the definet lack of pure common sense!

    John A. Smaldone

    • John,

      Since FHA is part of HUD and both are full of federal bureaucrats, the significance of your last paragraph escapes me. I do agree that the NBS issue is an interesting mess that rather than mitigating headline risk has evaluated it.

      The findings of the task force will barely influence anyone other than perhaps the members of the group and a few sitting on the fence. They rarely make much impact.

    • John,

      Task forces are rarely an efficient way to cure problems. They are more ceremonial in nature with their principal purpose to provide PR for their members.

      You lost me on your point about HUD, FHA, and federal bureaucrats. FHA is a division of HUD. Since the employees of HUD are federal employees, it would seem they qualify as federal bureaucrats.

      HUD is so lost in the non-borrowing spouse issue, litigation on this issue will haunt the industry for years. Imagine our reputations if HUD is found wrong on Mortgagee Letter 2015-03. This issue is not settled and no doubt has been made worse by the creative activities of HUD. Perhaps Congress will save the situation but who can count on that?

      Why HUD is not delaying Financial Assessment indefinitely is unclear. With a positive housing economic environment, lower principal limit factors, and a first year limitation on accessing proceeds, the conditions creating HECM technical defaults are much lower than at any time since the housing crisis. The latter two conditions, lower principal limit factors and the first year limit on accessing proceeds have limited the number of borrowers who will default. Are the costs of financial assessment in terms of actual costs and lost business worth the hypothetical and perhaps marginal reduction in defaults which MIGHT be achieved through this proposed process worth the result? Is this swatting a fly with a hand grenade? Some might think of it in terms of wiping out a known molecule at a known location with a dirty nuclear weapon, begging the question: “Which is worse the reduced problem or the proposed cure?”

      Until the impact of the changes which were implemented on September 30, 2013 and August 4, 2014 has been analyzed as to those prospects who would be the most likely to default is understood, why rush into financial assessment? Here the old adage applies: “Think BEFORE you leap.”

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