HUD Secretary Carson Praises Reverse Mortgage Program in Speech

Secretary Ben Carson affirmed his commitment to the reverse mortgage program in a Monday speech to a major advocacy group for older Americans, lauding recent program improvements and emphasizing his desire to help homeowners age in place.

“This is a top priority for my department: To give seniors more opportunities, more alternatives, more choices, and, if desired, to help more people age in place,” the Department of Housing and Urban Development secretary said in remarks at LeadingAge Florida’s annual convention in ChampionsGate, Fla.

Carson called financial health one of “three essential initiatives for our nation’s seniors,” and dedicated a large portion of that discussion to the Federal Housing Administration-backed reverse mortgage program.

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“As reverse mortgages have become more popular, we have learned more about the needs of seniors,” Carson continued.

He then went on to give a detailed history of the Home Equity Conversion Mortgage program, acknowledging previous issues with the product such as imprudent draw amounts and the lack of non-borrowing spouse protections.

“These problems have lingered and need to be addressed,” Carson said, according to his prepared remarks. “Adjustments needed to be made.”

Carson ran down the recent regulations designed to help make the products safer — including amendments to the non-borrowing spouse rules, Financial Assessment, draw limits, and mandatory housing counseling programs — and promised guidance for lenders and servicers on the recently-issued HECM Final Rule over the coming months.

The remarks represent a rare deep dive into the HECM program before a wide audience by a sitting HUD secretary, and a signal that Carson’s previous commentary on self-reliance translates into a firm commitment to the reverse mortgage program.

“The Founding Fathers wanted you and me to determine our needs and our spending, not some far-off monarchy in Europe or some self-interest in Washington,” Carson said. “And our freedom is a continuous struggle. Every day we fight for freedom, looking for ways to have more choices, to make up our own minds, and to use our resources for our needs, in our own way.”

The secretary’s comments also included praise for housing counseling programs, which HUD recently supported with $50 million in grants.

“Housing counseling helps people buy a home and helps many people stay in their homes,” Carson said. “They will be able to age in place. There will be more financial freedom, more responsible practices, and greater security for seniors.”

Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association, praised the secretary’s comments in a statement released Monday.

“We appreciate Secretary Carson’s articulation of all the important changes to the HECM program and HUD’s efforts to implement them,” Bell said. “NRMLA and our members stand ready to assist the Department in continuing to enhance the utility and viability of the HECM program, which has served over one million senior households since President Reagan signed the program into law.”

And just like many average Americans who have learned about the products through television spots, Carson couldn’t resist the opportunity to shout out the HECM’s most famous supporter.

“Under certain conditions senior homeowners age 62 and over could access a portion of their equity in their homes,” Carson said in explaining the program to his audience. “You’ve seen the TV commercials with Tom Selleck.”

Written by Alex Spanko

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  • What will Secretary Carson say when he realizes that the ending balance in the MMI Fund for HECMs is over $7 billion negative and over $15 negative if one removes over $6 billion in transfers from forward programs and the $1.7 billion taken from Treasury transferred into the HECM portion of the MMI Fund since fiscal 2010.

  • The Reverse Mortgage qualifying age could be changed to 55 like it is in the UK. There are some senior at age 55 that need assistance and would be a great assets to those with early health problems or debt. A properly structured Reverse Mortgage at a early age would provide resources to deal on their own with their problems versus the government tax payer entitlement programs from the equity in the homes. It would also enhance Reverse Mortgage value to financial planner to start a Line of Credit at the early age of 55 and provide significant protection due the growth factor of a RM LOC where senior in later life at advance age would not run out of money but have a significant source of funds to take them comfortably through their advance age for those lucky to live long lives independently. A well planned LOC starting at an early age could provide seniors with the fund needed to enter in into reputable retirement home when the time comes and have a decent sustained live that they deserve. The setup cost for retirement center can be significant and not affordable to many seniors. We need to look at the structure of a Reverse Mortgage from the early age of 55 to the advance ages and provide financial solutions for each stage of aging.

    • How is a HECM an asset? It also is NOT a line of credit. It is a nonrecourse mortgage and only has a line of credit if the senior elects to take an adjustable rate. With a performing HECM, nonpayment of accrued costs and principal simply delays the date that the payment of those accrued costs and principal must be paid.

      The HECM line of credit is generally felt to be better than the traditional mortgage line of credit. It is not magic but many originators make up tales that are full of smoke and mirrors. Credit cards have been notorious about allowing increases in their available credit. At one time, I had a few such cards with $50,000 in available credit each.

      There is sufficient concern about the MMI Fund that any downward adjustment in the minimum required age of borrowers seems doomed even before even looking into it. If you can demonstrate how lowering the eligible age of borrowers will enhance the MMI Fund we are all ears.

      To ensure there is no dipping into government programs, are you willing to have seniors sign off under penalties of perjury that they will not participate in any such programs including Medicaid (or similar state program) until such time as the HECM terminates? If they do should HECM originators become surety for such decisions?

      You see some of us do not believe that HECMs in any way correlate to the use of government programs by those seniors who are homeowners with substantial equity. To us you are simply creating scenarios without any significant research, research that would take several generations to develop at least as to the participation of senior homeowners under 62 with substantial home equity and their participation in government programs both with HECMs and without.

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