Secretary of the U.S. Department of Housing and Urban Development (HUD) Marcia Fudge recently sat down for a conversation with AARP CEO Jo Ann Jenkins about the state of senior housing and aging in place, marking the first major senior-related public comments made by the Secretary since being sworn in earlier this year.
Among the topics discussed, Fudge and Jenkins touched on the preferences of many seniors to age in place; why communal living settings have become less prominent in the senior living landscape in recent years; as well as legal realities at local, state and federal levels that sometimes act as impediments to the expansion of senior housing.
The necessity to bolster the option of aging in place
One of the first major topics touched upon in the presented discussion is specifically about ways to facilitate aging in place among American seniors. Because of the often immense costs that can come with dedicated congregate care settings, finding a way to retrofit a home to better accommodate a senior’s physical needs in an existing property is something that Secretary Fudge seems to have a keen interest in.
“I have found in my very short time at HUD that local ordinances and zoning create barriers, oftentimes, for the kind of housing that seniors need,” Fudge explains. “We find ourselves in positions where we can’t always build senior housing, but people can afford to stay in their homes, sometimes they just need a little help.”
Fudge then goes on to specifically ask Jenkins how a senior can be assisted if they want to remain in their own home for long periods of time, and whether or not there is a way for them to do so while also “get[ting] some extra income doing it.” Instead of naming something like a Home Equity Conversion Mortgage (HECM) as one such possible option for that kind of scenario, she instead talked about some of the work that AARP is doing to expand the availability of accessory dwelling units (ADUs) on existing properties.
“[These] allow people to perhaps convert a garage, or build a unit on the back of their house or convert a room where someone who may need some additional assistance — whether it’s a parent or a loved one — can get it,” she said. “We know that the average cost of caring for an adult in a nursing kind of facility is almost $80,000 a year in the U.S. And so, the ability to adapt one’s existing home structure, or a child’s home structure to have that loved one live with them, makes a world of difference.”
Additionally, aging in place particularly through something like an ADU may also help to address issues of isolation which seniors may face, and AARP has been working with state and community governments to address zoning restrictions that can often impede the construction of ADUs.
Fudge added to the points Jenkins laid out by specifically addressing that homelessness is a growing concern for American seniors, which can be tied back to the pricing and general availability of housing. Fudge also expressed hope that members of AARP’s vast membership network are aware of the forms of relief available through recent legislation like the American Rescue Plan Act, which can help to offer rental assistance or mortgage forbearance.
The sprawling responsibilities of HUD
Fudge also made mention of a general observation she has made where the issues of seniors may not get the necessary attention they need from any housing authority because of so many other pressing issues that can affect the housing stability of the entire U.S. population.
“Seniors [are] something that people, as a general rule, don’t look at,” Fudge explains. “They don’t look at age discrimination very often, and it is as pervasive as any other form of discrimination. And so, we’re going to enforce fair housing laws, and we’re going to make sure that we look at disparate impacts. We want to make sure that we do everything that is necessary and possible to be sure that every single American is treated with the fairness they deserve.”
Fudge also addressed the realities that the American housing system has to confront in regards to climate change, saying that in the last 10-15 years, HUD has spent an estimated $90 billion on disaster relief alone. When disasters strike, low-income people are disproportionately affected, as are seniors, she explains.
“Most of that [$90 billion] relief was directed at low-income people, which for a lot of these places are senior citizens,” she says. “So, we just need to be able to make the commitment. It’s not that we don’t have the will. We have the will, we just have to have the ability, and we just have to commit to getting it done. Because seniors really are suffering greatly from disasters, whether it be floods or fire.”
Reverse mortgages are M.I.A.
While it’s not abundantly surprising that the conversation between Secretary Fudge and Ms. Jenkins did not include reverse mortgages, the applicability of the early subject matter within the conversation can certainly bring the HECM program to mind especially considering that it is sponsored by the Federal Housing Administration (FHA). However, AARP in the past has gone to court over issues of borrower safety stemming from reverse mortgages, particularly for issues involving non-borrowing spouses (NBS).
Recent years have shown in AARP’s own research that a clear majority of seniors wish to age in place in their own homes, and general perspectives from the organization have softened in recent years particularly as major changes have been handed down to the HECM program by FHA and HUD. However, while reverse mortgages may be helpful in some situations, the organization in general does not subscribe to the idea that HECMs or other variations provide long-term solutions for America’s retirement issues.
“At AARP we do not see home equity or reverse mortgages as a major solution for all people for the retirement security problem,” said Debra Whitman, EVP and chief public policy officer at AARP in a keynote from a 2019 Brookings Institution event. “In our view, even transparent, well-designed reverse mortgages can only play a limited role in improving the financial outlook for the majority of people.”
Citing the median home equity value in 2016 of $145,000, Whitman argued at that time that most people will not be able to ensure retirement security for the full length of their increasingly longer retirement terms by employing home equity products like reverse mortgages, while also stating that reverse mortgage foreclosures are “too high.” She did, however, also say that reverse mortgages can work for some people in specific situations.
A columnist who formerly wrote for the association, Jane Bryant Quinn, also described last year how she had a “change of heart” when it comes to reverse mortgages, citing the maturation of the product category and the different changes it has gone through over the course of its availability in the United States.
“The law changed. Now, if you apply for a reverse mortgage and the lender’s analysis is that you might be unable to pay your bills after ten or fifteen years, you don’t get all the money to spend,” Quinn said in 2020. “The lender keeps some aside to pay for the property taxes and keep the house going. So, there are fewer risks for people who don’t have much money.”