Saturday, May 12, 2012

Everyone loves reverse mortgages? Oh?

Says here "Congress and Advocates for Seniors Agree on Value of Reverse Mortgages." Sure about that? See for example here and here and here and here and here....

Well, the headline is in National Mortgage Professional, a trade publication, which sort of explains it. But that doesn't make it right. A reverse mortgage is a serious lesser-evil choice. It's a choice, typically made by a retired person with a small pension, to go into debt more or less irrevocably. It means very likely forcing the family home to be sold upon the retired person's death or long-term institutionalization, possibly reducing the security of a whole extended family.

It's not a thing you cheerlead about.

Turns out the article was inspired by a House Financial Services subcommittee hearing where the selected witnesses were all supporters of reverse mortgages in some form, and none of the folks I've linked to above were invited.

Looking at the prepared testimony (all available at the House link above), seems like most speakers gave nuanced testimony, not necessarily favoring reverse mortgages in all circumstances. A spectrum of opinion did exist, if a narrow one: supporting or opposing the program's partial domestication through government insurance and accompanying regulation that includes careful counseling requirements.

The prepared statements from AARP and the National Council on Aging carefully set out circumstances where a reverse mortgage would or would not be advisable. Daniel Fenton, representative of a counseling organization, Money Management International, emphasized the importance of counseling in preventing reverse mortgage elder abuse. Two academic experts argued the reverse mortgage industry should be allowed to function privately without FHA insurance and regulation of the Home Equity Conversion Mortgage (HECM) -- a move that, in effect, might reduce counseling and other protections for seniors. And then some on the panel did cheer for the HECM product.

Doesn't mean that "advocates for seniors" love those things. They're sometimes necessary, but always, always scary.

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