The Senate and House have both put
forth different approaches to cover the request from the Federal
Housing Administration’s for a $798 Million subsidy for the Home
Equity Conversion Mortgage (HECM of "Heck-um") reverse mortgage
program. The House version requires HUD
to operate without any subsidy which would mean that HUD would have to
lower benefits to senior borrowers, but does not elaborate on the
amount.
The Senate version does provide for
$288 Million to cover part of the shortfall, but that would also
require that HUD lower the senior homeowner’s benefits to cover
the shortfall as well. The Senate version actually mentions an amount that the senior’s benefits would have to be reduced by 5%.
The
House Bill does not state how much the seniors’ benefits would
decrease, but if the shortfall is roughly three times as much under the
House Bill than the Senate version and the Senate version calls for a
decrease in benefits of 5% to seniors, it is easy to imagine how hard
seniors could be hit by the House version of the Bill. The
National Reverse Mortgage Lenders Association (NRMLA) is working with
HUD to try to re-engineer the mortgage insurance premium to require
less up front and raise the annual premium to soften the blow to
seniors according to NRMLA’s President, Peter Bell.
While
I applaud the efforts of those at NRMLA, I cannot help but get angry at
the members of Congress. I sit here day in and day out and speak with
senior homeowners and those who wish to become homeowners with the HECM for purchase program, and I see how much good this program has done for the members of our society who have given so much of themselves.
The
parents and grandparents who have spent their lives enriching this
country and paying into every program and are now looking to enjoy
their retirement years are being squeezed from every angle, and this is
just one more slap in the face to those individuals.
Many
of the seniors who come to us now either just barely qualify for enough
to pay off existing liens on which they can no longer afford the
monthly mortgage payments after they've watched their retirement
savings disappear, or worse, sometimes they hear the news that they do
not qualify for enough and a reverse mortgage is already not a solution
for them. Now under the proposed Senate and House Bills, seniors
will receive even lower benefits.
To make
matters worse, our seniors are being tossed aside while Congress
continues to fund the extremely important programs such as cash for clunkers. Seniors may lose their homes
but we have plenty of money for yet another round of stimulus for the
auto industry. It is not hard to search the internet and find
story after story of Stimulus funds being used or wasted and among the
billions of dollars, money going to airports that handle fewer than a
couple flights a day, bridges in rural areas that do not service many
autos, guard rails around dried man-made lakes that were never filled,
renovating train stations which have been closed for three decades,
tunnels for turtles and the list goes on.
But
when it comes to a program which allows many senior homeowners to
continue to live in their homes, it seems that the members of Congress
can find little or no money to spend on the program, they are going to
leave it up to the seniors to fund their own shortfall by way of lower
loan to value benefits.
With the losses to
retirement accounts and the associated income, many seniors have found
that the mortgage payment that they once paid fairly easily between
their retirement incomes and the income they made from their retirement
plans is a monthly obligation that they can no longer afford. They may
have to choose between cashing in stocks at depressed values and
leaving themselves dangerously low on reserves, selling the homes they
have occupied for years or seeking reverse mortgages now more than ever.
With
the decrease in property values, the amounts for which seniors could
qualify have already been adversely affected. The steady rise in the margins
being charged over the last year or two due to secondary market
conditions have further adversely affected the benefit amount for which
seniors will receive and if interest rates rise in the future,
borrowers will qualify for even less. Senior homeowners looking to
obtain a reverse mortgage do not need the further blow at this time of
Congress not supplying HUD with the subsidy required to fully fund the
program.
I
would hope that if Congress can find the money for turtles and
abandoned train stations, they can find the money to help our parents
and grandparents stay in their homes!
Reverse Mortgages for Seniors by: Michael Branson (CEO All Reverse Mortgage Company)
Michael
G. Branson is a Mortgage Broker Licensed in several states who has over
32 years of mortgage banking experience. When you choose the
Specialists at All Reverse Mortgage Company, you’re choosing more
than just another reverse mortgage lender
Have a question about reverse mortgages? Talk to an Expert... (888) 801-2762 Ext 1 or complete online request
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